By Jonathan Stem­pel

(Reuters) — A U.S. judge ordered Wells Far­go to face a law­suit alleg­ing it defraud­ed share­hold­ers by pro­claim­ing its com­mit­ment to hir­ing diver­si­ty, even as it con­duct­ed sham job inter­views of non-white and female appli­cants it had no plans to hire.

U.S. Dis­trict Judge Tri­na Thomp­son in San Fran­cis­co, who dis­missed a ver­sion of the law­suit last August, on Mon­day found direct and indi­rect evi­dence that the San Fran­cis­co-based bank intend­ed to defraud share­hold­ers about its hir­ing prac­tices.

She reject­ed argu­ments that there was insuf­fi­cient proof that fake inter­views were wide­spread, or that top offi­cials includ­ing Chief Exec­u­tive Charles Scharf knew about it.

Share­hold­ers chal­lenged 11 bank state­ments tout­ing the suc­cess of a pol­i­cy adopt­ed in March 2020 that at least 50% of can­di­dates inter­viewed for jobs pay­ing at least $100,000 be minori­ties, women or peo­ple in oth­er dis­ad­van­taged groups.

They cit­ed inter­views with for­mer employ­ees, an inter­nal whistle­blow­er email, and the sud­den retire­ment of a senior wealth man­ag­er who alleged­ly pres­sured the whistle­blow­er into con­duct­ing fake inter­views.

“The employ­ee-sub­mit­ted com­plaints, the pecu­liar tim­ing of [the man­ager’s] depar­ture, and defen­dants’ demon­strat­ed focus on diver­si­ty issues sup­ports a strong infer­ence of [fraud­u­lent intent] that is cogent and at least as com­pelling as an oppos­ing infer­ence that defen­dants remained obliv­i­ous,” Thomp­son wrote.

In a state­ment, Wells Far­go said it would con­tin­ue defend­ing against the law­suit. It not­ed that the Depart­ment of Jus­tice and Secu­ri­ties and Exchange Com­mis­sion closed inves­ti­ga­tions into its hir­ing prac­tices with­out tak­ing action.

“Wells Far­go is deeply ded­i­cat­ed to diver­si­ty, equi­ty and inclu­sion and does not tol­er­ate dis­crim­i­na­tion in any part of our busi­ness,” it added.

Lawyers for the share­hold­ers did not imme­di­ate­ly respond to requests for com­ment.

The fourth-largest U.S. bank has since 2016 faced many com­plaints and pub­lic crit­i­cism over its busi­ness prac­tices, and remains under a Fed­er­al Reserve cap on asset growth.

Wells Far­go’s share price fell 10.2% over two days in June 2022, wip­ing out more than $17 bil­lion of mar­ket val­ue, after the New York Times report­ed the Jus­tice Depart­ment probe.