Officials from Wells Fargo and Company have entered a $240 million settlement with U.S. shareholders regarding the claims of the creation of fake accounts by bank employees. The company had filed the settlement in the federal court in San Francisco last Thursday. The shareholders were led by pension plans from both Alabama and Colorado.
Their goal was to resolve the claims about Wells Fargo officials, including executives and directors, who have breached in their trustee duties by deliberately ignoring and failing to stop the creation of numerous unauthorized accounts which they have denied.
The insurers for Chief Executive Tim Sloan, his predecessor John Stumpf, and 18 other former and current executives and directors will be paying the bank $240 million.
The bank has already previously entered a different settlement with the government amounting to $190 million in September 2016. It was over the claims that the San Francisco-based bank has, without permission, created customer accounts.
Stumpf left the company after the scandal which was then followed by the surfacing of other sales practices pertaining to the bank charging unnecessary auto insurance and excessive mortgage payments. There was also the $480 million settlement in May, for a securities fraud lawsuit over the unauthorized accounts that was filed by shareholders.
It is now the largest insurer-funded settlement for derivative lawsuits by US shareholders. It beat the $193 million accord in 2013 for New Corp’s conduct on the phone hacking incident in Britain.
The company stated that they might end up spending $2.7 billion for resolving their legal matters. It exceeds their previous estimate of $2.2 billion, which they had set aside last December 31.
During the start of this year, Wells Fargo reported that they had worked in refining their risk oversight and accountability by eradicating sales goals and taking back compensations from their previous executives. Massachusetts Senator Elizabeth Warren’s calls for the Chief Executive’s removal putting Sloan under a lot of pressure.