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Wells Fargo Pays $1 Billion to Shareholders

Wells Fargo Pays $1 Billion to Shareholders

by Starling Insights

Starling Insights Editorial Board

May 23, 2023


Last week, Wells Fargo agreed to pay $1 billion to settle a lawsuit alleging it defrauded shareholders about its progress in recovering from the scandals that have plagued it in recent years.

Wells Fargo has been operating under consent orders from several regulators since 2018, requiring that it improve its governance and risk management. The shareholders claim that the bank overstated its compliance with these orders, losing more than $54 billion in market value in the two years ending March 2020 due to the continuing deficiencies.

Wells Fargo's CEO, Charlie Scharf, has said that repairing issues at the bank has been more challenging than he expected when taking the role in 2019. "When I arrived, we did not have the culture, effective processes, or appropriate management oversight in place to remediate weaknesses on a timely basis," he wrote in a recent letter to shareholders. "Today, we approach these issues differently," Scharf said, though it is unclear precisely how any new approaches differ from what went before.

Late last year, Starling Insights published "The Costs of Misconduct," a Deeper Dive supplement to our 2022 Compendium. The report discusses the massive fines and societal impact stemming from misconduct, and whether, going forward, they can be treated even tacitly as "costs of doing business."

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