May 13, 2021

A federal court judge in Minneapolis rebuffed an attempt by Wells Fargo & Co. and other defendants to dismiss an ERISA complaint filed by a participant in a company 401(k) plan.

U.S. District Court Judge Donovan Frank on May 12 rejected every defense submitted in the case of Yvonne Becker vs. Wells Fargo Co. et al., on allegations ranging from charging excessive fees to offering poor-performing investments to engaging in prohibited transactions under ERISA. Ms. Becker, a plan participant and former employee, sued in March 2020.

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The judge noted that Ms. Becker, in her complaint, provided benchmarks for assessing plan investments. These benchmarks "are sufficiently meaningful to provide proper comparison to the challenged funds with respect to both performance and fees," Mr. Frank wrote.

The judge also rejected defendants' request to dismiss Ms. Becker's claim that they violated ERISA's prohibited transactions rule.

She alleged they "caused the plan to repeatedly purchase property from Wells Fargo, Wells Fargo Bank or both, which hold legal title to Wells Fargo funds," the judge wrote. She also alleged that these defendants plus another defendant, Galliard Capital Management, caused "the repeated transfer of plan assets directly, indirectly or both" to each other "in the form of various direct or indirect fees," the judge wrote. Galliard is an investment adviser and fiduciary to the 401(k) plan, according to court documents.

Reviewing the complaint and the defendants' response, the judge concluded that "Becker has plausibly pled that defendants engaged in transactions prohibited under ERISA."

The Wells Fargo & Co. 401(k) Plan had assets of $48.2 billion as of Dec. 31, 2019, according to the latest Form 5500.

The complete article can be viewed here.