Home > World Business
Wells Fargo Sued By Shareholders over Cross-Selling Scandal
John Stumpf. | PHOTO: Pete Marovich/Bloomberg
September 27th, 2016 | 10:18 AM | 1799 views
WORLD
Wells Fargo & Co. was accused of misleading shareholders about its opening of unauthorized accounts and blamed for a 9 percent drop in the bank’s stock price when details became public this month.
The San Francisco-based bank deceived investors for years about its fraudulent practice of cross-selling financial products and misrepresented the success of its model, according to the complaint filed Monday in San Francisco federal court. The investor who sued seeks class-action status on behalf of all shareholders from Feb. 26, 2014, to Sept. 15, 2016.
Chief Executive Officer John Stumpf allegedly continued to dupe shareholders when he announced in July that Carrie Tolstedt, the head of the company’s community banking unit, was retiring.
“Stumpf concealed the fact that the company had made substantial findings of the unlawful activity and actual fraud in its Community Banking segment as part of its investigation, which not only exposed millions of customers to unlawful fees and potential identity theft, but put the company in the crosshairs of federal investigations,” shareholder Gary Hefler alleged in the complaint.
Authorities including the U.S. Consumer Financial Protection Bureau fined Wells Fargo $185 million on Sept. 8 for potentially opening about 2 million deposit and credit-card accounts without authorization. Last week, Senate Banking Committee members including Democrat Elizabeth Warren urged Stumpf to return compensation and resign.
Wells Fargo spokesman Oscar Suris declined to comment on the complaint.
The case is Hefler v. Wells Fargo & Co., 3:16-cv-05479, U.S. District Court, Northern District of California (San Francisco).
Source:
courtesy of BLOOMBERG
by Kartikay Mehrotra
If you have any stories or news that you would like to share with the global online community, please feel free to share it with us by contacting us directly at [email protected]