$100 Million Cash Payment in Derivative Case Sets New Record in California Court

Representing individual investors, Robbins Geller and co-counsel recently secured a record-breaking $100 million cash payment to Wells Fargo & Company in a shareholder derivative action alleging certain officers and directors breached their fiduciary duties. The payment is the largest cash payment made directly to a company in connection with a derivative action in California state court history and the thirteenth largest such payment in a derivative settlement in any jurisdiction.

“By securing a direct cash payment, our clients ensured there would be an immediate benefit to the company,” said Randall J. Baron, who served as one of the lead counsel for shareholders. David A. Knotts added that “such a large cash payment directly to the company is a rarity in derivative litigation and, here, that recovery was even further enhanced by corporate governance changes set to provide further long-term benefits to Wells Fargo.”

The case arose out of several recent high-profile scandals exposing unlawful sales practices spanning nearly two decades. Wells Fargo employees were found to have opened millions of unauthorized accounts in customers’ names, discriminated against minority borrowers, facilitated erroneous foreclosures, and enrolled customers in automobile insurance policies without their consent.

Several state and federal agencies entered into regulatory consent orders with Wells Fargo, and in 2020, an investigation by the U.S. House of Representatives Committee on Financial Services found Wells Fargo was not complying with several of the consent orders.

In addition to the cash payment, Wells Fargo has adopted several corporate governance reforms.  Those reforms included improvement to Wells Fargo’s risk structure, programs, policies, and procedures, additional training for employees, expanded and enhanced oversight of risk management by Wells Fargo’s Board of Directors, and changes to the composition of Wells Fargo’s Board of Directors.  Wells Fargo described those reforms as “significant non-monetary relief” in a court filing.

Robbins Geller attorneys Randall J. Baron, Shawn A. Williams, David A. Knotts, Benny C. Goodman III, Lion Wintemute, and Taeva C. Shefler represent the plaintiffs.

Himstreet v. Scharf, No. CGC-22-599223 (Cal. Super. Ct., S.F. Cnty.).