Judge Preliminarily Approves a $240 Million Wells Fargo Derivative Settlement

On May 14, 2019, U.S. District Judge Jon S. Tigar of the Northern District of California preliminarily approved a proposed $240 million cash settlement that would resolve shareholder derivative litigation over Wells Fargo’s illicit account creation scandal.  The settlement resolves claims against 20 current and former directors and officers, including former CEO John Stumpf and former CEO Timothy Sloan (“Individual Defendants”).

Beginning in September 2016, several derivative actions were filed and then consolidated on December 12, 2016.  The Court appointed Lieff Cabraser Heimann & Bernstein and Saxena White as co-lead counsel for Plaintiffs.  Plaintiffs then filed a consolidated amended complaint on February 24, 2017 alleging that, “Defendants knew or consciously disregarded that Wells Fargo employees were illicitly creating millions of deposit and credit card accounts for their customers, without these customers’ knowledge or consent.”  These unauthorized accounts were created by employees as a result of a high-pressure sales culture at Wells Fargo. 

On March 17, 2017, the Court largely denied Wells Fargo and the Individual Defendants’ motion to dismiss for failure to adequately plead demand futility.  Each of the Individual Defendants moved again to dismiss the complaint for failure to state a claim.  On October 4, 2017, the Court denied in large part the Individual Defendants’ motion to dismiss for failure to state a claim.

The $240 million cash settlement will be paid to Wells Fargo by the bank’s directors and officers liability insurers.  According to the Plaintiffs’ counsel, the $240 million cash portion of the settlement is “the largest insurer-funded cash component of any shareholder derivative settlement in history.”  In addition, Plaintiffs put an $80 million valuation on the corporate governance reforms and other remedial measures that are being implemented as a result of this litigation.  Plaintiffs’ counsel is requesting $68 million in attorney’s fees and costs, which represents 21.25% of the $320 million value of the settlement.  The fairness hearing is scheduled for August 1, 2019.

Below is a link to Judge Tigar's Order Granting Preliminary Approval of Derivative Action Settlement.

About Faruqi & Faruqi, LLP

Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour, personal injury and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Delaware, Georgia and Pennsylvania.

Since its founding in 1995, Faruqi & Faruqi, LLP has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, direct purchasers, consumers and employees.

To schedule a free consultation with our attorneys and to learn more about your legal rights, call our offices today at (877) 247-4292 or (212) 983-9330.

About Alex B. Heller

Alex B. Heller's practice is focused on securities litigation. Alex is an associate in the firm's Pennsylvania office.

Tags: faruqi & faruqi, investigation, news, litigation, settlement notice, case, faruqi law, faruqi blog, faruqilaw, Alex B. Heller, derivative litigation Alex B. Heller Alex B. Heller
Partner at Faruqi & Faruqi, LLP

Pennsylvania office
Tel: (215) 277-5770
Fax: (215) 277-5771
E-mail: aheller@faruqilaw.com

Finding us

Our Offices

Our offices are nationwide. If you have any questions about a case or our firm, please contact us.

New York

685 Third Avenue 26th Floor
New York, New York 10017
(212) 983-9330
(877) 247-4292
(212) 983-9331


10866 Wilshire Boulevard Suite 1470
Los Angeles, California 90024
(424) 256-2884
(424) 256-2885


3828 Kennett Pike Suite 201
Wilmington, Delaware 19807
(302) 482-3182
(302) 482-3612


3975 Roswell Rd Suite A
Atlanta, Georgia 30342
(404) 847-0617
(404) 506-9534


1617 JFK Boulevard, Suite 1550
Philadelphia, Pennsylvania 19103
(215) 277-5770
(215) 277-5771

Faruqi & Faruqi office in New York, New York

Faruqi & Faruqi office in Los Angeles, California

Faruqi & Faruqi office in Wilmington, Delaware

Faruqi & Faruqi office in Atlanta, Georgia

Faruqi & Faruqi office in Philadelphia, Pennsylvania