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Judge: 'Implausible' that Wells Fargo board, execs were unaware of fraud

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Judge: 'Implausible' that Wells Fargo board, execs were unaware of fraud

U.S. District Judge Jon Tigar on Oct. 4 dismissed insider trading-related claims against Wells Fargo & Co. CEO Tim Sloan, Chief Risk Officer Michael Loughlin, former CEO John Stumpf and former community banking head Carrie Tolstedt.

Plaintiffs in a consolidated September 2016 complaint against Wells Fargo's board and executives alleged that the defendants committed fraud in order to increase cross-sales and then unjustly enriched themselves when they sold stock at artificially inflated prices.

Tigar, however, found that the plaintiffs had adequately alleged that almost all the defendants knowingly made materially false or misleading statements. Stumpf, for example, had testified that the board knew by 2011 that unauthorized customer accounts had been created and had received periodic reports from a group that reviewed EthicsLine complaints. It is similarly "implausible," Tigar said, that the senior management, with their involvement in day-to-day operations and greater access to cross-selling metrics and whistleblower complaints, would have been unaware of the alleged fraud.