Shareholders at Wells Fargo sued members of the bank’s board for allegedly standing by “passively” when they were presented with diversity, equity and inclusion problems.
The stockholder derivative complaint, filed on Wednesday in the US District Court for the Northern District of California by the Asbestos Workers Philadelphia Pension Fund, accuses the board of ignoring “pervasive issues of discrimination” that have resulted in multiple scandals.
The lawsuit alleges breaches of fiduciary duties, unjust enrichment, corporate waste, and violation of federal securities laws. The shareholders say the discrimination scandals hurt Wells Fargo’s reputation and harmed it financially.
Wells Fargo “is deeply committed to diversity, equity and inclusion,” a bank spokesperson told Bloomberg Law in an email. “We disagree with the claims, and look forward to defending ourselves against them.”
The lawsuit points out a series of diversity issues at Wells Fargo, most recently revealed in a June New York Times report that said the bank held fake interviews with minority candidates. The bank announced in late 2022 that US authorities were investigating the alleged practice. The lawsuit also referenced a Bloomberg investigation that said Wells Fargo rejected minority applicants for mortgage refinancing at a higher rate than white applicants.
Wells Fargo’s stock price dropped by more than 10% in two days following the fake interview revelations in June 2022, the lawsuit said.
“The board and management of the company were more interested in the reputation and perception of the company’s engagement with DEI issues than actually addressing them substantively,” the lawsuit said, adding that they “acted on DEI issues only after negative media coverage forced them to.”
The shareholders also highlighted that regulators imposed an asset cap on the bank, restricting its ability to grow its assets beyond $1.9 trillion.
The Asbestos Workers Philadelphia Pension Fund is represented by Joseph Pettigrew at Scott & Scott Attorneys at Law.
The case is Asbestos Workers Philadelphia Pension Fund v. Scharf, N.D. Cal., No. 3:23-cv-01168, 3/15/23.
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