ERISA Class Action Filed Against Wells Fargo

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In the wake of the embattled bank’s fake accounts scandal, a class action has been filed by current and former Wells Fargo employees claiming the fiduciaries of their 401(k) plans violated the Employee Retirement Income Security Act (ERISA). Filed in Minnesota, the 70-page complaint says the proposed class looks to recover millions in economic damages after Wells Fargo stock prices plummeted by nine percent—and have since remained stagnant—once news of the fake account scandal became public. “The longer that Wells Fargo’s fraud went on, the more [401(k)] Plan purchasers bought at artificially inflated prices,” the suit claims, “and the size of the harm to each purchaser increased over time as the stock price inflated.”

The lawsuit alleges the changes Wells Fargo announced to its business practices, including the elimination of sales quotas and its incentive compensation system, will likely reduce the bank’s already inflated revenues for years to come. Plaintiffs say the defendants should have known Wells Fargo stock had become volatile since undisclosed information about the company’s business practices had contributed to artificially inflating its stock prices. “Defendants’ inaction towards the known fraud caused not merely theoretical harm,” the complaint says, “but concrete damage.”