Chattanooga, Tennessee’s Fire and Police Pension Fund has filed a lawsuit against its trustee, Wells Fargo, claiming the bank provided inaccurate and incomplete information about revenue it received that was intended for the fund.
In court filings, the fund accused Wells Fargo of “what appears to be systemic nondisclosures, or incomplete disclosures, of revenue paid by third parties.”
The fund’s board of directors said it has been investigating potential fraud and overcharging by Wells Fargo for the last several months in connection with compensation paid by mutual funds to Wells Fargo. The fund said that Wells Fargo’s “answers have changed over time” revealing ever-greater amounts of undisclosed revenue sharing, systemic errors, and incomplete records.
“The board has lost confidence that the answers provided by Wells [Fargo] to date are complete,” said the fund on its website, adding that it “is also concerned that other trust and fiduciary accounts may have been similarly harmed.”
The fund said it is “appropriate” to file a whistleblower complaint with the SEC and Commodity Futures Trading Commission (CFTC), providing regulators with original information regarding its investigation.
In the lawsuit, the fund said that once the potential overcharging was found that Wells Fargo “proceeded to provide inaccurate and/or incomplete information related to undisclosed, or incompletely disclosed, revenue sources from third parties that conflict, or may conflict, with its fiduciary and contractual obligations to the fund and its beneficiaries.”
The fund said the lawsuit is intended to compel Wells Fargo “to fulfill its contractual and fiduciary obligations to the fund and its beneficiaries by fully accounting for and disclosing all revenue sources received … related to defendant’s role as trustee for the fund.”
Wells Fargo, which has been having public relations issues over the past few years over charges it opened millions of accounts and new credit cards in its customers’ names without their knowledge or permission, admitted it made mistakes as the trustee for the pension fund, but said it corrected the errors.
“We acknowledge that because there was a change directed by the client in 2017, we made an error in setting up the revenue sharing associated with that change appropriately and the revenue share rebates did not occur as intended,” said Leslie Ingberg, vice president of corporate communications for Wells Fargo, according to the Chattanooga Times Free Press. “We are sorry this error occurred, and upon discovery the issue was fixed and the total revenue share received from the third-party fund companies (approximately $15,000) was returned to the pension fund.”