Beginning Next Week: InsideCounsel will become part of Corporate Counsel. Bringing these two industry-leading websites together will now give you comprehensive coverage of the full spectrum of issues affecting today's General Counsel at companies of all sizes. You will continue to receive expert analysis on key issues including corporate litigation, labor developments, tech initiatives and intellectual property, as well as Women, Influence & Power in Law (WIPL) professional development content. Plus we'll be serving all ALM legal publications from one interconnected platform, powered by, giving you easy access to additional relevant content from other InsideCounsel sister publications.

To prevent a disruption in service, you will be automatically redirected to the new site next week. Thank you for being a valued InsideCounsel reader!


Wells Fargo decreases expected litigation expenses by $50 million

The company now expects to suffer just $950 million in litigation losses

 With Morgan Stanley one of the most recent financial institution to be a large settlement concerning the financial crisis, is there any bank out there that is actually decreasing its expected litigation spending? Apparently, that bank exists, and its name is Wells Fargo.

In a regulatory filing on Feb. 26, Wells Fargo announced that it had decreased the amount of losses the company expects to suffer through litigation from $1 billion at the end of 2012 to $950 million at the end of 2013.

The bank paid a large sum — $591 million — in a settlement with Fannie Mae concerning mortgage-backed securities in January 2014. The bank is also expected to soon face pressure under the Financial Institutions Reform and Recovery Act following a year-long investigation into its dealings.

However, Wells Fargo has not encountered many of the same pressures as its financial industry counterparts. JPMorgan’s 2013 fourth quarter included $1.1 billion in after-tax litigation charges on its own, leading many analysts to question whether the banking giant will be able to expect positive results in 2014. Bank of America, meanwhile, has increased its own estimate of potential legal and regulatory losses to $6.1 billion in early February after increasing it to $5.1 billion in October 2013. Barclays also announced a large spike in litigation provisions in early February.

Perhaps the reasoning for Wells Fargo’s positive outlook comes from increased internal controls. The company recently began an internal ethics review that seeks to improve best practices and handling of conflicts of interest within the company. The review, which began on Jan. 1 and is expected to take 18-24 months, is one tool that Wells Fargo hopes will allow it to avoid many of the compliance concerns that other banks currently face.

Although Wells Fargo is still being investigated for potential improprieties during the financial crisis, the company announced no new investigations in its regulatory report.


For more on how the world’s largest financial institutions are still recovering from the financial crisis, check out these InsideCounsel stories:

Morgan Stanley could pay $275 million financial crisis settlement to SEC

JPMorgan Chase’s chief compliance officer steps down

RBS reaches $275 million mortgage-backed securities settlement

FDIC suits against failed financial institutions seeing a spike

Assistant Editor

author image

Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.