Wells Fargo announces proposed settlement in derivative suit

Wells Fargo & Company (NYSE:WFC) has disclosed a proposed settlement in a shareholder derivative lawsuit, according to an 8-K filing with the Securities and Exchange Commission (SEC). On April 23, 2025, the Superior Court of California, County of San Francisco, granted preliminary approval for the settlement, which addresses claims of insufficient oversight in the bank’s compliance with regulatory consent orders.

The settlement includes a Notice of Proposed Settlement of Shareholder Derivative Action (WA:ACT) and Hearing, as well as a Stipulation and Agreement of Compromise, Settlement, and Release, which are attached as Exhibits 99.1 and 99.2 to the 8-K filing, respectively. These documents outline the terms and conditions of the settlement, which aims to resolve allegations against the company’s management and oversight practices.

Wells Fargo, a multinational financial services company with headquarters in San Francisco, California, has been under scrutiny for its compliance practices following various regulatory issues in the past. The proposed settlement represents a step towards resolving legal challenges related to the bank’s governance and oversight mechanisms. According to InvestingPro, the company maintains a FAIR overall financial health score, with particularly strong momentum metrics. Get access to detailed analysis and 10+ exclusive ProTips about Wells Fargo’s performance and outlook through InvestingPro’s comprehensive research reports.

The details of the settlement are set to be reviewed in a court hearing, the date of which will be determined and announced in the Notice. This legal development follows Wells Fargo’s ongoing efforts to strengthen its compliance and governance processes in response to previous regulatory concerns.

The bank’s stock, traded on the New York Stock Exchange under the ticker WFC, may see investor reactions to this news as the market assesses the implications of the settlement. Trading at $69.63 with a P/E ratio of 12.65, the stock has delivered a robust 22.77% return over the past year. InvestingPro analysis suggests the stock is currently slightly overvalued based on its proprietary Fair Value model. The company has maintained dividend payments for 55 consecutive years, with a current yield of 2.25%. The full details of the proposed settlement are available in the attached exhibits of the SEC filing, which provides transparency for shareholders and the public.

This news is based on information contained in a recent SEC filing by Wells Fargo & Company.

In other recent news, Wells Fargo reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $1.39, compared to the forecasted $1.23. However, the company experienced a revenue shortfall, reporting $20.15 billion against an expected $20.75 billion. Additionally, Wells Fargo announced a quarterly dividend of $0.40 per share and a new $40 billion stock repurchase program, highlighting its strong capital position. The company also resolved a consent order with the Consumer Financial Protection Bureau, marking its twelfth resolved consent order since 2019. Wells Fargo issued a series of medium-term notes totaling $8 billion, which includes $3 billion in Senior Redeemable Fixed-to-Floating Rate Notes. Meanwhile, Truist Securities lowered its price target for Wells Fargo from $285 to $180, maintaining a Buy rating on the bank’s shares. This adjustment reflects concerns over economic uncertainties affecting future revenue projections.

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