Lieff Cabraser serves as Co-Lead Counsel for the Fire and Police Pension Association of Colorado, which along with the City of Birmingham Retirement and Relief System, are court-appointed Co-Lead Plaintiffs in this consolidated shareholder derivative action. Co-Lead Plaintiffs allege that, since at least 2011, the Board and executive management of Wells Fargo & Company (“Wells Fargo”) knew or consciously disregarded that Wells Fargo employees were illicitly creating millions of deposit and credit card accounts for their customers, without those customers’ consent, in an attempt to drive up “cross-selling,” i.e., selling complementary Wells Fargo banking products to prospective or existing customers.
Revelations regarding the scheme, and the defendants’ knowledge or blatant disregard of it, have deeply damaged Wells Fargo’s reputation and cost it millions of dollars in regulatory fines and lost business. In May 2017, the court largely denied defendants’ motion to dismiss Co-Lead Plaintiffs’ amended complaint. In October 2017, the court again denied a second round of motions to dismiss the amended complaint.
A proposed $320 million settlement (the “Settlement”) has been reached in this derivative action. On February 28, 2019, Co-Lead Plaintiffs filed a motion for preliminary approval of the Settlement. The benefits to Wells Fargo of the proposed Settlement include (i) monetary consideration of $240 million paid to Wells Fargo by the defendants’ insurers; (ii) agreement and acknowledgement that facts alleged in the derivative action were a significant factor in causing certain corporate governance changes undertaken by Wells Fargo, which include improvement to Wells Fargo’s internal controls, internal reporting, and expanded and enhanced oversight of risk management by the Board of Directors (the “Corporate Governance Reforms”); and (iii) agreement and acknowledgement that facts alleged in the derivative action were a significant factor in causing certain remedial steps with respect to compensation reductions and forfeitures undertaken by Wells Fargo (the “Clawbacks”). As part of the Settlement, the parties agreed that the Corporate Governance Reforms and the Clawbacks have a value to Wells Fargo of $80 million, for a total Settlement value to Wells Fargo of $320 million.
On May 14, 2019, the court preliminarily approved the proposed Settlement. The proposed Settlement is subject to final court approval, and a final fairness hearing will be held on August 1, 2019, at 2:00 p.m., before the Honorable Jon S. Tigar, United States District Judge, at the United States District Court for the Northern District of California, 450 Golden Gate Avenue, San Francisco, California 94102. For more information on the Wells Fargo Derivative Settlement, please visit www.wellsfargoderivativesettlement.com.
The case is In re Wells Fargo & Company Shareholder Derivative Litigation, No. 3:16-cv-05541 (N.D. Cal.).
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