A new U.S. lawsuit has been leveled against Wells Fargo alleging the company invested more than $3 billion of employee retirement savings into over-priced underperforming, proprietary mutual funds to enrich Wells Fargo and not the employees. The class-action lawsuit, alleged Wells engaged in “self-dealing and imprudent investing” byinvesting 401(k)contributions to its Wells Fargo Dow Jones Target Date funds. 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. The Wells Fargo 401(k) plan has about 350,000 participants and controls about $35 billion in assets.
In addition, Wells Fargo made its target date funds a default investment option, and provided an “easy” and “quick” enrollment feature.
The alleged scheme generated substantial revenues for Wells Fargo and provided “critical seed money that kept the funds afloat by boosting market share,” the complaint said.employees could have earned $323 million more in returns in the five years ended June 30 had Vanguard target date funds been used.
Jeffrey Newman represents whistleblowers.