Investment Losses with Wells Fargo
Wells Fargo & Co. will pay $35.5 million to more than 500 black financial advisors and trainees according to the settlement agreement filed Friday. The punitive class action suit claimed the bank failed to give the African-American employees the same career opportunities as their white colleagues.
Wells Fargo Corp. agreed to so-called programmatic reforms, as part of the settlement, including changes to recruiting and management training programs and reviews of its remedial efforts that will be effective for at least four years.
The suit affects more than 320 current and former brokers, according to an article in Advisor Hub. The lawyers will receive about $8.9 million of the settlement amount plus costs, while the six named plaintiffs will each receive $175,000.
A named plaintiff, Lance Slaughter, has been a Wells broker for 11 years and is based in Washington D.C. In his claim, which was filed in September 2013 one month after Merrill Lynch agreed to a $160 million settlement of a racial discrimination suit, Slaughter alleged that he and other African American brokers and trainees were denied business opportunities, excluded from high-producing teams because of their race.
His case was combined in 2014 with other discrimination complaints against Wells Fargo Advisors’ private client group and its in-bank branch brokerage programs.
Under the proposed settlement, which awaits approval from Judge Harry Leinenweber, any current or former African American broker or trainee employed at Wells Fargo at any time from September 2009 to December 31, 2016, is eligible for an award.
Payments will be based on length of service at the Wells broker-dealer and personal experiences regarding account transfers, teaming, managerial support and other factors that will be evaluated by one or more independent “neutral” parties selected by Lynn Cohn, the Special Master appointed by the court.
Wells Fargo Advisors denied all claims of race discrimination. The $35.5 million tentative settlement exceeds a $32-million agreement Wells negotiated in 2010 to resolve claims from female advisors of sex discrimination.
Recovery of Investment Losses
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