The agreement came as part of an out-of-court settlement with the US Department of Labor (DoL), which had sued Wells Fargo in December 2001.
The suit alleged that Wells Fargo and the former owners of Toms Sierra Company Inc. caused the petroleum company’s ESOP to lose more than $10 million by buying company stock from the Toms family at prices well above market value. The DoL said its case against the Toms family was ongoing.
According to the DoL, Wells Fargo, the ESOP trustee, approved the sale of the Toms Family interests in the company to the ESOP in October 1998. Some 275 participants were covered by the plan at the time. Toms Sierra operates bulk petroleum facilities, service stations, and tire and auto parts stores in Northern California and Nevada .
Under the settlement, Wells Fargo will cooperate with the DoL in reviewing certain plan clients that hold non-publicly traded shares of the employer’s stock to make sure they comply with ERISA.
In a separate settlement of a private class action lawsuit, Wells Fargo agreed to restore $5.35 million in losses to the Toms Sierra ESOP. Sierra Energy, which bought Toms Sierra in 1998, will pay an additional $5 millionto the ESOP, and will receive the ESOP’s remaining shares of Toms Sierra stockowned by the ESOP upon approval of the class action settlement brought by the plan’s court-appointed trustee.