Federal Court Approves $110 Million Wells Fargo Shareholder Derivative Settlement

A federal judge has granted final approval of a $110 million shareholder derivative settlement resolving claims that Wells Fargo & Co.’s directors and senior executives failed in their fiduciary duty to provide adequate oversight of the bank’s mortgage lending practices. As a result, substantial resources will soon be made available to provide mortgage assistance for low income and moderate income borrowers in more than 50 metropolitan communities throughout the country.

Motley Rice LLC, Cotchett Pitre & McCarthy LLP, and Bleichmar Fonti & Auld LLP served as co-lead counsel for plaintiffs in the litigation, played a central role in negotiating the settlement and developed the abatement framework. Attorneys Marlon Kimpson, Josh Littlejohn, William Norton, and Vanessa Davis led the litigation for the firm.

Under the settlement, Wells Fargo will commit $100 million to establish a mortgage assistance Borrower Program designed to support communities disproportionately affected by lending barriers. The program will benefit people who reside or are purchasing property within eligible metropolitan communities. While the proposed Borrower Program started with 32 geographic areas, the settlement agreement stipulated that the list of eligible communities could be modified “to maximize the effectiveness of the Borrower Programs.” It has since expanded to more than 50 communities throughout the country.

“Often, the largest asset a person or family has is a home. This case alleged Wells Fargo systematically locked out people of color and marginalized families, preventing them from pursuing the American dream,” said Motley Rice attorney Marlon Kimpson. He also emphasized the forward-looking impact of the agreement. “This settlement delivers real, tangible benefits for low to moderate-income borrowers in census tracts that mirror the people allegedly discriminated against. Owning a home is one of the most important pathways to wealth creation, providing families with a foundation for improving their financial standing across America.”

About the litigation

Brought in 2022 on behalf of Wells Fargo and its shareholders, the litigation alleged the company’s board failed to maintain adequate oversight structures, lacked a functioning committee to monitor fairness in mortgage lending. The governance failures exposed the company to regulatory scrutiny, criminal and civil investigations, and significant compliance costs, plaintiffs alleged.

“This settlement is a positive step toward needed change,” stated Motley Rice attorney Josh Littlejohn. “Critically, it provides borrower assistance for those who have historically faced barriers to fair access to home ownership."

Attorney Bill Norton noted that the settlement underscores the importance of board level responsibility and compliance by all banks with the fair lending laws.

“In a shareholder derivative action, the shareholders stand in the shoes of the company and seek to address its directors’ and officers’ alleged breaches of fiduciary duty,” Norton said. “This settlement strengthens Wells Fargo for all of its shareholders by reaffirming the bank’s commitment to lend to low-income and moderate-income borrowers in communities throughout the country.”

The case is In re Wells Fargo & Co. Hiring Practices Derivative Litigation, No. 3:22 cv 05173, in the U.S. District Court for the Northern District of California.

Wells Fargo Borrower Program Areas

The Borrower Programs (both the Grant and Closing Cost Credit programs) will be available in the following 44 areas:

1. Allentown-Bethlehem-Easton, PA-NJ Metro SA (NJ counties only)
2. Anaheim-Santa Ana-Irvine, CA Metro Division
3. Arlington-Alexandria-Reston, VA-WV Metro Division
4. Atlanta-Sandy Springs-Roswell, GA Metro Division
5. Atlantic City-Hammonton, NJ Metro SA
6. Austin-Round Rock-San Marcos, TX Metro SA
7. Baltimore-Columbia-Towson, MD Metro SA
8. Bridgeport-Stamford-Danbury, CT Metro SA
9. Camden, NJ Metro Division
10. Charlotte-Concord-Gastonia, NC-SC Metro SA
11. Chicago-Naperville-Schaumburg, IL Metro Division
12. Dallas-Plano-Irving, TX Metro Division
13. Denver-Aurora-Centennial, CO Metro SA
14. Fort Lauderdale-Pompano Beach-Sunrise, FL Metro Division
15. Fort Worth-Arlington-Grapevine, TX Metro Division
16. Jacksonville, FL Metro SA
17. Lakewood-New Brunswick, NJ Metro Division
18. Los Angeles-Long Beach-Glendale, CA Metro Division
19. Marietta, GA Metro Division
20. Miami-Miami Beach-Kendall, FL Metro Division
21. Minneapolis-St. Paul-Bloomington, MN-WI Metro SA
22. Montgomery County-Bucks County-Chester County, PA Metro Division
23. Nassau County-Suffolk County, NY Metro Division
24. New York-Jersey City-White Plains, NY-NJ Metro Division
25. Newark, NJ Metro Division
26. Oakland-Fremont-Berkeley, CA Metro Division
27. Orlando-Kissimmee-Sanford, FL Metro SA
28. Philadelphia, PA Metro Division
29. Phoenix-Mesa-Chandler, AZ Metro SA
30. Portland-Vancouver-Hillsboro, OR-WA Metro SA
31. Raleigh-Cary, NC Metro SA
32. Richmond, VA Metro SA
33. Riverside-San Bernardino-Ontario, CA Metro SA
34. Sacramento-Roseville-Folsom, CA Metro SA
35. San Diego-Chula Vista-Carlsbad, CA Metro SA
36. San Francisco-San Mateo-Redwood City, CA Metro Division
37. San Jose-Sunnyvale-Santa Clara, CA Metro SA
38. Seattle-Bellevue-Kent, WA Metro Division
39. Tampa, FL Metro Division
40. Trenton-Princeton, NJ Metro SA
41. Vineland, NJ Metro SA
42. Washington, DC-MD Metro Division
43. West Palm Beach-Boca Raton-Delray Beach, FL Metro Division
44. Wilmington, DE-MD-NJ Metro Division

Closing Cost Credit Program Areas

The following 7 additional areas will have only the Closing Cost Credit program:

1. Albuquerque, NM Metro SA
2. Cape Coral-Fort Myers, FL Metro SA
3. Columbia, SC Metro SA
4. Houston-Pasadena-The Woodlands, TX Metro SA
5. Las Vegas-Henderson-North Las Vegas, NV Metro SA
6. Oxnard-Thousand Oaks-Ventura, CA Metro SA
7. Salt Lake City-Murray, UT Metro SA

Related Court Documents

Read the full complaint.
Read the settlement agreement.
Read the final approval order.

About Motley Rice

Motley Rice LLC is one of the nation’s largest plaintiffs’ litigation firms. With a tradition of representing those whose rights have been violated, Motley Rice attorneys gained recognition for their pioneering asbestos lawsuits, their work with the State Attorneys General in the landmark litigation against Big Tobacco, their representation of Sept. 11 families and survivors against terrorist financiers, and with their leadership in the ongoing litigations related to the national opioid crisis and social media harm.

The firm handles complex litigation in numerous areas. Motley Rice is headquartered in Mt. Pleasant, S.C., and has additional offices in California; Connecticut; New Jersey; New York; Pennsylvania; Rhode Island; Washington, D.C. and West Virginia.

For more information, contact Motley Rice attorney Marlon E. Kimpson (SC) at 1.800.768.4026 or www.motleyrice.com. Motley Rice LLC, a South Carolina Limited Liability Company, is engaged in the New Jersey practice of law through Motley Rice New Jersey LLC. Esther Berezofsky is the attorney responsible for New Jersey practice. Motley Rice LLP operates the California office.