Wells Fargo lost its appeal to throw out a 2010 court verdict ruling that the custodian must pay four Minnesota non-profit organizations $30.1 million in a case involving its securities lending program.
The original $30.1 million verdict was increased to $41.2 million including interest plus a return of the custodians management fees, and further to $54 million including the non-profits legal fees, according to a local news report. The organizations originally sued Wells Fargo in 2008.
A spokesperson says the firm is very disappointed in the ruling and that Wells Fargo is considering a further appeal.
The non-profits include the Minnesota Workers Compensation Reinsurance Association, Minnesota Medical Foundation, the Minneapolis Foundation and the Robins, Kaplan, Miller & Ciresi Foundation for Children. A state jury found the bank guilty of blocking attempts to retrieve funds and failing to notify clients of significant losses. The nonprofits accused Wells Fargo of investing securities lending collateral in structured investment vehicles that collapsed during the sub-prime crisis, rather than safe, liquid instruments promised by the bank.
We continue to believe that the investments made by Wells Fargo on behalf of its clients in the securities lending program were appropriate and in accordance with investment guidelines, the spokesperson says. Wells Fargo was focused at all times on serving our clients interests and we worked very hard and responsibly to achieve the best results for all of the participants in the securities lending program during very difficult economic conditions.
(CG)