The motion to dismiss does not include CEO Charles Scharf. However, the new complaint drops two officers from the litigation: Senior Executive Vice President and Chief Financial Officer Michael Santomassimo and Vice President and Co-CEO of Corporate & Investment Banking Jonathan Weiss.
The proposed class action claims stem from a 2022 New York Times report that some Wells Fargo employees were faking interviews for positions that had already been filled in order to meet a company target on diversity. This led to an 8.6% drop in the bank’s stock price. A consolidated amended stockholder derivative complaint filed in 2024 alleges breaches of fiduciary duty and related causes of action, claiming the board failed to “meaningfully monitor Wells Fargo’s discriminatory lending and hiring practices.”
During an August hearing, a lawyer for Wells Fargo argued that its board has worked to address the concerns raised in media reports from 2022. Christopher Viapiano of Sullivan & Cromwell LLP stated that the lawsuit failed to plead specific facts showing that a majority of the board did not act on the allegations or faced the likelihood of liability due to their alleged lack of oversight over Wells Fargo’s mortgage refinancing and minority hiring practices. “The standard is that the directors have to try in good faith to put in place an information system,” Viapiano said, adding that evidence in the plaintiffs’ hands “shows that the directors tried in good faith to put in such a system.”
