Wells Fargo facing class action lawsuit from shareholders

The bad news kept coming in thick and fast churning for US bank Wells Fargo with the lender set to face a class action lawsuit from its own shareholders, as a result of the scandal that saw the company fined $185m for creating unauthorised accounts and credit cards for customers.

The California-based bank agreed to pay regulators the fine earlier this month after its staff were found to have created the accounts to meet aggressive sales targets.

The suit claims that investors were misled for years about the sales practices and the subsequent success it gained from them.

CEO John Stumpf appeared before a senate committee last week to answer questions concerning the scandal, and is one of the defendants named in the case.

The others are Carrie Tolstedt, the executive who controlled the unit responsible for the fraudulent accounts, and chief financial officer John Shrewsberry.

In the complaint lodged by shareholder Gary Hefler, he accuses the bank of concealing the fraud from investors.

"Stumpf concealed the fact that the company had made substantial findings of the unlawful activity and actual fraud in its community banking segment as part of its investigation," the complaint read.

Wells lost its position as the largest bank in the world by market capitalisation as a result of the scandal, with its share price falling more than 10% since the news broke on September 8.