A federal class action lawsuit concerning the Wells Fargo & Company 401(k) Plan, was filed on November 22, 2016, in the United States District Court for the District of Minnesota. The action is brought on behalf of participants in the Wells Fargo & Company 401(k) Plan who invested in any one of Wells Fargo’s affiliated target dates funds (listed on page 15 of the Complaint, available here under “Case Documents”), from November 22, 2010 to the present.
Summary of the Lawsuit
Under the Employee Retirement Income Security Act of 1974 (“ERISA”), the federal law that sets minimum standards for retirement plans, including Wells Fargo’s 401(k) Plan, fiduciaries are required to act solely in the interest of the Plan’s participants when making investment decisions regarding their employees’ retirement savings. The lawsuit alleges that Wells Fargo breached its fiduciary duties to participants by selecting affiliated target date funds as the default investment in the 401(k) plan, which funneled billions of dollars of plan assets into the target date funds at the expense of the plan’s participants.
The Complaint states that Wells Fargo used an “easy” and “quick” enrollment feature that participants could select to invest their savings in the affiliated target date funds. Moreover, the lawsuit alleges that Wells Fargo profited from its system of funneling plan assets, not only in bolstering investments in its funds, but also in charging 2.5 times more in fees than comparable funds. Plaintiff alleges that Wells Fargo’s target date funds double-charged participants by charging for management of the target date funds and for management of the underlying index funds. Plaintiff also alleges that the Wells Fargo target date funds produced lower returns than comparable target date funds.
The lawsuit was dismissed in the district court and is now on appeal before the United States Court of Appeals for the Eighth Circuit.
Summary of the Claims
The lawsuit alleges that Wells Fargo and its affiliates violated ERISA by, among other things:
- Allowing Defendants to funnel over $3 billion in Plan assets into the Wells Fargo target date funds (“TDFs”) when, at all times, cheaper, better- performing alternatives were available.
- Failing to remove the imprudent Wells Fargo TDFs by, among other things:
- Failing to consider Defendants’ conflict of interest,
- Putting Defendants’ interests before the Plan beneficiaries,
- Failing to consider cheaper, better-performing investment alternatives, and
- Allowing Defendants to funnel Plan assets into the Wells Fargo TDFs as seed money.
This lawsuit is brought as a class action on behalf of participants in the Wells Fargo & Company 401(k) Plan whose accounts had a balance in any one of several target dates funds (listed on page 15 of the Complaint, available here under “Case Documents”), from November 22, 2010 to the present.
Status of the Litigation
Plaintiff filed the Complaint in the United States District Court for the District of Minnesota on November 22, 2016. Defendants filed a Motion to Dismiss the Complaint on March 22, 2017, and Plaintiff responded in opposition on April 12, 2017. Defendants filed their reply on April 21, 2017. The Hon. Judge David S. Doty granted Defendants’ Motion to Dismiss the Complaint on May 26, 2017. Plaintiff filed a Notice of Appeal to the United States Court of Appeals for the Eighth Circuit on June 22, 2017.
Plaintiff continues to litigate the case on appeal in the Eighth Circuit. He filed his opening brief in that court on August 31, 2017. Defendants, as Appellees, filed their brief on October 24, 2017. Plaintiff filed his reply on November 21, 2017. Oral argument is scheduled for June 13, 2018.
Whom to Contact for More Information
In a class action, one or more individuals— called class representatives—file a lawsuit on behalf of themselves and other similarly situated individuals with similar legal claims. This type of action permits the claims of many individuals to proceed in one lawsuit and ensures that all similarly situated persons are treated consistently.
If you are or were a participant in the Wells Fargo & Company 401(k) Plan at any time from November 22, 2010 through the present, you may be affected by this lawsuit. If you are interested in learning more about this lawsuit, or if you have information that might assist us in the prosecution of these claims, please contact Connor Grant-Knight, Paralegal, via email: firstname.lastname@example.org, or by mail or telephone:
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Fifth Floor
Washington, D.C. 20005
Telephone: 888-240-0775 (Toll Free) or 202-408-4600
Karen L. Handorf
Jamie L. Bowers
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Suite 500, West Tower
Washington, D.C. 20005
Tel: (202) 408-4600
Fax: (202) 408-4699