Wells Fargo. (Photo: Diego M. Radzinschi/ALM)
A $35.5 million settlement between Wells Fargo & Co. and a group of African-American brokers is set to go before a Chicago federal judge on Jan. 24.
The plaintiffs alleged in the complaint, filed in 2013 in the U.S. District Court for the Northern District of Illinois, that Wells Fargo “substantially” underpaid African-American financial advisors in management and executive positions.
The class-action settlement “provides comprehensive programmatic relief designed to increase the representation of and opportunities for African-American financial advisors and FA trainees, as well as substantial monetary relief for settlement class members,” lawyers for the plaintiffs told the court last month.
Suzanne Bish of Stowell & Friedman, a lawyer for the plaintiffs, told ThinkAdvisor that the amount “is larger than that of many other settlements, [since] these are high-paying good jobs and involved high rates of attrition and big gaps in pay—with significant disparities in earnings between white and African-American financial advisors who had substantial economic losses.”
The advisors and licensed trainees affected by the suit include those employed by Wells Fargo’s Private Client Group or WFA’s bank-brokerage channel from September 2009 through December 2016. The number of advisors benefitting from the settlement could top 400 as more find out about it, Bish said.
Wells Fargo said in a statement that the San Francisco-based bank disagrees with the claims in the suit “but believe that putting this matter behind us is in the best interests of our team members, clients and investors.”
“Resolving this matter allows Wells Fargo Advisors to continue to focus on providing a diverse and inclusive work environment where all of our team members can thrive through industry leading recruiting, coaching, leadership and business development practices,” the Wells Fargo statement said. “We will also update our policies and procedures to provide greater opportunities for inclusiveness.”
Wells Fargo, according to the terms of the deal, will set up a $500,000 fund to support affected advisors over the next four years and help them grow their practices.
Wells Fargo also said it will have a recruiting contact whose primary responsibility will be the recruitment of African American financial advisors and trainees. The company will create two coaching positions to help African American financial advisors build relationships and boost productivity.
“There’s always a need for success stories,” Bish said. If the policies and procedures laid out by the Wells Fargo settlement work effectively, “they could catch on elsewhere.” This would mean that organizations “would have the potential to have talent that is now underrepresented in the industry.”
A preliminary approval hearing is set for Jan. 24 in front of U.S. District Judge Harry Leinenweber.
A version of this report was first published at ALM affiliate ThinkAdvisor.com. All rights reserved.