Lieff Cabraser served as Co-Lead Counsel for the Fire and Police Pension Association of Colorado which, along with the City of Birmingham Retirement and Relief System, was court-appointed Co-Lead Plaintiffs in this consolidated shareholder derivative action. On April 7, 2020, Judge Jon S. Tigar of the Northern District of California granted final approval to a settlement including a $240 million cash payment and corporate governance reforms. The settlement is the largest insurer-funded derivative settlement in history. Read a copy of Judge Tigar’s Order.
In the litigation, Co-Lead Plaintiffs alleged 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 the consent of those customers, 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 Wells Fargo Board’s and senior officers’ knowledge or blatant disregard of it, 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.
In early 2019, a settlement (the “Settlement”) was 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 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”).
On May 14, 2019, the court preliminarily approved the proposed Settlement. On April 7, 2020, the court granted final approval of the Settlement. 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.).
Important Documents Related to the Case
- Settlement Agreement (February 28, 2019)
- Motion for Preliminary Approval of Settlement (February 28, 2019)
- Order Requesting Supplemental Briefing (March 20, 2019)
- Supplemental Brief in Support of Preliminary Approval of Settlement (April 2, 2019)
- Order Granting Preliminary Approval (May 14, 2019)
- Order Granting Motion for Final Approval of Settlement (April 7, 2020)
- Motion for Final Approval of Settlement (June 27, 2019)
- Motion for Award of Attorneys’ Fees (June 27, 2019)
- Joint Declaration of Richard M. Heimann and Joseph E. White, III (June 27, 2019)
- Declaration of Brian T. Fitzpatrick (June 27, 2019)
- Declaration of Jeffrey N. Gordon (June 27, 2019)
- Reply in Further Support of (I) Motion for Final Approval of Settlement and (II) Motion for Award of Attorneys’ Fees (July 25, 2019)
- Declaration of Hon. Daniel Weinstein (Ret.) (July 25, 2019)
- Supplemental Declaration of Brian T. Fitzpatrick (July 25, 2019)
- Proposed Order Approving Derivative Settlement And Order of Dismissal With Prejudice (July 25, 2019)
Key Case Filings
- Complaint (February 24, 2017)
- Motion to Dismiss Order—Demand Futility (May 4, 2017)
- Motion to Dismiss Order—Failure to State a Claim (October 4, 2017)