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
Stock loan falls short for buy side as liquidity source
25 July 2017 | London | Reporter: Jenna Lomax
Securities lending was voted the least popular source of liquidity in a survey of European buy-side heads of operations
Hedge fund H1 gains best since 2009
25 July 2017 | London | Reporter: Drew Nicol
The hedge fund industry has recorded one of its strongest H1 performance periods since the financial crisis, according to data and intelligence provider Preqin
Northern Trust’s Q2 lending revenue stutters
24 July 2017 | New York | Reporter: Drew Nicol
Northern Trust saw its securities lending earnings fall to $24.6 million in Q2
Euroclear achieves record-breaking H1 collateral volume
21 July 2017 | Frankfurt | Reporter: Jenna Lomax
Post-trade service provider Euroclear saw achieved "record levels" of collateral outstanding through its Collateral Highway in the first half of 2017
BNY Mellon rakes in $48 million
21 July 2017 | New York | Reporter: Mark Dugdale
BNY Mellon recorded securities lending revenue of $48 million in Q2 2017, as assets under custody and administration reached $31.1 trillion
Northern Trust commits to EU hub
20 July 2017 | Luxembourg | Reporter: Drew Nicol
Northern Trust is set to establish a banking presence in Luxembourg, and has appointed a new head of continental Europe, in a move that it says is “further establishing its commitment to the region”
Strate and CloudMargin partner for South African OTC derivatives solution
19 July 2017 | Sandton, South Africa | Reporter: Drew Nicol
CloudMargin and South African central securities depository Strate have integrated their platforms to provide improved automation and efficiencies to the country’s OTC derivatives market