Shareholder suit may offer best chance to fix Wells Fargo

The bills keep piling up for Wells Fargo as it grapples with a scandal where employees signed up customers for millions of accounts they never asked for. There’s $110 million to settle a class-action lawsuit, on top of $185 million in fines to regulators. The company has made amends in other ways, firing CEO John Stumpf, adding two independent directors to the board and slashing executive bonuses.

The question is whether these moves are enough to suck out the poison that has infected the bank.

Joe Cotchett doesn’t think so. The Burlingame trial lawyer filed a suit last fall in San Francisco Superior Court on behalf of shareholders to force executives and directors to give back bonuses and fees to the company. He also wants directors to personally compensate shareholders for the money the bank used to pay fines to regulators.

“This case is one more example seeking to hold officers and directors of the bank accountable for their conduct and not blame the managers who were simply told what to do,” Cotchett told me.

This month, Cotchett will file documents contesting Wells Fargo’s motion to dismiss the case. He’s not surprised by the bank’s defense, which has been to plead ignorance on behalf of the top brass.

Read on.

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