07 April 2014
Minnesota
Reporter: Georgina Lavers

Wells Fargo wins Blue Cross suit


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.”

More Industry news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Al Ramz Capital gains short selling licence
24 November 2017 | Abu Dhabi | Reporter: Jenna Lomax
Al Ramz Capital is one of the first investment providers to offer short-selling in the UAE
Hedge funds continue 2017 run
23 November 2017 | Madrid | Reporter: Drew Nicol
Global AUM of hedge funds rose 24 percent to $3.2 trillion in the past two years, according to data captured by IOSCO’s latest market survey.
Goldman Sachs appointed by Thrivent for agent lending
23 November 2018 | Minneapolis | Reporter: Jenna Lomax
Thrivent Financial has appointed Goldman Sachs as it new lending agent
Hedge fund industry reaches new highs in Q3
22 November 2017 | London | Reporter: Zsuzsa Szabo
The hedge fund industry has recorded strong performance in Q3 2017, after stumbling in 2016, according to Preqin
Eurex Clearing’s partnership entices strong market interest
20 November 2017 | Frankfurt | Reporter: Zsuzsa Szabo
Citigroup, Deutsche Bank, HSBC and J.P. Morgan Securities, to name but a few, signed up for the programme, which opened its registration in October
ISLA and the CBI tackle UCITS collateral rules
17 November 2017 | Dublin | Reporter: Drew Nicol
The Central Bank of Ireland’s director of policy and risk has confronted industry concerns around stringent collateral re-use and “arbitrary” fee splits for UCITS funds at a roundtable discussion
NEX imbues derivatives platform with KVA analytics
16 November 2017 | London | Reporter: Drew Nicol
KVA calculations determine the lifetime costs of capital as part of the pricing of an OTC derivative and the service will helps firms understand the capital costs an OTC trade will consume over the portfolio’s lifetime.