Plaintiff Yvonne Gipson of Annapolis, Maryland said the service deals for the 401(k) plan represented prohibited transactions under the Employee Retirement Income Security Act (ERISA). Gipson’s suit seeks class action certification on behalf of the nearly 165,000 401(k) participants.
“As a fiduciary for the 401(k) Plan, the Benefit Committee (and its members) was required by the Employee Retirement Income Security Act to act prudently and solely in the interest of the 401(k) Plan and its participants and beneficiaries when selecting investments, products, and services for the 401(k) Plan,” the suit charged. “It did not do so. Instead, it put Wells Fargo’s interests ahead of the 401(k) Plan’s interests by choosing investment products and pension plan services offered and managed by Wells Fargo subsidiaries and affiliates, which generated substantial revenues for Wells Fargo at great cost to the 401(k) Plan.”
The suit charged that the Benefit Committee chose mutual funds offered, and advised by Wells Fargo Funds Management under the Wells Fargo Advantage Funds brand and trustee services provided by Wells Fargo Bank, N.A. Wells Fargo subsidiaries and affiliates, chiefly Wells Funds Management and Wells Bank, received tens of millions of dollars in annual fees from the 401(k) Plan, Gipson alleged.
“The Benefit Committee and its members knew or should have known by virtue of their senior positions at a large financial services company that comparable investment funds and retirement trustee services were available from unaffiliated entities,” the complaint alleged.
Citigroup was recently hit with a lawsuit leveling similar self-dealing allegations of conducting too much plan business with affiliated companies (See Citigroup Sued Over Possible ERISA Violations).
The Wells Fargo suit can be read here.