Wells Fargo wins Blue Cross suit
07 April 2014 Minnesota
Image: Shutterstock
Wells Fargo has won a second suit levelled against it by the health plan provider Blue Cross.
On 24 March, a jury returned a verdict in which it found that the bank did not breach a fiduciary duty to any of the six non-ERISA (Employee Retirement Income Security Act) plaintiffs.
Wells Fargo did not “provide false information or use a deceptive practice in the course of selling the securities lending programme” to each of the six non-ERISA plaintiffs, and it also did not “knowingly misrepresent, directly or indirectly, the true quality of the securities lending programme or its collateral investments in connection with the sale of the securities lending programme to the plaintiffs, the jury found.
The outcome was similar in August of last year, when ERISA plaintiffs from Blue Cross and Blue Shield of Minnesota, which offers health plans for individuals and businesses, alleged that their investments were grossly mismanaged in a securities lending programme.
Blue Cross Blue Shield’s claim stated that: securities lending was offered as a conservative option for investors; and the bank also represented that the collateral would be safely invested in high-grade money market instruments. Neither of these conditions were satisfied, alleged the firms.
But the jury has cleared Wells Fargo of any liability. A statement from the company at the time said: “The verdict validates that Wells Fargo was focused at all times on serving our clients’ interests and that Wells Fargo worked very hard and responsibly to achieve the best results for all participants in the securities lending programme during extremely difficult economic conditions.”
“Our conservative approach was effective, as the plaintiffs in Wells Fargo securities lending program had minimal losses averaging approximately three percent at the same time that the markets were down up to 50 percent during the height of the financial crisis.”
“The jury’s verdict supports our company’s firm belief that the investments made on behalf of our clients were in accordance with investment guidelines and were prudent and suitable.”
On 24 March, a jury returned a verdict in which it found that the bank did not breach a fiduciary duty to any of the six non-ERISA (Employee Retirement Income Security Act) plaintiffs.
Wells Fargo did not “provide false information or use a deceptive practice in the course of selling the securities lending programme” to each of the six non-ERISA plaintiffs, and it also did not “knowingly misrepresent, directly or indirectly, the true quality of the securities lending programme or its collateral investments in connection with the sale of the securities lending programme to the plaintiffs, the jury found.
The outcome was similar in August of last year, when ERISA plaintiffs from Blue Cross and Blue Shield of Minnesota, which offers health plans for individuals and businesses, alleged that their investments were grossly mismanaged in a securities lending programme.
Blue Cross Blue Shield’s claim stated that: securities lending was offered as a conservative option for investors; and the bank also represented that the collateral would be safely invested in high-grade money market instruments. Neither of these conditions were satisfied, alleged the firms.
But the jury has cleared Wells Fargo of any liability. A statement from the company at the time said: “The verdict validates that Wells Fargo was focused at all times on serving our clients’ interests and that Wells Fargo worked very hard and responsibly to achieve the best results for all participants in the securities lending programme during extremely difficult economic conditions.”
“Our conservative approach was effective, as the plaintiffs in Wells Fargo securities lending program had minimal losses averaging approximately three percent at the same time that the markets were down up to 50 percent during the height of the financial crisis.”
“The jury’s verdict supports our company’s firm belief that the investments made on behalf of our clients were in accordance with investment guidelines and were prudent and suitable.”
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