A federal judge ruled on Friday that Wells Fargo and Co, the fourth-largest U.S. bank, deceived or defrauded investors about its business loans. U.S. District Judge William Alsup in San Francisco said the investors failed to adequately allege that Wells Fargo extravagantly expanded the nature of its loans, minimized bad luck savings or misrepresented its loan repeats. The proposed class covers investors in the three years ending October 13, 2020, a period when the price of Wells Fargo shares fell 54%.
But the judge found that Wells Fargo had underwriting standards that “have been found to be broadly accurate or conservative, and not inflationary,” and have not misled shareholders about the amount of loans relative to the companies’ value. borrowers.
Shareholders claimed they lost billions of dollars in Wells Fargo stock as the San Francisco-based bank gradually revealed in 2020 the “previously unknown level of risk” in its commercial loans.
Because he found no false or misleading statements, Alsup did not say whether Wells Fargo intended to defraud anyone.
Attorneys for the shareholders did not immediately respond to requests for comment. Wells Fargo and its attorneys did not immediately respond to similar requests.
He said the shareholders, led by the Hawaii State Employees Retirement System, could file an amended lawsuit to address the shortcomings in their case.
Since 2018, Wells Fargo has operated under consent orders from the Federal Reserve and two other U.S. financial regulators to improve governance and oversight. The Fed also capped the bank’s assets at $1.95 trillion.
The bank has faced widespread criticism over its practices since 2016, including for opening accounts without customer permission and charging borrowers for car insurance they didn’t need.
Summary of news:
- Wells Fargo wins shareholder lawsuit dismissal over business loans
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