The Chattanooga, Tenn., Fire and Police Pension Fund intends to file a whistleblower complaint with the Securities and Exchange Commission and Commodity Futures Trading Commission against Wells Fargo, its custodian and trustee, alleging potential fraud and overcharging, the pension fund said in a statement on its Facebook page.
The $225 million pension fund said in the statement that its board and staff have been investigating for several months the compensation paid by mutual funds to Wells Fargo. The statement said the company, which has been the pension fund's custodian and trustee since 2005, has provided answers that "have changed over time revealing ever-greater amounts of undisclosed revenue sharing, systemic errors and incomplete records." The statement says the board has lost confidence that Wells Fargo's answers to date are complete and it is now appropriate to file the whistleblower complaint.
"The board is also concerned that other trust and fiduciary accounts may have been similarly harmed," the statement said.
Wells Fargo spokeswoman Leslie Ingberg said in an email that the company acknowledges "that because there was a change directed by the client in 2017, we made an error in setting up the revenue sharing associated with that change appropriately and the revenue-share rebates did not occur as intended. We are sorry this error occurred, and upon discovery the issue was fixed and the total revenue share received from the third-party fund companies (approximately $15,000) was returned to the pension fund. We have been in active dialogue with the client and have been committed to resolving this matter and are disappointed they felt the need to file a complaint requesting information we have provided and are very willing to provide."
Katrina Abbott, the pension fund's administrator, could not immediately provide further information.
Rob Kozlowski is a reporter at InvestmentNews' sister publication Pensions&Investments.