Wells Fargo squares up to securities lending lawsuit
28 March 2012 Minnesota
Image: Shutterstock
Institutional investors have filed a lawsuit against Wells Fargo, claiming that the bank miss-sold the safeness of its securities lending program.
The lawsuit was filed by the City of Farmington Hills Employees Retirement System, a Michigan pension fund, on behalf of more than 100 other institutional investors.
It asserts that Wells Fargo ‘touted’ its securities lending programme: “as a highly-secure way for its institutional clients to maximize portfolio returns. Instead, Wells Fargo invested a substantial portion of the collateral in extremely risky securities.”
The investors also claimed that Wells Fargo concealed investment performance from class members to prevent them from exiting the securities lending programme.
Spokeswoman for Wells Fargo Laura Fay said in an e-mail to Reuters: “Wells Fargo categorically denies the allegations made in this lawsuit and will vigorously defend.”
The lawsuit was filed by the City of Farmington Hills Employees Retirement System, a Michigan pension fund, on behalf of more than 100 other institutional investors.
It asserts that Wells Fargo ‘touted’ its securities lending programme: “as a highly-secure way for its institutional clients to maximize portfolio returns. Instead, Wells Fargo invested a substantial portion of the collateral in extremely risky securities.”
The investors also claimed that Wells Fargo concealed investment performance from class members to prevent them from exiting the securities lending programme.
Spokeswoman for Wells Fargo Laura Fay said in an e-mail to Reuters: “Wells Fargo categorically denies the allegations made in this lawsuit and will vigorously defend.”
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