Wells Fargo's spiraling "sandbagging" scam might get a lot more expensive for the nation's biggest bank.
Two former employees filed a $ 2.6 billion class action lawsuit last week accusing the bank of demoting or ousting workers who failed to meet "unrealistic quotas" that drove other employees to rip off customers.
"Wells Fargo knew that their unreasonable quotas were driving these unethical behaviors that were used to fraudulently increase their stock price and benefit the CEO at the expense of the low level employees," the suit says.
The lawsuit, filed Thursday in California Superior Court in Los Angeles County, says the bank pressured workers to open 10 accounts daily and punished those who fell short. It accuses Wells Fargo of wrongful termination, unlawful business practice and failure to pay wages and overtime.
Wells Fargo employees fired for blowing whistle, they say
Filed by ex-employees Alexander Polonsky and Brian Zaghi, it seeks compensation for former employees from the past 10 years, as well as current Wells Fargo workers. Polonsky and Zaghi say in the suit they were both demoted, and later fired, for failing to meet quotas without committing fraud.
The suit comes the same month Wells Fargo paid more than $ 185 million in civil fines for its so-called "sandbagging" scheme, in which thousands of employees opened fraudulent customer accounts to meet quotas.
Wells Fargo said it has fired more than 5,300 employees connected to the scam since it was discovered in 2011.
But the fines brought new notoriety to Wells Fargo, with lawmakers continuing to dig into the bank's top dogs.
Elizabeth Warren: Wells Fargo CEO is ‘gutless,’ should quit
Sen. Elizabeth Warren (D-Mass.) told CEO John Stumpf he is "gutless" when he appeared before the Senate Banking Committee last week for a hearing about the racket. She said Stumpf deserves to leave his post and face a criminal investigation. Other senators on the panel rejected Stumpf's claim that the scam wasn't the result of a cutthroat corporate culture.
But lawmakers have not announced any action against the bank or its leadership.
No executives have been charged for the scam. Carrie Tolstedt, the executive who oversaw the department whose workers opened fake accounts, announced her voluntary retirement in July and will receive $ 125 million when she leaves her job.
If Stumpf were to retire soon, he could walk away with $ 195 million, according to the San Francisco Examiner.
The bank has announced no plans to enact its "clawback" policy for taking back compensation from executives tied to wrongdoing.
Wells Fargo has not commented on the class action lawsuit.
With News Wire Services
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