Wells Fargo will now be facing — among other recent issues — a class action lawsuit that alleges the firm misled investors via its reports on its financial performance and materials on its successful sales practices.
Shareholders are suing the nation’s third largest bank (by assets), adding to a bill that is already clocking in at around $190 million in fees assigned by the CFPB, Comptroller and L.A. DA’s office. The lawsuit is on behalf of investors who purchased shares between February 26, 2014 and September 15th, 2016 — also known as the prime time that account fraud was allegedly going on at the firm.
Robbins Geller Rudman & Dowd LLP is representing the plaintiffs in the case, which has been filed in the U.S. District Court of Northern California.
The lawsuit in particular singles out CEO John Stumpf and Carrie Tolstedt, the now-retired executive at the center of the scandal — whom the suit alleges worked hard to sell over $31 million of their stock in Wells Fargo at “artificially inflated” prices. The suit is also critical of the practice of “cross-selling” and that investors were not more fully informed of how Wells’ quota system worked or what kinds of practices employees were resorting to to meet said quotas.
Wells Fargo had, until now, been highly lauded for its ability to sell multiple products to the same customer.
The San Francisco-based bank has said it has fired 5,300 people over the matter and would eliminate sales goals in its retail banking on Jan. 1, 2017.
Shares of the company have fallen more than 10 percent since Sept. 8 when it reached a settlement with regulators, wiping off more than $25 billion of market capitalization. Wells Fargo has offered no official comment on this class actions lawsuit.
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