Wells Fargo, a juicy target, sparks lead counsel fight among shareholder firms

Wells Fargo, a juicy target, sparks lead counsel fight among shareholder firms

A historic regulatory settlement of $3.7 billion has set the stage for shareholder litigation targeting Wells Fargo. In December of the previous year, Wells Fargo consented to pay $1.7 billion as a civil penalty and $2 billion for customer restitution to the U.S. Consumer Financial Protection Bureau (CFPB). This monumental settlement

the largest ever for the CFPB, followed a $250 million fine imposed on the bank by the U.S. Office of the Comptroller of the Currency (OCC) in 2021. The OCC penalized Wells Fargo for a perceived sluggishness in reimbursing drivers and homeowners for insurance-related overcharges

as mandated by a 2018 consent agreement.

Shareholder lawyers Wells Fargo

Shareholder lawyers argue that these recent regulatory issues at Wells Fargo are not accidental but instead indicate persistent oversight failures by the bank’s board of directors. However, prominent plaintiffs’ firms

such as Robbins Geller Rudman & Dowd, Kessler Topaz Meltzer & Check, and Scott + Scott

are pursuing different strategies in derivative breach-of-duty claims against Wells Fargo’s board for their alleged mismanagement of regulatory compliance.

These firms are currently vying for control of these potential claims and the associated fees that would come with any settlement with the bank. In the past two weeks, all three firms have informed U.S. District Judge Jon Tigar in Oakland that they should lead the derivative litigation against Wells Fargo’s board. Most recently

on Wednesday, Scott + Scott requested to intervene in two cases before Judge Tigar, seeking a temporary pause until they can file a complaint that includes internal records obtained from Wells Fargo.

Robbins Geller Wells Fargo

Additionally, Robbins Geller is actively engaged in a similar derivative lawsuit against Wells Fargo’s board members in the San Francisco Superior Court. Although this case was initiated in 2021

after Wells Fargo’s $250 million fine, it predates the bank’s 2022 settlement with the CFPB. A significant ruling in the state-court case could impact the litigation before Judge Tigar.

It’s important to note that recent regulatory penalties against Wells Fargo do not guarantee success in subsequent derivative suits against the bank’s board members. Wells Fargo’s legal representatives at Sullivan & Cromwell declined to comment on the derivative suits. Notably, in 2022

Wells Fargo successfully had a previous shareholder derivative suit alleging board failures in regulatory compliance dismissed.

Furthermore, the bank has prevailed in several recent securities class actions, including cases related to hiring practices and commercial loans. However, in May, Wells Fargo agreed to pay $1 billion to settle a securities class action that accused it of deceiving investors regarding

its recovery from customer abuse scandals.

Kessler Topaz

Kessler Topaz initiated the first shareholder derivative suit against Wells Fargo directors following the bank’s historic settlement with the CFPB, alleging comprehensive oversight failures over multiple years.

Crucially Kessler supported its claims with Wells Fargo’s internal records obtained under Delaware’s corporate code Section 220. Kessler submitted its Section 220 demand in 2021, after the Comptroller of the Currency’s fine but before the CFPB settlement.

In May, Kessler filed its derivative suit in federal court, followed by a similar suit from Robbins Geller in July. Judge Tigar designated these cases as related in an August 11 order.

Robbins Geller promptly sought to lead a consolidated derivative case, asserting that its client

a union pension fund, was the most qualified to withstand potential jurisdictional challenges and that their lawyers were uniquely equipped for the litigation.

Kessler Topaz responded on August 23

arguing that Robbins Geller had not obtained Wells Fargo’s books and records before filing its suit and relied solely on public records for its complaint.

In contrast Kessler claimed that its complaint, featuring “detailed” and “substantial” references to Wells Fargo’s internal documents

was more likely to withstand a dismissal motion from the bank.

Scott + Scott entered the fray

Scott + Scott entered the fray on August 30, seeking to intervene. They argued that Kessler’s internal records from Wells Fargo were outdated as they had served their Section 220 demand before the CFPB agreement

while Scott + Scott’s demand came after the $3.7 billion CFPB settlement. They urged Judge Tigar not to jeopardize their strong claims by allowing a weaker complaint to prevail.

Leave a Comment

Your email address will not be published. Required fields are marked *