Wells Fargo Settles ERISA Breach of Fiduciary Duty Suit for $32.5M

After a Minnesota federal district court judge denied its motion to dismiss a proposed ERISA class action suit in May, Wells Fargo & Co. has agreed to settle the case by paying $32.5 million. The employees claimed that Wells Fargo had violated ERISA by mismanaging their 401(k) plan. More specifically, the workers alleged that Wells Fargo had breached its fiduciary duty by offering expensive proprietary investment options despite better performing and lower-cost options. 

According to Wells Fargo, $32.5 million represents 40% of all fee damages resulting from alleged ERISA violations of prohibited party-in-interest and self-dealing transactions. Workers claimed that their employer’s actions were not in their best interest, but Wells Fargo will admit no wrongdoing under the settlement terms. 

When the proposed class filed suit in March 2020, attorneys estimated that it included about 340,000 individuals and $40 billion in assets. That number grew to about 400,000 potential class members who had invested in at least one of the challenged funds, as the case wore on. The largest group of employees, or about 16% of the proposed class, live in California. The settlement class consists of all Wells Fargo 401(k) plan participants between March 13, 2014, and the settlement date. Members of the settlement class can receive a settlement in a check or a qualified rollover into an individual retirement account. 

The district court judge issued an order, preliminarily approving the settlement on April 25, 2022. The case is Becker v. Wells Fargo & Co. et al., case number 20-cv-2016, the U.S. District Court for the District of Minnesota

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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