NEW YORK, May 4, 2018 /PRNewswire/ -- Union Investment, one of Europe's largest asset management firms and the Court-appointed Lead Plaintiff in a federal securities class-action lawsuit against Wells Fargo & Co. ("Wells Fargo"), proudly announces that it has achieved a settlement of $480 million in cash to resolve its claims against the Defendants. The Settlement, which remains subject to court approval and ongoing diligence discovery, provides a significant cash recovery in comparison to the likely recoverable damages had the case been pursued through a lengthy jury trial and appeals, represents the fourth largest securities settlement ever achieved in the Ninth Circuit, and the 31st largest securities settlement ever in the United States.
"As long term investors in Wells Fargo and thousands of other portfolio companies across the world, we take action to rectify misconduct that raises significant public policy concerns and severely harms public stock market investors," said Union Investment Executive Board Member Dr. Andreas Zubrod.
Union's Complaint, pending in the United States District Court for the Northern District of California, alleged that Wells Fargo and certain current and former officers and directors of Wells Fargo made a series of materially false statements and omissions in connection with Wells Fargo's secret creation of fake or unauthorized client accounts in order to hit performance-based compensation goals. Those alleged false statements artificially inflated the price of the Company's common stock during the Class Period from February 26, 2014 through September 20, 2016.
After years of presenting a business driven by legitimate growth prospects, U.S. regulators revealed in September 2016 that Wells Fargo employees were secretly opening millions of potentially unauthorized accounts for existing Wells Fargo customers. The complaint alleged that these accounts were opened in order to hit performance targets and inflate the "cross-sell" metrics that investors used to measure Wells Fargo's financial health and anticipated growth. When the market learned the truth about Wells Fargo's violation of its customers' trust and failure to disclose reliable information to its investors, the price of Wells Fargo's stock dropped, causing substantial investor losses.
As Dr. Zubrod added: "Fabricating customer accounts and then concealing how those fake accounts impacted cross-sell metrics is simply unacceptable and undermines the trust that Union Investment and other investors put in Wells Fargo's management. We are pleased that with this settlement, Wells Fargo is taking an important step towards reckoning with its prior mistakes and focusing on creating value for its investors while acting with integrity."
The Settlement to be paid is in addition to the $185 million penalty collectively imposed on Wells Fargo by the CFPB, the U.S. Office of the Comptroller of the Currency, and the City and County of Los Angeles for Wells Fargo's underlying misconduct, and demonstrates the continuing need for private litigation to supplement government enforcement actions. As noted, the Settlement is subject to further documentation, ongoing due diligence, review, and Court approval.
Union Investment is headquartered in Frankfurt, Germany, and manages over 325 billion EUR (ca. 400 billion USD). Union Investment was represented by Lead Counsel Bernstein Litowitz Berger & Grossmann LLP.
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SOURCE Bernstein Litowitz Berger & Grossmann LLP