Published: Sun, November 27, 2016
Economy | By Melissa Porter

Wells Fargo Seeks Arbitration Order in Customer Lawsuit

Wells Fargo Seeks Arbitration Order in Customer Lawsuit

"Wells Fargo's managers and bankers have for years engaged in unethical, and illegal practices called "gaming, '" the Utah court complaint argued".

Troubled US bank Wells Fargo has asked a US court to dismiss dozens of cases against it following the fake account scandal which dogged the California-based firm earlier this year.

The proposed class-action lawsuit, filed on Tuesday in federal court in Minnesota, accused the third-largest US bank of "self-dealing and imprudent investing" by steering 401 (k) contributions to its Wells Fargo Dow Jones Target Date funds.

The San Francisco-based banking giant's motion, filed in Utah as the Thanksgiving holiday neared, is aimed at the first putative class-action lawsuit filed after Wells agreed to pay $185 million in penalties and $5 million in customer reimbursement for opening as many as 2 million accounts without customers' authorization.

Despite this, assets allegedly grew in part because Wells Fargo made its target date funds a default investment option, and provided an "easy" and "quick" enrollment feature.

The bank has been criticized for its mandatory arbitration clauses, including by Sen. And customers suing large corporations for small amounts of money may not be able to find lawyers willing to take on the case. Its previous CEO John Stumpf ventured down in the midst of the disturbance, it has been put under harder administrative investigation and its notoriety has been harmed as it faces numerous tests.

In September, Wells Fargo settled with the Consumer Financial Protection Bureau, the U.S. Comptroller of the Currency and the city and county of Los Angeles. The ad pledged, "Wells Fargo is making changes to make things right".

Zane Christensen, a lawyer representing customers in the suit, said it will "vigorously defend" against the bank's motion.

"Wells Fargo isn't concerned about making things right with their customers". But customer advocates say it improperly denies customers the legal protections of court proceedings, such as the right to appeal, and helps to hide corporate misconduct from the public and regulators because documents and hearings are not made public.

The bank said it's offering "fast and free" mediation to customers through an impartial third party.

During the presidential campaign, Hillary Clinton said she would give federal agencies the power to restrict the use of fine print arbitration clauses.

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