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Wells Fargo (WFC) Wins Class Action Suit Over Fake Interviews
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The lawsuit accusing Wells Fargo & Company (WFC - Free Report) of defrauding its shareholders by making commitments to interview diverse job candidates in its hiring process, while it actually faked interviews for positions that had already been filled, has been dismissed.
U.S. District Judge, Trina Thompson, stated that shareholders failed to prove the conduct of fake interviews. Moreover, no evidence was found that could prove the chief executive, Charlie Scharf, and senior diversity executives had knowledge about the sham interviews.
The plaintiffs through the class action suit claimed that Wells Fargo had inflated its stock price by issuing public statement discussing its guidelines mentioning workplace diversity. The said policy was adopted in 2020 and required at least 50% of candidates, who were interviewed for jobs paying at least $100,000, to be minorities, women or people from other disadvantaged groups.
WFC has been facing legal hassles and operational challenges. In May 2023, it agreed to pay $1 billion related to a lawsuit accusing the bank of overstating its progress on resolving its 2016 fake account scandal and thereby defrauding shareholders. Though past litigations prove misleading statements by WFC, it cannot be considered as sufficient proof regarding its intent to defraud shareholders.
Apart from various litigation expenses, the company has been slapped with numerous penalties and sanctions, including a cap on the asset position by Federal Reserve. These are likely to increase expenses in the upcoming period, limiting the company’s bottom-line growth.
Wells Fargo’s shares have lost 8.1% over the past six months compared with the industry’s decline of 10.4%.
UBS Group AG (UBS - Free Report) has arrived at a settlement with the U.S. Department of Justice to pay $1.44 billion as penalty to resolve a long-running civil case. The civil action against UBS was filed in 2018, alleging misconduct with regard to underwriting, issuance and sale of residential mortgage-backed securities that were issued in 2006-2007.
UBS said that the entire settlement has been provisioned in prior periods.
Bank of America (BAC - Free Report) has been hit with substantial financial penalties that amount to $250 million. This includes $100 million in customer reimbursements and $150 million in fines due to a trio of unsavory practices involving overdraft fees, withholding credit card rewards and opening unauthorized accounts.
Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) have levied this colossal fine after BAC's actions were deemed illegal and a detriment to customer trust. The bank must refund $100 million to affected customers and pay $90 million to CFPB and $60 million to OCC.
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Wells Fargo (WFC) Wins Class Action Suit Over Fake Interviews
The lawsuit accusing Wells Fargo & Company (WFC - Free Report) of defrauding its shareholders by making commitments to interview diverse job candidates in its hiring process, while it actually faked interviews for positions that had already been filled, has been dismissed.
U.S. District Judge, Trina Thompson, stated that shareholders failed to prove the conduct of fake interviews. Moreover, no evidence was found that could prove the chief executive, Charlie Scharf, and senior diversity executives had knowledge about the sham interviews.
The plaintiffs through the class action suit claimed that Wells Fargo had inflated its stock price by issuing public statement discussing its guidelines mentioning workplace diversity. The said policy was adopted in 2020 and required at least 50% of candidates, who were interviewed for jobs paying at least $100,000, to be minorities, women or people from other disadvantaged groups.
WFC has been facing legal hassles and operational challenges. In May 2023, it agreed to pay $1 billion related to a lawsuit accusing the bank of overstating its progress on resolving its 2016 fake account scandal and thereby defrauding shareholders. Though past litigations prove misleading statements by WFC, it cannot be considered as sufficient proof regarding its intent to defraud shareholders.
Apart from various litigation expenses, the company has been slapped with numerous penalties and sanctions, including a cap on the asset position by Federal Reserve. These are likely to increase expenses in the upcoming period, limiting the company’s bottom-line growth.
Wells Fargo’s shares have lost 8.1% over the past six months compared with the industry’s decline of 10.4%.
Image Source: Zacks Investment Research
WFC presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Financial Misconduct by Other Firms
UBS Group AG (UBS - Free Report) has arrived at a settlement with the U.S. Department of Justice to pay $1.44 billion as penalty to resolve a long-running civil case. The civil action against UBS was filed in 2018, alleging misconduct with regard to underwriting, issuance and sale of residential mortgage-backed securities that were issued in 2006-2007.
UBS said that the entire settlement has been provisioned in prior periods.
Bank of America (BAC - Free Report) has been hit with substantial financial penalties that amount to $250 million. This includes $100 million in customer reimbursements and $150 million in fines due to a trio of unsavory practices involving overdraft fees, withholding credit card rewards and opening unauthorized accounts.
Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) have levied this colossal fine after BAC's actions were deemed illegal and a detriment to customer trust. The bank must refund $100 million to affected customers and pay $90 million to CFPB and $60 million to OCC.