Wells Fargo has come to a $300 million settlement with shareholders who claim in a class action lawsuit that the bank forced unneeded insurance policies on thousands of customers and concealed the practice from investors who lost money after the problem became public.
The suit brought by lead plaintiff Construction Laborers Pension Trust Fund of Southern California claims Wells Fargo pushed hundreds of thousands of customers to purchase Collateral Protection Insurance "and failed to refund unearned guaranteed auto protections premiums to tens of thousands of customers, causing more than 20,000 of its customers to have their cars repossessed."
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The complaint claims Wells Fargo knew of the issues but failed to disclose them, causing the price of the bank's stock to "trade at artificially inflated prices" between the time the issues became public and when the bank acknowledged them.
Wells Fargo disclosed the issues in July 2017, saying that it had learned of the problems a year prior. The plaintiffs sued in 2018, alleging that former CEO Timothy Sloan misled them when he said in November 2016 that he was "not aware of any issues" relating to the sales practices at the bank.
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Wells Fargo has denied any wrongdoing. A spokesperson told Reuters, "While we disagree with the allegations in this case, we are pleased to have resolved this legacy issue."
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The company also denied any wrongdoing when it settled a $386 million class action with auto loan borrowers in 2019.
Reuters contributed to this report.
