Wells Fargo to pay $1B to settle shareholder lawsuit over fake accounts scandal

Lakshmi Calo

Co-Presenters: Lakshmi Calo, Fausto Lopez, Miriam Atlixqueno Castillo, Jeicy Bustamante, Jeremy Chocoj, Ariandy Frias

College: Hennings College of Science Mathematics and Technology

Major: BA.BIOLOGY

Faculty Research Mentor: Adams-Harmon, Dawn  

Abstract:

Title: Wells Fargo to pay $1B to settle shareholder lawsuit over fake accounts scandalAuthor: Lakshmi Calo,Nicolas Castaneda Moore,Miriam Atlixqueno Castillo, Jeicy Bustamante,Jeremy Chocoj, Ariandy FriasAbstractThe settlement in this case represents one of the largest class action settlements in history. Wells Fargo agreed to a payment of $1 billion in order to resolve an investor lawsuit. Investors were claiming that the bank made false claims to its shareholders regarding its ability to address issues resulting from prior scandals.Investors claimed that although the bank stated that it had strengthened its compliance systems as well as completed all necessary actions to satisfy regulatory concerns, such was not true. As a result, shareholders felt that the company's stability was greater than what it actually was, and the stock price remained artificially high. Once it was revealed that the bank continued to struggle with regulatory compliance, the value of the company's stock fell and the investors suffered losses. Although Wells Fargo denied any wrongdoing, the company chose to settle the claim to avoid the expense and time required for a lengthy trial.This case demonstrates that the ramifications of corporate wrongdoing extend beyond consumers and may be detrimental to investors. This case also illustrates the importance of truthfulness and transparency as well as the responsibility companies have to their shareholders.