Motely Rice appointed co-lead counsel in Wells Fargo shareholder derivative suit
Motley Rice attorneys have been appointed to lead shareholder derivative litigation on behalf of Wells Fargo and its shareholders alleging the global bank’s directors and officers breached their fiduciary duties in connection with systematic discriminatory lending and hiring practices. The lawsuit, which is filed in the United States District Court for the Northern District of California, alleges the company’s board of directors failed to ensure that its business practices complied with legal and regulatory requirements prohibiting discrimination.
Wells Fargo has faced numerous legal and regulatory actions regarding discrimination toward mortgage customers. Specifically, plaintiffs allege that Wells Fargo’s lending policies amounted to “digital redlining.” Algorithms used to assess risk and determine terms of mortgage loans and refinancings allegedly resulted in systematic bias against Black and Hispanic borrowers, homeowners, and neighborhoods. The alleged result of these biased lending policies was that in 2020 Wells Fargo reportedly had the lowest approval rating for loans to minority borrowers, and the largest racial disparity in loan approvals, when compared to other major U.S. lenders.
The lawsuit also alleges that Wells Fargo engaged in discriminatory hiring and promotion practices. Whistleblowers have pointed to tactics such as “sham interviews” where candidates from protected classes would be interviewed for a position that had already been given away to someone else. These interviews were standard practice, according to whistleblowers, and were designed to present the illusion of diverse hiring practices to meet quotas.
The lawsuit further alleges that Wells Fargo’s directors and senior executives knew or should have known about these illegal practices which are mission critical compliance areas for lending institutions like Wells Fargo. By not correcting them, the defendants breached their fiduciary duty to shareholders, harming the company and, ultimately, its shareholders according to the complaint.
“We look forward to helping lead the fight to hold Wells Fargo fiduciaries accountable for their failures to safeguard legal and ethical business practices and preserve the financial positions of their shareholders,” said plaintiffs co-lead counsel, Motley Rice attorney Marlon Kimpson.