San Francisco, CA, February 28, 2019
Court-appointed Co-Lead Plaintiffs Fire & Police Pension Association of Colorado and The City of Birmingham Retirement and Relief System (“Co-Lead Plaintiffs”) announce that a $320 million settlement (the “Settlement”) has been reached in the consolidated federal shareholder derivative action captioned In re Wells Fargo & Company Shareholder Derivative Litigation, No. 3:16-cv-5541, pending in the United States District Court for the Northern District of California (the “Derivative Action”). The Settlement includes the largest insurer-funded cash component of any shareholder derivative settlement in history. Co-Lead Plaintiffs are grateful for the efforts of Co-Lead Counsel, Lieff Cabraser Heimann & Bernstein, LLP and Saxena White P.A., in achieving the Settlement.
The Derivative Action alleges, among other things, that certain current and former officers and directors of Wells Fargo knew or consciously disregarded that Wells Fargo’s employees were illicitly creating millions of customer accounts without those customers’ knowledge or consent, thereby breaching their fiduciary duties to Wells Fargo in connection with these and other alleged improprieties.
Today, Co-Lead Plaintiffs filed a motion for preliminary approval of the Settlement as well as various supporting documents, including the Settlement agreement. The benefits to Wells Fargo of the proposed Settlement include (i) monetary consideration of $240 million paid to Wells Fargo from its insurers, which is the largest insurer-funded cash recovery of any settlement in a shareholder derivative action; (ii) agreement and acknowledgement that facts alleged in the Derivative Action were a significant factor in causing certain corporate governance changes undertaken by Wells Fargo during the pendency of the Derivative Action, which include improvement to Wells Fargo’s internal controls, internal reporting, and expanded and enhanced oversight of risk management by the Board of Directors (the “Corporate Governance Reforms”); and (iii) agreement and acknowledgement that facts alleged in the Derivative Action were a significant factor in causing certain remedial steps with respect to compensation reductions and forfeitures undertaken by Wells Fargo during the pendency of the Derivative Action (the “Clawbacks”). As part of the Settlement, the parties agreed that the Corporate Governance Reforms and the Clawbacks have a value to Wells Fargo of $80 million, for a total Settlement value to Wells Fargo of $320 million.
The Settlement is subject to Court approval, and a preliminary approval hearing is scheduled before the Honorable Judge Jon S. Tigar for April 4, 2019 at 2:00 p.m. PST in San Francisco, California. For more information, please contact Kevin Lindahl, General Counsel/Deputy Executive Director at Fire & Police Pension Association of Colorado, through his counsel Richard M. Heimann at firstname.lastname@example.org, (415) 956-1000 for Lieff Cabraser Heimann & Bernstein, LLP, or James Love, Assistant City Attorney of The City of Birmingham Retirement and Relief System, through his counsel Joseph E. White, III at email@example.com, (561) 394-3399 for Saxena White P.A.