Wells Fargo & Co. has failed to avoid a lawsuit alleging the bank defrauded investors by touting a successful diversity-based hiring policy while actually conducting “mock” job interviews for minority candidates it had no intention of hiring.
Judge Trina L. Thompson on Monday refused to dismiss the proposed securities class action lawsuit, which was filed in 2022 in the U.S. District Court for the Northern District of California.
Thompson ruled that shareholders had provided sufficient reasons to explain why 11 public statements made by Wells Fargo about its hiring policy aimed at boosting diversity were misleading.
That policy adopted by the bank in 2020 required that half of candidates interviewed for a job paying more than $100,000 be “diverse” based on factors of race, gender, sexual orientation and disability.
But the judge found that the plaintiffs made sufficient allegations that Wells Fargo and its chief executive, Charles Scharf, knew of a widespread practice of conducting interviews with minority candidates for positions that had already been filled or for which they would not receive an offer.
He lawsuit He pointed to internal complaints directed at Scharf and members of Wells Fargo’s board of directors about the practice of mock interviews.
Thompson rejected Wells Fargo’s argument that its statements were not misleading because its policy only promised that half of the candidates interviewed would be diverse, but did not address whether those candidates would be hired.
That argument ignores “the broader context in which the statements were made,” including pressure from investors to increase overall diversity at the company after a series of workplace discrimination scandals, the judge said.
Wells Fargo said in an emailed statement that it is “deeply committed to diversity, equity and inclusion and does not tolerate discrimination in any part of our business.”
“The claims in this lawsuit are without merit and we will continue to defend ourselves against them,” the statement said.
An attorney for the plaintiffs did not immediately respond to a request for comment.
Kessler Topaz Meltzer & Check LLP represents the shareholders. Sullivan & Cromwell LLP represents Wells Fargo.
The case is SEB Inv. Mgmt. AB v. Wells Fargo & Co.ND Cal., No. 3:22-cv-03811, 7/29/24.
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