Boston, MA 06/02/2014 (wallstreetpr) – Wells Fargo & Co (NYSE:WFC) will pay $62.5 million in settlement related to claims of foul play as raised by some of its investors. The case has been dragging on since 2010. In addition to agreeing to the settlement, the bank may also end the controversial securities lending program on which several lawsuits have been based.
The $267 billion bank was taken to task in 2010 by a group of institutional investors over claims that it misrepresented a risky investment as safe thereby leading to significant losses to the investors that include a pension fund.
The investors claimed that Wells Fargo improperly characterized a risky securities lending program to make it look safe yet it carried high risks. As a result, 100 investors that included City of Farmington Hills Employees Retirement System filed a lawsuit against the bank. After nearly four years of push and pull, the investors asked U.S. District Judge sitting in St. Paul, Minnesota to approve the settlement deal that would see the aggrieved investors receive $62.5 million in total.
Nothing wrong in WFC sight
Although Wells Fargo & Co (NYSE:WFC) agreed to the settlement, the bank maintains its innocence. The bank got away with a similar case last year when a federal jury ruled in its favor. The case also touched on claims that the bank misled a group of investors over its securities lending program.
There are other pending lawsuits in Minnesota against the bank touching on the bank’s controversial lending program.
A good move
According to Wells Fargo & Co (NYSE:WFC) reaching a settlement on the lawsuit is in the best interest of the company and the clients that it serves through the securities lending program. However, according to court documents, the bank considers discontinuing its securities lending program in 2015.
Wells Fargo & Co (NYSE:WFC) is a mortgage major financial services company. The company emerged as the most profitable bank in 2013, overtaking JPMorgan Chase & Co. (NYSE:JPM). The bank’s success in the year despite troubles in the housing market was linked to its marketing acumen and the ability to suppress costs and expenses throughout its operations.
