Published December 21, 2012
Wells Fargo & Co would pay up to $2.5 million in attorneys' fees and implement certain corporate governance changes under a proposed settlement of lawsuits brought by shareholders on behalf of the company, according to a securities filing by Wells on Friday.
The suits were filed in U.S. District Court in Northern California in 2010 on behalf of Wells Fargo and its shareholders against current and former directors and executives largely related to conduct at Wachovia bank, which Wells bought in 2008.
The suits claim that from 2005 to 2008 the former Wachovia defendants disregarded "their fundamental responsibilities" with respect to Wachovia's acquisition of mortgage lender Golden West Financial and other activities at Wachovia, according to settlement documents. The suits also allege that Wells directors did not pursue "valuable claims" that it inherited in the Wachovia acquisition, according to the documents.
Wells bought Wachovia as the lender verged on collapse due to ballooning mortgage losses and a run on its deposits. All the defendants denied wrongdoing and filed motions to dismiss, according to the documents.
A hearing will be held on the settlement on March 5, according to Friday's filing by Wells with the Securities and Exchange Commission. The governance changes include a requirement that the risk committee of the Wells Fargo board hire an outside consultant for three years.
Under the proposed settlement, the defendants would not make any payments to Wells Fargo or the plaintiffs, according to the securities filing. Wells will pay any attorneys' fees.
The cases are Feuer v. Thompson et al, U.S. District Court, Northern District of California, No. 10-0279; and Rogers v. Thompson et al, U.S. District Court, Northern District of California, No. 12-0203.
(Reporting By Rick Rothacker in Charlotte, N.C.; Editing by Leslie Adler)