Wells Fargo must face shareholder lawsuit alleging compliance failures
Wells Fargo brand is seen in New York Metropolis, U.S. January 10, 2017. REUTERS/Stephanie Keith
NEW YORK, Sept 30 (Reuters) – A federal choose on Thursday rejected Wells Fargo & Co’s bid to dismiss a lawsuit accusing the fourth-largest U.S. financial institution of defrauding shareholders about its compliance with consent orders from U.S. regulators governing its conduct.
U.S. District Choose Gregory Woods in Manhattan mentioned the plaintiff shareholders plausibly alleged that some statements by varied financial institution officers, together with former Chief Government Tim Sloan, had been “intentionally or recklessly false or deceptive.”
Woods dismissed claims towards Sloan’s successor Charles Scharf, saying he was not culpable for the dissemination of these statements.
Wells Fargo and legal professionals for the defendants didn’t instantly reply to requests for remark. Legal professionals for the shareholders didn’t instantly reply to related requests.
The San Francisco-based financial institution has been topic since 2018 to consent orders from the Federal Reserve and two different regulators to enhance governance and oversight.
These orders adopted a sequence of scandals starting in 2016 that highlighted Wells Fargo’s mistreatment of shoppers, together with the opening of hundreds of thousands of unauthorized accounts and charging debtors for insurance coverage they didn’t want.
The Fed has capped Wells Fargo’s belongings at $1.95 trillion till the financial institution improves its governance and danger controls.
Wells Fargo has paid greater than $5 billion in fines because the scandals started.
Reporting by Jonathan Stempel in New York; modifying by Jonathan Oatis and Aurora Ellis
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