Thousands of Wells Fargo employees have already been fired for opening unauthorized accounts to meet sales goals, but what about all of those employees who remain at the bank? They’ve seen the value of their 401(k) retirement plan sink during this fake account fiasco, and some are saying that Wells hid the truth from them about the huge bogus account sinkhole that was waiting to collapse underneath them.
“Defendants intentionally withheld material non-public information from [401(k)] Plan Participants invested in Wells Fargo stock and the public at large about a criminal epidemic at Wells Fargo associated with a critical component of Wells Fargo’s business model and key driver of its stock price – i.e., cross-selling,” reads a complaint [PDF] filed recently in a federal court in Minnesota.
The lawsuit contends that Wells Fargo senior executives knew that the company’s high-pressure sales goals and incentives — pushing employees to cross-sell customers on multiple Wells products — were leading some employees to game the system by opening unauthorized accounts in customers’ names. Thus, alleges the complaint, the Wells stock was artificially inflated. The Wells Fargo share price is currently down around 10% from its high point in early September.
The 401(k) plan at the core of the lawsuit is heavily invested in the bank — the complaint also notes that the bank’s matching funds are in the form of Wells stock — and has seen its value drop by around 12% since the scandal broke.
The plaintiff, who seeks to represent all participants in the plan who have invested money since the beginning of 2014, claims that senior Wells executives sold off their shares in the bank before the bank acknowledged the fake accounts publicly.
“As a result of this, as well as other conflicts of interest and fraud, Defendants violated their fiduciary duties to the Plan participants in violation of [the Employee Retirement Income Security Act], causing no less than hundreds of millions of dollars in damages to the Plan,” alleges the suit.
However, Bloomberg points out that this lawsuit faces an uphill battle, as recent, similar actions by employees at Whole Foods, BP, and RadioShack, were each ultimately thrown out out court for failing to meet the threshold for bringing an ERISA suit.
by Chris Morran via Consumerist