Wells Fargo executives, board must face lawsuit over fake accounts, federal judge says

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reuters.com |October 5, 2017,

By Jonathan Stempel

(Reuters) – A federal judge said current and former Wells Fargo & Co officers and directors, including Chief Executive Officer Tim Sloan, must face nearly all of a lawsuit by shareholders seeking to hold them personally liable for sales abuses and the creations of millions of unauthorized accounts.

U.S. District Judge Jon Tigar in San Francisco said shareholders may pursue claims that Wells Fargo officials looked the other way as employees facing “unrelenting” pressure to meet sales quotas unlawfully opened accounts, and misled the public about fraudulent practices at the nation’s third-largest bank.

“Where, as here, plaintiffs’ claims arise from a pervasive and undisputed fraud going to the core of the company’s business, it is reasonable to infer senior executives knew about, or at least recklessly turned a blind eye to, the stream of red flags,” Tigar wrote in a decision dated Wednesday.

The judge also said that in the “unlikely” event Sloan did not know about the suspect practices before 2013, when he was chief financial officer, he was “certainly aware of these issues” by December 2013 when he told the Los Angeles Times: “I‘m not aware of any overbearing sales culture.”

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