Wells Fargo & Co. has agreed to a $300 million settlement in order to settle a lawsuit from shareholders, accusing the bank of having pushed unnecessary auto insurance on loan customers, according to recently filed US court documents.
The class action suit was launched by the Construction Laborers Pension Trust for Southern California.
The auto insurance suit led to a class action brought on behalf of investors. The Construction Laborers Pension Trust for Southern California stated in federal court in San Francisco that the bank and Timothy Sloan, its former CEO, had agreed to the settlement. Though Wells Fargo has agreed to the settlement, it has not admitted any wrongdoing.
The settlement will still require the approval of US Judge James Donato, who is overseeing this case, in order to become official. The case trial had been slated to begin on February 27.
“While we disagree with the allegations in this case, we are pleased to have resolved this legacy issue,” read a statement released by a spokesperson for the bank.
The lawsuit had to do with a past auto insurance scandal over the bank’s sales practices.
The settlement “is part of remediating the entire spectrum of harm that you get in a complex fraud case,” explained Scott Saham of Robbins Geller Rudman & Dowd, the firm representing the shareholders.
The suit has to do with one of the scandals that previously plagued the bank regarding its sales practices which led to investigations from the government followed by fines.
In July 2017, the bank disclosed that hundreds of thousands of its customers were paying unnecessarily for “collateral protection insurance,” which was meant to provide coverage for car loan customers who do not have auto insurance coverage. According to the bank, it had already learned of concerns regarding this issue in 2016.
The shareholders sued Wells Fargo in 2018, accusing the bank of having misled them in November 2016, when Sloan claimed that he was “not aware of any issues” when he was asked about the sales practices and culture in the company.