NEW YORK (AP) — A federal court has ruled that Wells Fargo is liable for a negligence penalty in a tax case that involved foreign tax credits, but the bank prevailed in another part of the case that could mute any payment.
The case involves Structured Trust Advantaged Repackaged Securities, or STARS.
Wells Fargo said the structure exempted it from tax, which the IRS disputed. A jury ruled last year that Wells Fargo’s STARS were two products, a loan and trust. The trust was ruled to be simply for tax purposes, while the loan was not.
A court found Wells liable for a 20 percent penalty Wednesday tied to tax credits, but also that it could deduct interest expenses from the loan.
A recent Supreme Court decision that will allow mortgage discrimination cases against Wells Fargo and other banks to proceed is more than just another bad headline for the San Francisco financial giant.
As those cases progress, they represent yet another way that the bank’s practice of opening unauthorized accounts for customers could come back to haunt it.
Attorneys for the cities of Philadelphia and Oakland are arguing that the unauthorized accounts scandal — and the bank’s own admissions as to what caused it — bolsters their claims that Wells Fargo improperly steered black and Latino home buyers into pricier mortgages than white buyers.
SAN FRANCISCO (CN) – Wells Fargo must guarantee full compensation and credit history repairs for an estimated 2.73 million victims of its sham accounts scandal before a judge will approve a proposed $142 million settlement.
U.S. District Judge Vince Chhabria laid out his conditions for approving the deal in a ruling Wednesday night, less than one week after several lawyers urged him to reject the settlement during a May 20 hearing.
The class action settlement in Jabbari v. Wells Fargo would release the bank from liability over its employees opening an estimated 3.5 million unauthorized accounts and lines of credit from 2002 to 2017 to meet aggressive sales goals.