Wells Fargo has agreed to pay $32.5 million for self-dealing related to a 2020 class-action lawsuit involving its target date collective investment trusts, which charged high fees and underperformed.
The March 13, 2020, suit was brought by Yvonne Becker, a participant in the Wells Fargo & Co. 401(k) Plan, on behalf of all participants and beneficiaries in the plan.
Becker alleged Wells Fargo breached its fiduciary duties by failing to "prudently and loyally select and monitor" the plan's investment options.
Under the terms of the April 1 settlement, filed in the U.S. District Court for the District of Minnesota, the $32.5 million — which recovers 40% of all fee damages — will be deposited into a common fund.
Details of the Case
In 2016, Wells Fargo Bank established a new series of target date collective investment trusts called the "Wells Fargo/State Street Target CITs."
The Target Date CITs were designed to invest the plan's assets into a series of other Wells Fargo funds, the suit brought by Becker and the class states.
Upon their creation in 2016, Wells Fargo added the Target Date CITs to the plan, "even though the funds had no prior performance history or track record which could demonstrate that they were appropriate funds for the Plan," the suit states.
