Shareholders file suit against Wells Fargo News
Shareholders file suit against Wells Fargo

Wells Fargo [corporate website] shareholders on Monday filed [press release] suit against the banking conglomerate over their allegedly deceptive sales practices. The suit [complaint, PDF], filed in the US District Court for the Northern District of California [official website], alleges that the Wells Fargo organization violated the Securities Exchange Act of 1934 by engaging in misleading and incorrect information regarding the financial status of the bank. The shareholders argue that this misinformation caused the stock of the banking giant to trade at an inflated rate causing undue financial harm to them. The shareholders further argue Wells Fargo recouped millions in profit after misleading consumers and the public by creating false cross-selling techniques to make the company more profitable.

While bragging about the Company’s cross-selling prowess, defendants knew but deliberately failed to disclose known material true facts, including that the Company’s cross-selling strategy was not focused on or designed to benefit customers, but was instead designed to fulfill sales quotas or otherwise advances the interest of Wells Fargo or its employees and ind increase sources of profitability, while simultaneously burdening customers with financial products they did not authorize, need and/r even know about. In fact, defendants knew the Company;s cross-sell strategy that they oversaw was fueled by a sales culture designed by Wells Fargo management that incentivized and rewarded employees for pushing products on customers in order to show growth without regard for the impact on customers.

Two former employees of Wells Fargo filed a class action lawsuit on Thursday on behalf of employees whom they claim were penalized over the last 10 years for following the rules and not meeting sales quotas. A class action lawsuit was filed [JURIST report] earlier this month in a US District Court in Utah against Wells Fargo by customers alleging invasion of privacy, fraud, negligence and breach of contract. The Consumer Financial Protection Bureau (CFPB), a federal agency entrusted with consumer protection in the financial sector, announced [JURIST report] in September a $100 million fine against banking giant Wells Fargo [corporate website] for widespread illegal sales practices.

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