Wells Fargo to face class action law suit by investors
28 March 2012
A class-action suit would be brought by investors against Wells Fargo & Co who accuse the bank of improperly pitching a lending programme as safe when in fact it was risky.
Judge Donovan Frank of US District Court in Minnesota, in certifying the case as a class-action yesterday, said aggrieved investors should proceed as a group as they had common issues that were sufficiently similar.
The City of Farmington Hills Employees Retirement System, a pension plan, took Wells Fargo to court in October 2010 on behalf of 100 institutional investors over its securities lending programme.
The plaintiffs said in court papers, that they had been investing funds since 2006, in the lending programme, which they were led to believe was low-risk and safe by the bank.
However the bank instead invested the money in risky and illiquid financial products such as mortgage backed securities, according to the plaintiffs, and had thereby breached fiduciary duty.
The case has been registered as The City of Farmington Hills Employees Retirement System v. Wells Fargo Bank, US District Court for the District of Minnesota.