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Wells Fargo (WFC) Gets Preliminary Nod for $142M Settlement
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Recently, Wells Fargo & Company (WFC - Free Report) received preliminary approval from the U.S. District Court for the Northern District of California for the settlement of a class-action lawsuit for $142 million. The class-action suit is related to the bank’s practices of opening more than 2 million credit and deposit accounts for its customers without their permission since 2009.
Additionally, this settlement agreement carries a provision of providing sufficient funds for total compensation to the affected customers. If after reimbursing customers and compensating them, along with payment of attorneys’ fees and expenses, the distribution amount falls below $25 million for all class members, additional funds will be contributed by the bank for the settlement.
Wells Fargo expects this payment to settle claims in 10 other pending suits. Over the next three months, potential class members will be issued notices with the information of making claims and will be allowed to submit claims who are deemed to be eligible for the settlement. However, the aforementioned settlement awaits final court approval, which is needed prior to making payments to class members. Notably, the settlement will cover customers having opened illegal accounts, without their consent, by the bank between May 1, 2002 and Apr 20, 2017.
Wells Fargo is also toward the completion of its multiple remediation options offered to the affected customers. These include $3.26 million paid as remediation amounts under the specific judgment with the Los Angeles City Attorney and under the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency consent orders of the May 2011 to mid-2015 period. Further, $1.8 million was paid additionally to customers from Sep 8, 2016 to May 31, 2017, through remediation process.
“We are pleased that the court found the settlement to be fair, reasonable and adequate. This preliminary approval is a major milestone in our efforts to make things right for our customers,” said Tim Sloan, Wells Fargo’s President and Chief Executive Officer. “It further ensures each customer impacted by an improper retail sales practice has every opportunity for remediation. This is in addition to our direct efforts to review accounts and provide remediation. These efforts are fundamental to restoring trust with all our stakeholders and building a better Wells Fargo for the future,” he further added.
Conclusion
Earlier in Sep 2016, Wells Fargo had agreed to pay $185 million in fines and penalties to federal regulators and the Los Angeles city attorney’s office pertaining to similar charges. Following this, it has fired nearly 5,300 employees. Further, the bank put an end to its unreasonable sales target practices, which prompted the employees to sell more in order to earn additional fees. Besides this, Wells Fargo’s then Chairman and CEO – John Stumpf – quit his job in October.
Shares of Wells Fargo declined 1.8% over the last two years, significantly underperforming 22.8% growth recorded by the Zacks categorized Major Regional Banks industry. The primary reason for this underperformance was the substantial plunge in shares following the September lawsuit settlement.
While the current crisis at Wells Fargo will take some time to alleviate, the company’s solid capital position, growing loans and deposits, and improving credit quality position it well for growth. Moreover, the latest move is likely to help this San Francisco-based bank regain its customers’ trust.
Currently, Wells Fargo carries a Zacks Rank #3 (Hold).
Comerica Incorporated (CMA - Free Report) has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock soared nearly 79.5%, over the past one year. It currently has a Zacks Rank #2.
BancFirst Corporation (BANF - Free Report) has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 63.5%, over the last one year. It holds a Zacks Rank #2, at present.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Wells Fargo (WFC) Gets Preliminary Nod for $142M Settlement
Recently, Wells Fargo & Company (WFC - Free Report) received preliminary approval from the U.S. District Court for the Northern District of California for the settlement of a class-action lawsuit for $142 million. The class-action suit is related to the bank’s practices of opening more than 2 million credit and deposit accounts for its customers without their permission since 2009.
Additionally, this settlement agreement carries a provision of providing sufficient funds for total compensation to the affected customers. If after reimbursing customers and compensating them, along with payment of attorneys’ fees and expenses, the distribution amount falls below $25 million for all class members, additional funds will be contributed by the bank for the settlement.
Wells Fargo expects this payment to settle claims in 10 other pending suits. Over the next three months, potential class members will be issued notices with the information of making claims and will be allowed to submit claims who are deemed to be eligible for the settlement. However, the aforementioned settlement awaits final court approval, which is needed prior to making payments to class members. Notably, the settlement will cover customers having opened illegal accounts, without their consent, by the bank between May 1, 2002 and Apr 20, 2017.
Wells Fargo is also toward the completion of its multiple remediation options offered to the affected customers. These include $3.26 million paid as remediation amounts under the specific judgment with the Los Angeles City Attorney and under the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency consent orders of the May 2011 to mid-2015 period. Further, $1.8 million was paid additionally to customers from Sep 8, 2016 to May 31, 2017, through remediation process.
“We are pleased that the court found the settlement to be fair, reasonable and adequate. This preliminary approval is a major milestone in our efforts to make things right for our customers,” said Tim Sloan, Wells Fargo’s President and Chief Executive Officer. “It further ensures each customer impacted by an improper retail sales practice has every opportunity for remediation. This is in addition to our direct efforts to review accounts and provide remediation. These efforts are fundamental to restoring trust with all our stakeholders and building a better Wells Fargo for the future,” he further added.
Conclusion
Earlier in Sep 2016, Wells Fargo had agreed to pay $185 million in fines and penalties to federal regulators and the Los Angeles city attorney’s office pertaining to similar charges. Following this, it has fired nearly 5,300 employees. Further, the bank put an end to its unreasonable sales target practices, which prompted the employees to sell more in order to earn additional fees. Besides this, Wells Fargo’s then Chairman and CEO – John Stumpf – quit his job in October.
Shares of Wells Fargo declined 1.8% over the last two years, significantly underperforming 22.8% growth recorded by the Zacks categorized Major Regional Banks industry. The primary reason for this underperformance was the substantial plunge in shares following the September lawsuit settlement.
While the current crisis at Wells Fargo will take some time to alleviate, the company’s solid capital position, growing loans and deposits, and improving credit quality position it well for growth. Moreover, the latest move is likely to help this San Francisco-based bank regain its customers’ trust.
Currently, Wells Fargo carries a Zacks Rank #3 (Hold).
Stocks to Consider
BOK Financial Corporation (BOKF - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the last one year, the company’s share price has been up more than 37%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Comerica Incorporated (CMA - Free Report) has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock soared nearly 79.5%, over the past one year. It currently has a Zacks Rank #2.
BancFirst Corporation (BANF - Free Report) has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 63.5%, over the last one year. It holds a Zacks Rank #2, at present.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>