Institutional clients sue Wells Fargo
St. Louis Business Journal
Three foundations and an insurance fund sued Wells Fargo & Co. Wednesday, accusing the financial company of defrauding them of millions of dollars by investing in mortgage-backed securities.
The lawsuit -- filed on behalf of the Minnesota Workers’ Compensation Reinsurance Association (WCRA), the Minnesota Medical Foundation, the Minneapolis Foundation and the Robins, Kaplan, Miller & Ciresi Foundation for Children -- accused a unit of Wells Fargo of consumer fraud and unlawful trade practices.
According to media reports, the four plaintiffs have lost more than $16 million.
Michael Ciresi, a consumer lawyer with Robins, Kaplan, Miller & Ciresi, filed the suit. It alleges that instead of investing in money market instruments, some of the plaintiffs’ money was invested in more risky investments, and that financial statements were altered to inflate the investments’ value.
San Francisco-based Wells Fargo (NYSE: WFC) said in a statement that it disputed the allegations. “Like all investments, the investors bear the risk of their investment losses. We intend to vigorously defend this action.”
Wells Fargo & Co. is buying Wachovia Corp. for $15 billion. Wachovia's brokerage unit, Wachovia Securities, is based in St. Louis and employs 4,800.
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