On July 29, 2024, a major victory was secured for Wells Fargo shareholders with a significant decision issued by the Honorable Trina L. Thompson of the Northern District of California, in SEB Investment Management AB and West Palm Beach Firefighters’ Pension Fund v. Wells Fargo & Company et al., Case No. 3:22-cv-03811-TLT (N.D. Cal.), in which Judge Thompson denied in its entirety Defendants’ motion to dismiss Plaintiffs’ second amended complaint.

This securities class action arises from Defendants’ material false and misleading statements and omissions regarding Wells Fargo’s diversity hiring initiative, the Diverse Search Requirement. This initiative was purportedly implemented to increase diversity in Wells Fargo’s senior ranks and to enable the bank to regain investor trust following several costly corporate scandals. The Diverse Search Requirement mandated that for virtually all U.S. job openings that paid $100,000 a year or more, at least half of the candidates interviewed had to be diverse. Yet, for years, diverse candidate interviews were shams, conducted despite the diverse candidates not having a legitimate chance at obtaining the job or another candidate already selected for the position. These “fake” interviews boosted Wells Fargo’s touted statistics about the success of the Diverse Search Requirement and allowed the bank to claim that it complied with the Diverse Search Requirement.

In denying Defendants’ motion to dismiss, Judge Thompson sustained every false statement alleged in the second amended complaint. Further, the Court held that Plaintiffs sufficiently alleged, through several avenues, that all Defendants knowingly made false statements that misled investors.

The case will now proceed to the discovery phase.