Wells Fargo & Co. agreed to pay $32.5 million to resolve a proposed class action from workers alleging it violated federal benefits law through mismanagement of their employee 401(k) plan, according to a proposed settlement filed in Minnesota federal court.
The proposed settlement and order filed Friday comes after U.S. District Judge Donovan Frank denied a motion to dismiss from Wells Fargo in May. Judge Frank concluded workers had plausibly claimed that Wells Fargo breached its fiduciary duty under the Employee Retirement Income Security Act when it continued to offer expensive proprietary funds in the plan knowing there were better performing and lower cost options available. The settlement still needs final court approval, and a preliminary approval hearing has been scheduled for April 22.
Attorneys for the proposed class said in a memorandum in support of giving the settlement preliminary approval that $32.5 million represented 40% of all fee damages estimated from the alleged ERISA violations. If approved, the agreement would resolve claims from the workers that the company engaged in prohibited party-in-interest and self-dealing transactions when it marketed proprietary investments to retirement savers that workers said weren't in their financial best interest. Wells Fargo doesn't have to admit or deny wrongdoing under the settlement terms.
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Under the settlement terms, Cohen Milstein Sellers & Toll PLLC, Keller Rohrback LLP and Zimmerman Reed LLP would be appointed as class counsel. Named plaintiffs Yvonne Becker, Christopher Nobles, Rosa Ramirez, Valerie Seyler and Jannien Weiner would be appointed as class representatives and receive $15,000 individual service awards.
Michelle Yau, an attorney for the proposed class, said in a statement on Monday that "We are very pleased with the proposed settlement. We look forward to the upcoming preliminary approval hearing."
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Becker is represented by Michelle Yau, Mary Bortscheller and Ryan Wheeler of Cohen Milstein Sellers & Toll PLLC and by Carolyn Anderson, Charles Toomajian, Ian McFarland and June Hoidal of Zimmerman Reed LLP. Becker is also represented by Erin Riley of Keller Rohrback LLP.
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