The order comes in multidistrict litigation alleging Wells Fargo improperly swept customer cash into low-interest accounts while earning higher returns on those deposits. The case centers on the bank's Business Deposit Services rates and allegations that Wells Fargo failed to pass along adequate interest to customers on their cash sweep accounts over multiple years.
Judge Chhabria rejected Wells Fargo's attempts to seal extensive information about its past rate-setting practices, writing that the bank had requested to seal 'large amounts of information about its past rate-setting practices that have direct bearing on the issues in this case and appear to have minimal relevance to any current practices.' The court noted that 'such large portions of the class certification briefs are redacted that it would be difficult for a member of the public to understand the briefs.'
The judge expressed particular frustration that Wells Fargo ignored his prior guidance, stating at a previous venue hearing that 'it is not appropriate to seal information about how the company set interest rates many years ago without a showing of why that information is revealing of non-stale trade secrets, because that information is central this case and is very unlikely to reveal what Wells Fargo is doing today.'
The sealing dispute arose during briefing on class certification motions, where Wells Fargo sought to redact details about its historical practices including that 'Wells Fargo's BDS rates had a 58% beta from July 2007 through November 2015, meaning that the BDS rates historically followed the FF target rate very closely' and that 'CFO Santomassimo knew Wells Fargo's rates were low and expressed concern in February 2022 that WIM's betas are light as market rates rise.'
Wells Fargo defended its sealing requests by arguing the information constituted trade secrets, but Judge Chhabria found this justification insufficient for information about practices from years or even decades ago that is central to the litigation. The court emphasized that the public's right to access court filings outweighs the bank's desire to keep embarrassing historical information under wraps.
The sanctions threat represents an escalation in what appears to be an ongoing battle over transparency in the case. Judge Chhabria has previously shown little patience for overbroad sealing requests, as reflected in his Civil Standing Order requiring careful justification for any redactions.
Wells Fargo has until 11 a.m. Wednesday to file a written response explaining why sanctions are not warranted. The court also 'strongly suggests' that Wells Fargo work with plaintiffs' counsel to file new versions of the briefs with only justified redactions, and any proposed redactions must be highlighted in sealed versions for the court's review.