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Banking giant Wells Fargo has reportedly agreed to a $300 million settlement in a class action lawsuit related to the company’s alleged involvement in a collision protection insurance fraud scheme. The settlement was announced by Robbins Geller Rudman & Dowd LLP, the law firm representing the plaintiffs in the case.
Attorneys brought the case on behalf of the main plaintiffs, the Construction Laborers Pension Trust for Southern California, and a class that includes similarly affected investors across the nation. The settlement would the need for a trial, which had been planned for later in February. The agreement still needs to be reviewed and approved by the court.
The lawsuit alleged that Wells Fargo had “improperly charged more than 800,000 customers for unneeded collision protection insurance.” According to reporting from the New York Times, an internal Wells Fargo memo obtained by reporters revealed that the fraudulent scheme caused roughly 274,000 of the bank’s borrowers to end up delinquency. Worse, nearly 25,000 of those customers’ vehicles ended up being repossessed.
Wells executives were allegedly aware of the fraudulent activities and failed to make any disclosure to the company’s investors. Meanwhile, the bank’s stock continued to trade at what Robbins Geller described as “artificially inflated prices.” During that time, investors were unaware of the alleged fraudulent conduct.
Referencing those investors, Robbins Geller partner Scott H. Saham noted, “When companies conceal widespread abusive or unfair business practices that harm their customers, investors often get injured as well.”
A Wells Fargo spokesperson issued a statement in response to the settlement of the class action lawsuit, noting that the company continues to reject the plaintiffs’ accusations:
“While we disagree with the allegations in this case, we are pleased to have resolved this legacy issue.”