Wells Fargo & Co. has agreed to pay $32.5 million to settle a class-action lawsuit that alleged the company violated sections of the Employee Retirement Income Security Act.
Yvonne Becker, who was a participant in Wells’ $40 billion 401(k) plan and an employee for 26 years, filed suit against Wells Fargo in 2020. The lawsuit alleged that several proprietary collective investment trusts in the 401(k) plan, including Wells Fargo's target-date series, were bad choices because less expensive, better-performing products were available from third parties.
The settlement, filed April 1 in U.S. District Court for the District of Minnesota, recovers 40% of plan participant's estimated fee damages. Plaintiffs estimate that at least 400,000 class members invested in at least one of the challenged funds, according to court papers.
Under the proposed settlement, payments will be automatically deposited in the Wells Fargo 401(k) plan accounts of all current participants, while former participants will receive their distribution via check, or as a roll-over into a qualified retirement account.
Having led the division of enforcement since 2021, Grewal's tenure included record penalties against firms for securities-law violations.
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