May 12 Wells Fargo & Co may have opened
as many as 3.5 million unauthorized customer accounts, far more
than previously estimated, according to lawyers seeking approval
of a $142 million settlement over the practice.
The new estimate was provided in a filing late Thursday
night in the federal court in San Francisco, and is 1.4 million
accounts higher than previously reported by federal regulators,
in what became a national scandal.
Keller Rohrback, a law firm for the plaintiff customers,
said the higher estimate reflects "public information,
negotiations, and confirmatory discovery."
The Seattle-based firm also said the number "may well be
over-inclusive, but provides a reasonable basis on which to
estimate a maximum recovery."
Wells Fargo spokesman Ancel Martinez in an email said the
new estimate was "based on a hypothetical scenario" and
unverified, and did not reflect "actual unauthorized accounts."
Nonetheless, it could complicate Wells Fargo's ability to
win approval for the settlement, which has drawn opposition from
some customers and lawyers who consider it too weak.
U.S. District Judge Vince Chhabria in San Francisco is
scheduled to consider preliminary approval at a May 18 hearing.
The accounts scandal mushroomed after Wells Fargo agreed
last September to pay $185 million in penalties to settle
charges by authorities including the U.S. Consumer Financial
Wells Fargo employees were found to have opened the accounts
in part because of pressure to meet sales goals.
John Stumpf and Carrie Tolstedt, who were respectively the
San Francisco-based bank's chief executive and retail banking
chief, lost their jobs and had tens of millions of dollars
clawed back over the scandal, and 5,300 employees were fired.
The $142 million settlement covers accounts opened since May
2002. Wells Fargo originally agreed to pay $110 million covering
accounts since 2009, but boosted the payout after discovering
Keller Rohrback said the settlement "fairly balances the
risks" of further litigation, including the possibility their
clients might lose, against the benefits.
The accord has drawn objections from law firms including
Heninger Garrison Davis, from Birmingham, Alabama.
It said the accord underestimated the potential maximum
damages by at least 50 percent, and did not properly address
whether Wells Fargo committed identity theft by using customers'
personal data to open the accounts.
Lawyers from the Alabama firm did not immediately respond on
Friday to requests for comment.
(Reporting by Jonathan Stempel; Additional reporting by Dan
Freed in New York; Editing by Tom Brown)