Wells Fargo to pay $1B in shareholders lawsuit settlement

A Redditor highlighted the recurring violations of regulations by banks, expressing their frustration at the relatively muted response from the SEC.

Financial services firm Wells Fargo has reached a settlement in a class-action lawsuit, agreeing to pay shareholders $1 billion. The lawsuit alleged that the bank had misled its shareholders about its efforts to resolve the 2016 fake accounts scandal.

A $1 billion all-cash settlement was granted preliminary approval by United States district judge Gregory Woods in a Manhattan federal court. Another hearing will be held on Sept. 8 for final approval.

In a statement, the bank said it disagreed with the allegations made in the lawsuit. On the other hand, while it disagrees with the accusations, it is “pleased to have resolved this matter.”

In December 2022, Wells Fargo also reached a $3.7 billion agreement with the Consumer Financial Protection Bureau to resolve allegations that the bank’s actions had harmed more than 16 million individuals with deposit accounts, auto loans and mortgages.

At the time, Ripple CEO Brad Garlinghouse compared the Wells Fargo issue with the FTX collapse. According to Garlinghouse, the world was outraged by FTX, which he believed to be “appropriate.” However, the CEO expressed his concern about the lack of attention to the Wells Fargo case, considering that it also “mismanaged billions in customer funds.”

Related: Defending against SEC to cost Ripple $200M, CEO Brad Garlinghouse says

Members of the community recently voiced similar concerns on a recent Reddit forum. On May 17, one Redditor said that the U.S. Securities and Exchange Commission should also look into banks. They wrote:

“People put their hard-earned money in a bank thinking it is 100% safe, take loans for house and cars only to be scammed out of it.”

The community member also argued that banks had violated regulations multiple times every single year, but “the SEC has stayed rather quiet” about it. Another Redditor echoed the sentiment, saying it’s “obvious the banks get a pass for the most part.”

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