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Wells Fargo Settles Fake-Account Lawsuit for $110 Million

On Tuesday, San Francisco based bank Wells Fargo announced a $110 million settlement for a class-action lawsuit brought by customers. Still requiring court approval, the settlement covers anyone who claims to be touched by Wells Fargo’s employees opening more than 2 million accounts without customer consent.

Wells Fargo paid their first private settlement late last year. In September, the bank was penalized $185 million by federal and California authorities to cover their poor sales practices.

Now, upon approval of by a judge, Wells Fargo will have to repay the fees they charged customers for the fake-accounts. The rest will be split to compensate all impacted customers.

In addition to enduring financial blows, the bank’s business has been hit in a variety of different fashions. Bloomberg reports show that since Wells Fargo disclosed their initial $185 million fine by regulators, JPMorgan (JPM - Free Report) has replaced them as the biggest bank by market value. Also, Wells Fargo reported on Tuesday that a federal regulator has downgraded their rating under a law which monitors and promotes banking activities to minority and low income communities; this will lead to additional restrictions on acquisitions and openings of new branches.

Unfortunately for investors, Wells Fargo’s complications might still be far ahead of them. The bank is subject to criminal investigations, further reviews which may reveal more impacted customers, and lawsuits from previous employees.

Nonetheless, Wells Fargo is working towards a path to rebuild the market’s confidence in them. CEO Tim Sloan stated, “This agreement is another step in our journey to make things right with customers.”

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