Feb 7 (Reuters) – Wells Fargo & Co (WFC.N) agreed to pay $300 million to settle a shareholder lawsuit claiming the financial institution hid that it had pushed pointless insurance coverage on auto mortgage prospects, in line with paperwork filed in U.S. court docket on Tuesday.
The Development Laborers Pension Belief for Southern California, which led the category motion introduced on behalf of traders, stated in federal court docket in San Francisco that Wells Fargo and its former chief government, Timothy Sloan, had agreed to settle.
The financial institution didn’t admit wrongdoing.
The deal requires approval from U.S. Choose James Donato, who’s overseeing the case. Trial within the case had been scheduled for Feb. 27.
“Whereas we disagree with the allegations on this case, we’re happy to have resolved this legacy problem,” a Wells Fargo spokesperson stated in an announcement.
An lawyer who represents Sloan didn’t instantly reply to a request for remark.
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Scott Saham of Robbins Geller Rudman & Dowd, the regulation agency representing Wells Fargo shareholders, stated the settlement “is a part of remediating the whole spectrum of hurt that you simply get in a posh fraud case.”
The lawsuit stems from one of many San Francisco-based financial institution’s previous scandals over gross sales practices that resulted in authorities investigations and fines.
Wells Fargo disclosed in July 2017 that a whole lot of 1000’s of consumers had been unnecessarily charged for “collateral safety insurance coverage,” which covers auto lenders when debtors are uninsured. The financial institution stated it had realized of considerations a yr earlier.
Shareholders sued in 2018, alleging Wells Fargo misled them when Sloan stated in November 2016 that he was “not conscious of any points” when requested concerning the financial institution’s gross sales practices and tradition.
The financial institution additionally hid auto insurance coverage points from the U.S. Senate Banking Committee in November 2016, the traders alleged.
The lawsuit sought damages for traders who purchased Wells Fargo shares between Nov. 3, 2016, and Aug. 3, 2017, the day earlier than the financial institution disclosed additional particulars.
Wells Fargo settled an auto borrower class motion in 2019 for $386 million with out admitting wrongdoing.
In 2018, Wells Fargo agreed to pay $1 billion to U.S. regulators to settle probes of its auto insurance coverage and mortgage practices.
Reporting by Jody Godoy; Enhancing by Noeleen Walder, Chizu Nomiyama, Nick Zieminski and Jonathan Oatis
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