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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
Wells Fargo’s $110Mn Class Action Settlement – Does This Sound Cheap?
Wells Fargo announced that it has agreed to pay $110 million (after attorneys’ fees) to settle a class-action lawsuit relating to the 2 million or so accounts that bank employees opened without customer permission, going back to 2009. Under terms of the settlement, Wells Fargo would also waive its right to take customers into ‘third-party’ arbitration. This settlement, which is subject to court approval, would apparently resolve 11 other pending class-action lawsuits filed against Wells Fargo in this matter.
It’s the first private settlement that Wells Fargo has reached since September 2016, when the bank agreed to pay $185 million in fines to settle to charges filed by federal and California authorities. And then there’s $3.2 million in payments that tge babnk has already made customers who reportedly had 130,000 accounts opened without their permission. In most cases, these customers (who received a remediation check) will be eligible to take part in the $110million settlement.
“We want to ensure that each customer impacted by our sales practices issue has every opportunity for remediation, and this agreement presents an additional option. We continue to encourage customers to contact us directly so that we can act quickly to refund fees and address any concerns.” - - Wells Fargo CEO Tim Sloan, in a statement.
HOW DOES THE SETTLEMENT BENEFIT CUSTOMERS? A lawyer with Keller Rohrback, one of the firms that filed the class-action suit against Wells Fargo praised the settlement: “We believe this is an outstanding result obtained for the benefit of a proposed nationwide class, notwithstanding Wells Fargo’s effort to block the class action with an arbitration clause.”
Really? The numbers on the table seem rather low for remediation to customers- at least to this layman’s eyes. Let’s work out the numbers: $110Mn among 2,000,000 accounts equals $55 per account; $3.2Mn payouts for 130,000 accounts equals $25 per account.
How might that begin to compensate customers who have endured credit rating problems, or customers who worried needlessly and spent untold hours to process account closures?
Of course, the bank faces additional legal obstacles –regulatory and criminal investigations, and lawsuits by investors and former employees. All these may result in significantly higher payments by the bank. But of course, they would not necessarily end up in the pockets of customers – who, along with fired employees, have borne the greatest losses in the entire scandal.
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