Wells Fargo Ends Sales Scandal Investigation With 50 States

Wells Fargo & Company (NYSE:WFC) has finally settled numerous investigations and legal cases it had been involved in since the fake account scandal came into light. The bank will be paying about $575 million in order to clear the claims made by 50 states.

Earlier in December, Wells Fargo received the final court approval for $480 million settlement of the class action lawsuit that was filed by shareholders, claiming to be harmed by the bank’s false statements about its misdeeds.

These claims relate to the revelation of a sales scam, wherein the bank’s employees allegedly opened millions of unauthorized accounts to meet aggressive internal sales goals.

The news broke in September 2016, post which Wells Fargo was subjected to investigations of several departments and businesses. As a result, a cap on the company’s asset growth has been imposed by the authorities, which will remain in place until the bank is able to give a reasonable assurance to stay out of trouble. The revelation also led to several layoffs and restructuring of operations.

For Wells Fargo, 2018 had been a year of settlement, wherein it has made considerable efforts to put behind past misdeeds. In April, it paid $1 billion to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency to settle investigations related to mortgage and auto-lending practices.

In May, the District Court for the Northern District of California had approved a $142-million settlement related to the lawsuit filed by the customers wronged by Wells Fargo.

Also, in August, Wells Fargo was slapped with a penalty of $2.09 billion by the U.S. Department of Justice for actions that the regulator assumed contributed to the 2008 financial crises.

In 2018 so far, the stock has lost 24.5% compared with 19.3% decline recorded by the industry it belongs to.

Wells Fargo currently carries a Zacks Rank #4 (Sell).

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