SOURCE: Brodsky & Smith, LLC

November 16, 2005 15:09 ET

Law Offices of Brodsky & Smith, LLC Announces Class Action Lawsuit Against Wells Fargo & Co.

BALA CYNWYD, PA -- (MARKET WIRE) -- November 16, 2005 -- Law offices of Brodsky & Smith, LLC announces that a securities class action lawsuit has been filed against Wells Fargo & Company (NYSE: WFC), and certain of its affiliates, on behalf of all persons who purchased from Wells Fargo Investments, LLC ("Wells Fargo Investments") or H.D. Vest Investment Services, LLC ("H.D. Vest") one or more of the Wells Fargo proprietary funds ("Wells Fargo Funds," as defined below) or non-proprietary funds participating in the Revenue Sharing Program (the "Wells Fargo Preferred Funds" and "H.D. Vest Preferred Funds," as defined below), from June 30, 2000 through June 8, 2005, inclusive (the "Class Period"), seeking to pursue remedies under the Securities Act of 1993 (the "Securities Act"), the Securities Exchange Act of 1934 (the "Exchange Act"), the Investment Company Act of 1940 (the "Investment Company Act"), and state law. The class action lawsuit was filed in the United States District Court for the Northern District of California.

The "Wells Fargo Preferred Funds" includes mutual funds in the following mutual fund families: Franklin Templeton Investments, Putnam Investments, MFS Investment Management, Fidelity Investments, Evergreen Investments, Alliance Bernstein Investment Research and Management, Van Kampen Investments, AIM Distributors, Inc., Oppenheimer Funds, Inc., Eaton Vance Managed Investments, ING Funds Distributors, LLC, Allianz Global Investors Distributors, LLC, Federated, The Hartford Mutual Funds, Dreyfus Service Corporation, Delaware Investments, Pioneer Investment Management, Inc., Scudder Investments, and Wells Fargo Mutual Funds.

The "H.D. Vest Preferred Funds" includes mutual funds in the following families: Oppenheimer Funds, Putnam Investments, Scudder Investments, MFS Investment Management, Van Kampen Investments, Lincoln Financial Distributors, AIM Investments, Phoenix Investment Partners, John Hancock Funds, Wells Fargo Funds, American Funds, and Franklin Templeton Investments.

The complaint alleges that during the Class Period, defendants served as financial advisors who purportedly provided unbiased and honest investment advice to their clients. Unbeknownst to investors, defendants, in clear contravention of their disclosure obligations and fiduciary responsibilities, failed to properly disclose that they had engaged in a scheme to aggressively push Wells Fargo Investments and H.D. Vest sales personnel to steer clients into purchasing certain Wells Fargo Funds and Wells Fargo and H.D. Vest Preferred Funds (collectively, "Shelf Space Funds") that provided financial incentives and rewards to Wells Fargo and H.D. Vest and their personnel based on sales. The complaint alleges that defendants' undisclosed sales practices created an insurmountable conflict of interest by providing substantial monetary incentives to sell Shelf-Space Funds to their clients, even though such investments were not in the clients' best interest. Wells Fargo Investments and H.D. Vest's failure to disclose the incentives constituted violations of federal securities laws.

The action also includes a subclass of persons who held any shares of Wells Fargo Mutual Funds. The complaint additionally alleges that the investment advisor subsidiary of Wells Fargo, Wells Fargo Funds Management, created further undisclosed material conflicts of interest by entering into revenue sharing agreements with brokers at Wells Fargo Investments and H.D. Vest to push investors into Wells Fargo Funds, regardless of whether such investments were in the investors' best interests. The investment advisors financed these arrangements by illegally charging excessive and improper fees to the fund that should have been invested in the underlying portfolio. In doing so they breached their fiduciary duties to investors under the Investment Company Act and state law and decreased shareholders' investment returns.

The action includes a second subclass of persons who purchased a Wells Fargo Financial Plan that held Wells Fargo Funds. The Wells Fargo Financial Plans include, but are not limited to Full Service Brokerage Accounts, Wells Asset Management accounts, WellsChoice account, and WellsSelect account.

No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you purchased this stock during the above referenced class period you have certain rights. To be a member of the class you need not take any action at this time, and you may retain counsel of your choice. If you want to discuss your legal rights, you may e-mail or call the law office of Brodsky & Smith, LLC who will, without obligation or cost to you, attempt to answer your questions. You may contact Evan J. Smith, Esquire or Marc L. Ackerman, Esquire at Brodsky & Smith, LLC, Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by e-mail at clients@brodsky-smith.com, or by calling toll free 877-LEGAL-90.

Contact Information

  • Contact:
    Evan J. Smith, Esquire
    Marc L. Ackerman, Esquire
    Brodsky & Smith, LLC
    Email Contact
    877-LEGAL-90