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Financial company Wells Fargo settled a class-action lawsuit, agreeing to pay shareholders $1 billion. The lawsuit alleged that the bank misled its shareholders about its efforts to resolve the 2016 fake account scandal.
The $1 billion cash settlement was tentatively approved by U.S. District Judge Gregory Woods in federal court in Manhattan. Another hearing will take place on September 8 for final approval.
The bank said in a statement that it disagrees with the allegations made in the lawsuit. On the other hand, although they do not agree with the accusations, they are “happy to resolve this issue.”
Back in December, Wells Fargo also struck a $3.7 billion deal with the Consumer Financial Protection Bureau to resolve allegations that the bank’s actions harmed more than 16 million people with deposit accounts, auto loans and mortgages.
Back then, Ripple CEO Brad Garlinghouse compared the Wells Fargo problem to the collapse of FTX. According to Garlinghouse, the world was outraged by FTX, which he considered “appropriate”. However, the CEO expressed concern about the lack of attention to the Wells Fargo case given that they also “mishandled billions of customer funds”.
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Community members recently expressed similar concerns on a recent Reddit forum. On May 17, one Reddit user stated that the US Securities and Exchange Commission should also look into banks. They wrote:
“People put their hard-earned money in the bank, thinking it’s 100% safe, taking out loans for their house and car, only to be swindled out.”
A member of the community also claimed that banks broke the rules several times each year, but “the SEC remained silent” on the matter. Another Redditor echoed this sentiment and said that “it’s clear that banks are getting the pass for the most part.”