Wells Fargo has warned its litigation bill could be $200m higher than previously thought as the US bank sheds new light on a series of lawsuits it is facing over the bogus account scandal.
In a quarterly filing on Friday, Wells said “reasonably possible” losses from legal actions against it could exceed its existing provisions by $2bn — up from a $1.8bn figure it disclosed three months ago.
The document shows how lawsuits are piling up against Wells after thousands of its employees, under pressure to hit sales targets, turned to fraud. Workers signed up as many as 2.1m customers for cards and accounts over several years without their authorisation or consent, in some cases faking signatures.
The legal hangover is the latest reminder that the now-notorious episode is still affecting the $277bn bank. Directors including chairman Stephen Sanger narrowly avoided being voted down by shareholders last week at the bank’s annual meeting in Florida.
Here is a summary of the different legal claims against Wells, as disclosed in the filing:
* Investors who allege Wells misstated or made omissions in its disclosures have brought a consolidated securities fraud class action in the bank’s home state of California.
* Shareholders have brought several lawsuits, in Delaware and elsewhere, that claim current and former directors and officers failed to detect and prevent the scandal.
* Workers who argue they lost their jobs for failing to hit targets or protested against sales misconduct have filed claims in California and New York.
* Employees who complain that sales pressure led them to take overtime they were not paid for have brought several actions in California, New Jersey and Pennsylvania.
* Supposed whistleblowers have filed complaints under the Sarbanes-Oxley Act and state law, including with the Department of Labor and in various state courts, “alleging adverse employment action for raising sales practice misconduct issues”.
* Pension plan participants have brought action in Minnesota.
* Wells is facing 11 separate consumer-related class action suits filed in several jurisdictions including its home state of California.
The bank has already reached a settlement over the first of the 11. It has agreed to increase the settlement value by $32m to $142m, covering attorneys’ fees and administration as well as remediation.
Meanwhile, federal, state and local government agencies are conducting various inquiries into the scandal. They include the labour and justice departments, the Securities and Exchange Commission, state attorneys-general and prosecutors’ offices, and congressional committees.
Wells noted in the filing that “the outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible.
“It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable”.
Wells has already apologised for the misconduct. Tim Sloan, the new chief executive, told investors at the annual meeting in Florida that he was “deeply sorry”.
“We are facing these problems head on,” he said. “Wells Fargo is emerging a much stronger company.”
Next week Mr Sloan will join other senior managers at a special investor day in San Francisco at which they are expected to set out in detail how they plan to move on from the crisis.