According to documents filed in a U.S. court on Tuesday, Wells Fargo & Co agreed to pay $300 million to settle a shareholder lawsuit alleging the bank concealed the fact that it had pushed unnecessary insurance on auto loan customers.
The Construction Laborers Pension Trust for Southern California, which led the investor class action, announced in federal court in San Francisco that Wells Fargo and its former CEO, Timothy Sloan, had agreed to settle.
The bank denied any wrongdoing.
The agreement must be approved by U.S. Judge James Donato, who is overseeing the case. The trial date in the case had been set for February 27.
“While we disagree with the allegations in this case, we are pleased to have resolved this legacy issue,” said a spokesperson for Wells Fargo in a statement.
Sloan’s attorney did not immediately respond to a request for comment.
The settlement, according to Scott Saham of Robbins Geller Rudman & Dowd, the law firm representing Wells Fargo shareholders, “is part of remediating the entire spectrum of harm that you get in a complex fraud case.”
The lawsuit stems from one of the bank’s previous scandals involving sales practices, which resulted in government investigations and fines.
In July 2017, Wells Fargo revealed that hundreds of thousands of customers had been overcharged for “collateral protection insurance,” which protects auto lenders when borrowers are uninsured. The bank stated that it became aware of the issues a year ago.
Shareholders sued Wells Fargo in 2018, alleging that Sloan misled them when he said in November 2016 that he was “not aware of any issues” regarding the bank’s sales practices and culture.
The bank also allegedly hid auto insurance issues from the United States Senate Banking Committee in November 2016.
The lawsuit sought restitution for investors who purchased Wells Fargo stock between November 3, 2016, and August 3, 2017, the day before the bank disclosed additional information.
Wells Fargo paid $386 million to settle a class action lawsuit filed by auto borrowers in 2019.
Wells Fargo agreed to pay $1 billion to US regulators in 2018 to settle investigations into its auto insurance and mortgage practices.