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September 12, 2022 at 10:53 AM
What You Need to Know
- Wells Fargo and a plan trustee caused the plan to pay more for stock than it would be worth when deposited in participants’ accounts.
- The bank agreed to put $131.8 million into a trust for current and former plan participants.
- It will also pay a penalty of nearly $13.2 million.
The Labor Department on Monday said it has reached a settlement with Wells Fargo and Company, Wells Fargo Bank and GreatBanc Trust Company — a plan trustee — that recovers more than $131.8 million for the retirement plan’s participants after a department investigation found that, from 2013 through 2018, the fund overpaid for company stock purchased for the plan.
Wells Fargo also agreed to pay a penalty of nearly $13.2 million as part of the settlement.
Wells Fargo and GreatBanc entered into the settlement without admitting or denying the allegations made by the department.
Labor Secretary Marty Walsh said Labor’s investigation “found those responsible for Wells Fargo’s 401(k) plan paid more than fair market value for employer stock and, by doing so, betrayed the trust of the plan’s current and future retirees.”
The settlement “shows the Department of Labor will act when we find retirement assets are misused and benefit plans suffer,” Walsh said.
The action follows an investigation by the department’s Employee Benefits Security Administration that determined Wells Fargo and GreatBanc Trust Co. caused the 401(k) plan to pay between $1,033 and $1,090 per share for Wells Fargo preferred stock.
“Specifically designed for the plan, the stock converted to a set value of $1,000 in Wells Fargo common stock when allocated to participants,” Labor explained. “In transactions between 2013 and 2018, the plan borrowed money from Wells Fargo to purchase the preferred stock.”
Wells Fargo and GreatBanc caused the plan to pay more for stock than it would be worth when deposited in participants’ accounts.
