U.S. Bancorp is contending with the latest fallout from a 2022 regulatory settlement over unauthorized customer accounts: a shareholder lawsuit that names CEO Andy Cecere and various other top leaders as defendants.
The suit alleges that U.S. Bancorp executives and board members allowed compensation and incentive practices that led to the opening of fake accounts and profited from the concealment of the misconduct, keeping shareholders in the dark after the Consumer Financial Protection Bureau opened an investigation.
It also argues that U.S. Bancorp investors were misled when — in the wake of the
"Little did unsuspecting customers and investors know," the complaint alleges, "that U.S. Bank employed a strikingly similar scheme to Wells Fargo's that incentivized and encouraged U.S. Bank employees to open unauthorized accounts to increase the company's sales and revenues."
A spokesperson for U.S. Bancorp, the parent company of U.S. Bank, denied the allegations, saying in an emailed statement that the lawsuit contains "inaccuracies."
"Of the millions of accounts opened between 2010 and when additional sales practice controls were put into place in 2016, a very small number were confirmed as opened without authorization, and after 2016, that number decreased even further," the statement read. "We deny the lawsuit's allegations and intend to defend ourselves vigorously."
Blake Bennett, a lawyer who represents the lawsuit's plaintiff, a shareholder named P. Michael Read, did not respond to a request for comment.
In July 2022, the CFPB hit U.S. Bank with a
The lawsuit against top officials at the Minneapolis-based company, filed this month in Delaware state court, is an example of what's known as a shareholder derivative suit. Such cases are brought by shareholders who are seeking to recover money not for themselves, but rather for the company in which they are part-owners.
Shareholder derivative suits can be filed when a company has a valid claim against corporate insiders but has refused to pursue it.
In addition to Cecere and nine other members of the U.S. Bancorp board, the lawsuit lists Chief Financial Officer Terry Dolan, Chief Risk Officer Jodi Richard and then-Chief Administrative Officer Kate Quinn as co-defendants.
The suit follows a securities class action case filed last year by investors in connection with the unauthorized accounts at U.S. Bancorp.
The most recent suit alleges that the defendants breached their fiduciary duties and unjustly enriched themselves.
Specifically with regard to Cecere, the lawsuit alleges that he sold nearly 350,000 shares of U.S. Bancorp stock for proceeds of $20.1 million between November 2019 and April 2021, which was after the CFPB opened its investigation but before penalties against the bank were announced.
The U.S. Bancorp spokesman said Friday that the lawsuit mischaracterizes Cecere's stock transactions.
In the wake of the fake-accounts scandal at Wells Fargo, onetime executives and board members at the San Francisco bank also faced a shareholder derivative lawsuit. That suit
The proceeds of the Wells Fargo settlement, which were paid by insurance companies, were split between the bank and the plaintiff's lawyers.
