Wells Fargo employees sue over funds in retirement plans
By Jonathan Stempel
(Reuters) - Wells Fargo & Co WFC.N faces a new U.S. lawsuit claiming that it funneled more than $3 billion of employee retirement savings into expensive, underperforming proprietary mutual funds to enrich itself.
The proposed class-action lawsuit, filed on Tuesday in federal court in Minnesota, accused the third-largest U.S. bank of "self-dealing and imprudent investing" by steering 401(k)contributions to its Wells Fargo Dow Jones Target Date funds.
The lawsuit, filed by employees led by John Meiners, from St. Louis, seeks to recoup excess fees and unrealized profits stemming from Wells Fargo's alleged breach of fiduciary duties to all 401(k) participants over the last six years, the complaint said.
A Wells Fargo spokesman had no immediate comment on Friday.
Wells Fargo already faces many lawsuits over its opening of unauthorized customer accounts, in a scandal that led to last month's departure of the San Francisco-based bank's longtime chief executive, John Stumpf.
Target date funds, also known as lifecycle funds, blend mutual funds that invest in stocks, bonds and cash, shifting the mix based on investors' expected retirement dates.
According to the complaint, Wells Fargo's target date funds cost 2.5 times more than similar funds from such rivals as Fidelity Investments and Vanguard Group.
In the complaint, Meiners said the difference reflected the layering of an extra set of fees to run the funds, on top of fees to manage the underlying indexed funds. Continued...