On Tuesday, #wells fargo & Company (NYSE: WFC) announced that it had reached a "preliminary #settlement" in a number of lawsuits it faces over millions of fake accounts that were opened in customers' names by mangers and employees pushed to hit impossible sales targets. CNN reports that the settlement still needs to be approved by a judge, and it is unclear how much each customer will receive, because the number of people involved in the case is still being determined. However, the company has stated that the settlement will cover "all persons" who employees opened unauthorized accounts and completed fraudulent product sign-ups on behalf of.
Previously, Wells Fargo paid 130,000 customers about $25 each to resolve the unauthorized access of customer accounts by employees with the bank. In November 2016, attempting to hold customers to fine print in forms signed when opening accounts, Well Fargo moved to "force dozens of those customers to resolve their claims quietly in closed-door arbitration instead of open court." Tuesday's settlement is described as marking "a reversal" of the firm's direction with the suit last year.
Employees fired for both taking part and not taking part
While 5,300 employees were said to have been fired for their part in the Wells Fargo fake accounts scandal, an unknown number may have been fired, or quietly quit, unwilling to take part in seeming fraud. One former employee interviewed by NPR recounted being fired, after taking to calling the bank's ethics hotline, and human resources department, on a almost daily basis. In January 2008, the employee reported that quotas had been raised from eight new product sales each day, to 20.
Once a judge has approved the settlement, Wells Fargo expects to send instructions to affected customers, explaining how to proceed. Former Chief Executive Officer John Stumpf stepped down from his position in October 2016, as a result of how he "handled the fallout of the bank's phony account scandal," as reported by Fortune; he first blamed the 5,300 employees for acting alone. He was reported to earn about $133 million with his departure.
WFC stock keeps pace with general market
Current CEO Tim Sloan told CNN that yesterday's news represents "another step in our journey to make things right with customers." Yahoo Finance reports that Mr. Sloan earned $2.35 million in 2016, in addition to exercising $5.45 million in options. WFC stock has gained in value by close to 15 percent over the past 12 months, and pays quarterly dividends totaling $1.52 annually, currently yielding 2.74 percent. The general market, as measured by the Standard & Poor's 500 Index, returned 14.5 percent over the same period.
Twenty-eight research firms publish prices targets for #WFC stock, which range from $45 to $65, and average $58.48. The average recommendation among firms is 2.8, where 1.0 is a "strong buy," and 5.0 is a "sell." Over the coming five years, the Wall Street analyst consensus is for Wells Fargo to grow its earnings per share at an average annual rate of 7.46 percent. WFC stock traded down, by $0.26 or 0.46 percent, to 55.70 on the news.