Wells Fargo to Face Securities Suit Over Sham Job Interviews

Wells Fargo & Co. failed to dodge a lawsuit alleging the bank defrauded investors by touting a successful diversity hiring policy while actually conducting “sham” job interviews for minority candidates it had no intention of hiring.

Judge Trina L. Thompson on Monday declined to dismiss the proposed securities class action, which was filed in 2022 in the US District Court for the Northern District of California.

Thompson ruled that the shareholders had provided sufficient reasoning for why 11 public statements made by Wells Fargo about its hiring policy intended to boost diversity were misleading.

That policy adopted by the bank in 2020 required half of candidates interviewed for a job paying over $100,000 be “diverse” based on race, gender, sexual orientation, and disability factors.

But the judge found that the plaintiffs made sufficient allegations that Wells Fargo and its CEO Charles Scharf knew of a widespread practice of conducting interviews with minority candidates for positions that had already been filled or where they wouldn’t receive an offer.

The lawsuit pointed to internal complaints directed to Scharf and Wells Fargo board members about the sham interviews practice.

Thompson rejected Wells Fargo’s argument that its statements weren’t misleading because its policy only promised that half of interviewed candidates would be diverse but didn’t address whether those candidates would be hired.

That argument ignores “the greater context in which the statements were made,” including investor pressure to increase overall diversity at the company after a series of workplace discrimination scandals at the company, the judge said.

Wells Fargo said in an emailed statement that it is “deeply dedicated to diversity, equity and inclusion and does not tolerate discrimination in any part of our business.”

“The claims in this lawsuit have not merit, and we will continue to defend ourselves against them,” the statement said.

An attorney for the plaintiffs didn’t immediately return a request for comment.

Kessler Topaz Meltzer & Check LLP represents the shareholders. Sullivan & Cromwell LLP represents Wells Fargo.

The case is SEB Inv. Mgmt. AB v. Wells Fargo & Co., N.D. Cal., No. 3:22-cv-03811, 7/29/24.