The Nebraska Public Power District Employees Retirement Plan is seeking $1.5 million in damages from Wells Fargo, alleging Wells Fargo employed “fraud, false promises, misleading statements and deceptive practices” while breaching its fiduciary duty to act in the retirement plan’s best interests, the Columbus Telegram reports.
The lawsuit contends that Wells Fargo promoted the lending program as a near risk-free way for the plan to maximize portfolio returns; however, Wells Fargo actually invested some of the cash collateral in risky investments that lost value during the financial meltdown of 2008. According to the news report, the lawsuit asserts that the bank negligently misrepresented and concealed information regarding the lending program and did not provide accurate, timely information that would have allowed the trust fund committee to protect the property interests of the retirement plan.
“In June and July (2008), Wells Fargo dissuaded the retirement plan from withdrawing from the Securities Lending Program,’’ the lawsuit stated. By November of 2008, Wells Fargo advised the trust committee for the first time that the retirement plan was losing money by participating in the securities program.
The lawsuit was filed in October in Nebraska’s Platte County District Court, but has since been moved to a federal court.
Wells Fargo is facing other lawsuits related to the securities lending program of Wachovia Corp. before it was acquired by Wells Fargo in December 2008 (see “Ohio SERS Sues Wells over $24M SecLending Loss”).