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Judge says he may reject parts of Wells Fargo accounts settlement
May 17, 2017 / 1:31 PM / 6 months ago

Judge says he may reject parts of Wells Fargo accounts settlement

May 17 (Reuters) - A federal judge signaled that he may reject parts of Wells Fargo & Co’s proposed $142 million settlement with customers for whom it opened millions of unauthorized accounts.

In an order made public on Tuesday evening, U.S. District Judge Vince Chhabria in San Francisco said he was “strongly inclined” to reject the settlement’s provision for an injunction barring customers from pursuing other claims against the bank.

He also said he was “tentatively” inclined to carve out claims related to customer overdrafts, and said “there may be an argument” that the settlement gave too much protection to executives and directors.

The judge also ordered lawyers for the customers and Wells Fargo to address several issues, including whether the bank should owe punitive damages, and how the estimated number of bogus accounts rose to 3.5 million, a number suggested by the customers’ lawyers last Thursday, from 2.1 million.

Wells Fargo spokesman Jim Seitz said on Wednesday that the San Francisco-based bank is preparing a response.

“We believe this agreement is an important step in our journey to make things right for our customers and rebuild trust,” he added in an email.

Lawyers for the plaintiffs did not immediately respond to requests for comment.

Chhabria is scheduled on Thursday to consider whether to preliminarily approve the accord.

He has received several objections contending that the settlement is too broad and that the payout is too low.

The settlement came in the wake of a national scandal in which Wells Fargo employees were found to have opened bogus accounts in part because of pressure to meet sales goals.

Wells Fargo agreed last September to pay $185 million in penalties to settle related charges by various authorities. Chief Executive John Stumpf and retail banking chief Carrie Tolstedt lost their jobs soon afterward. (Reporting by Jonathan Stempel in New York; Editing by Bill Rigby)

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