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Wells Fargo to face lending program class-action suit
NEW YORK |
NEW YORK (Reuters) - Wells Fargo & Co was ordered to face a class-action lawsuit in Minnesota federal court by investors who accuse the bank of improperly touting a lending program as safe when in fact it was risky.
Judge Donovan Frank of U.S. District Court in Minnesota, in certifying the case as a class-action on Tuesday, said the disgruntled investors should proceed as a group because they had common issues and were sufficiently similar.
The City of Farmington Hills Employees Retirement System, a pension plan, sued Wells Fargo in October 2010 on behalf of 100 institutional investors over its securities lending program.
In court papers, the plaintiffs said that starting in 2006, they had invested funds in the lending program, which they said the bank advertised as safe and low-risk.
But Wells Fargo instead invested the money in risky and illiquid financial products such as mortgage backed securities, the plaintiffs said, and in so doing had breached its fiduciary duty.
A spokeswoman for Wells Fargo did not immediately return a request for comment on the ruling.
The case is The City of Farmington Hills Employees Retirement System v. Wells Fargo Bank, U.S. District Court for the District of Minnesota, No. 10-4372.
(Reporting By Basil Katz; Editing by Muralikumar Anantharaman)
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