Heavy & General Laborers’ Local 472 & 172 Pension and Annuity Funds will act as lead plaintiff in a proposed class action alleging Fifth Third Bancorp employees opened unauthorized accounts in clients’ names, the Northern District of Illinois ruled.
The U.S. District Court for the Northern District of Illinois also approved the Laborers’ Funds’ selection of Robbins Geller Rudman & Dowd LLP as lead counsel in the case.
The proposed class is comprised of “hundreds or thousands of members” who acquired Fifth Third securities between Feb. 26, 2016, and March 6, 2020, and were injured when the bank’s stock dropped after the bureau announced its intent to file an enforcement action.
The suit comes on the heels of a March 2020 suit filed by the Consumer Financial Protection Bureau alleging employees opened fake accounts for years in violation of consumer lending laws.
The plaintiffs allege the bank conditioned employee performance ratings, incentives, and even continued employment on meeting “ambitious” sales goals, pushing staff to create unauthorized new accounts for existing customers.
The employees were incentivized to open the fake accounts by the bank’s “cross-sell” strategy to increase the total number of products and services it provided to existing customers, the plaintiffs allege.
The plaintiffs assert the bank knew since at least 2008 that employees were opening unauthorized consumer-financial accounts, but took insufficient steps to detect and stop the conduct and to identify and remediate harmed consumers.
After the bureau notified Fifth Third that it intended to file an enforcement action, the bank’s stock price fell $0.72 per share, or 2.95%, during the next couple of days to close at $23.68 per share on March 5, 2020, the complaint alleges.
When the bureau later announced that the illegalities had been ongoing for more than a decade, Fifth Third’s stock price fell $0.64 per share, or approximately 3.5%, to close at $17.66 per share on March 11, 2020, and fell an additional $1.76 per share the following trading day to close at $15.90 per share on March 12, 2020—a total decline of 13.11%, the complaint alleges.
Judge Sara L. Ellis issued the order.
Skadden Arps Slate Meagher & Flom LLP represents Fifth Third Bancorp.
The case is Christakis v. Fifth Third Bancorp, N.D. Ill., No. 20-cv-02176, 6/29/20.