401(k) Participant Accuses Wells Fargo of Self-Dealing

A participant in the Wells Fargo&Company 401(k) Plan has sued the financial services company and a number of its executives over allegations the plan improperly did million of dollars in plan business with Wells Fargo-affiliated entities.

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.”

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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.

Principal Tool Simplifies Financial Liability Forecasting for ESOPs

The Principal Financial Group has a new tool that makes financial liability forecasting for Employee Stock Ownership Plans (ESOPs) easier and more efficient.

My Principal ESOP Repurchase Liability Solution (My PERLS) will be available in early 2008, and the Web-based solution will make it easy for plan sponsors to complete a repurchase liability study at their convenience, the announcement said. Plans’ annual census data can be fed into My PERLS automatically, eliminating duplicative efforts and increasing the accuracy of projections, according to the company.

Plan sponsors will use My PERLS to project the amount of cash needed to fund future distributions to participants who leave the company. The tool uses a client’s most recent year-end data to make assumptions about value and growth of the workforce and analyzes key factors such as employee compensation levels, vesting schedules, employee gender, and typical employee turnover rates.

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My PERLS is provided as a standard tool to ESOP clients of The Principal.

More information is available at
www.principal.com/MyPERLS.

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