Wells Fargo is the latest 401(k) plan provider to settle on a class-action case on their own plan.
Wells Fargo has agreed to pay a settlement amount of $32.5 million.
The original lawsuit claimed that upon the creation of their proprietary Wells Fargo/State Street Target collective investment trusts, or Target Date CITs, Wells Fargo added the CITs to the plan even though the funds had no prior performance history or track record which could demonstrate that they were prudent. Despite the lack of a track record, the committee defendants “mapped” nearly $5 billion of participants’ retirement savings from the plan’s previous target-date option into the Target Date CITs.In addition, the lawsuit claims that Wells Fargo also used the plan’s assets to fund the Wells Fargo/Causeway International Value Fund, as the plan’s assets constituted more than 50% of the total assets in the fund at year-end 2014.
It was also alleged that Wells Fargo selected and retained 17 Wells Fargo proprietary funds within the Plan, many of which underperformed the market.
The settlement comes after a federal judge refused Wells Fargo’s motion to throw out the case.