Wells Fargo To Pay $85M To Settle ‘Fake Diversity Interview’ Lawsuit

After a three-year battle, Wells Fargo has settled for $85 million in a lawsuit accusing it of holding fake interviews to meet a diversity, equity, and inclusion (DEI) hiring quota, The Charlotte Observer reports. 

The class action suit, filed in the U.S. District Court for the Northern District of California, claims the financial institution held interviews between February 2021 and June 2022 with diverse candidates with no actual intent of hiring them. After media reports exposed the “sham” May 2022 interviews, stock prices plummeted, prompting an investor lawsuit. On behalf of the plaintiffs, investment firm SEB Investment Management AB accused the bank and its executive team of violating securities laws by making false and misleading statements on its diversity requirements for higher-paying jobs. 

Wells Fargo claimed that close to half of the candidates seeking jobs, with U.S.-based roles paying $100,000 or more per year, ranged from underrepresented demographics, including minorities, women, veterans, LGBTQ individuals, and people with disabilities.

While the bank denied the accusations and said the Oct. 15 settlement was simply to avoid expenses and the possibility of continued litigation, the suit put the banking conglomerate’s diversity practices under a microscope. In 2024, the Securities and Exchange Commission (SEC) received a report from Wells Fargo that 46% of its 238,000 employees were from diverse backgrounds, and it remained committed to advancing its diversity stance.

However, once President Donald Trump signed an executive order opposing DEI efforts, the bank dialed back, along with hundreds of other leading corporations. With a large presence in Charlotte, Wells Fargo was among the seven of the nine largest public companies in the Queen City to pause any mention of diversity and equity in the same SEC reports.

The $85 million will be distributed to eligible class action members following deductions for fees, expenses, and taxes. Submitted claims from class action members will receive settlement funds following the distribution formula that makes persons who owned Wells Fargo stock during the period of the lawsuit a priority. Shareholders with stock held between Feb. 24, 2021, and June 9, 2022, will receive payments as Wells’ stock price fell by 10% after news of the fake interviews broke. 

As a result, the company lost $17 billion in market value. 

The bank has been busy settling lawsuits. According to HR Dive, Wells Fargo also settled a related suit that accused bank executives of breaching their fiduciary duties —by definition, a legal and ethical obligation to act in the best interest of another party —over the company’s misleading statements regarding its diverse hiring practices.

To settle, Wells Fargo agreed to set aside $100 million to fund mortgage assistance programs for low- and moderate-income borrowers, including those who live in or purchased property in low- and moderate-income areas.

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