The lawsuit alleges that through its administration of its Securities Lending Program, Wells Fargo breached its contractual agreements with and fiduciary duties to the Class and violated the Minnesota Prevention of Consumer Fraud Act. The Court has made no determination with respect to the validity of these claims and Wells Fargo contends that it breached no duties to the Named Plaintiffs or any members of the Class.
Specifically, the Action alleges that Named Plaintiffs and other Class Members entered into securities lending agreements with Wells Fargo. Pursuant to such agreements, Wells Fargo loaned Named Plaintiffs’ and Class Members’ securities to third party borrowers in return for cash collateral. In their Complaint, Named Plaintiffs alleged that Wells Fargo acted imprudently by investing and maintaining the securities lending collateral in high risk, long-term securities on behalf of members of the Class, which violated the express terms and principal objectives of the securities lending agreements. The alleged high risk, long-term securities included, but were not limited to, securities issued by structured investment vehicles, including Cheyne and Victoria, mortgage-backed securities, other asset-backed securities, and corporate bonds for such companies as Lehman Brothers and Bear Stearns. Finally, Named Plaintiffs allege that Wells Fargo’s improper conduct as the fiduciary of the Securities Lending Program caused substantial losses to Named Plaintiffs and members of the Class.
During discovery in this case, the Plaintiffs’ Counsel produced and/or reviewed over 7,087,500 pages of documents: in total, approximately 6,817,281 pages were produced by Wells Fargo, approximately 133,661 by Named Plaintiffs, and approximately 136,564 by third parties. Plaintiffs’ Counsel took, defended, and/or had access to more than 90 depositions. Those depositions resulted in approximately 22,725 pages of recorded testimony and the inclusion of approximately 2,399 exhibits. The parties filed various motions, including motions for partial summary judgment.
Counsel for the Settling Parties aggressively litigated this case for more than three years and the parties settled less than two days before the trial was scheduled to commence. The Settlement is the product of hard-fought, arm’s-length negotiations between Plaintiffs’ Counsel and Wells Fargo’s Counsel spanning multiple mediation sessions, facilitated by nationally recognized mediator, Layn Phillips, a former United States Federal Judge and United States Attorney with substantial experience mediating complex litigations of this type. Counsel for the Settling Parties agreed to this Settlement only after its terms were thoroughly and extensively negotiated.
In a class action, one or more plaintiffs, called “named plaintiffs,” sue on behalf of people who have similar claims. All of the individuals on whose behalf the Named Plaintiffs in this Action are suing are members of a “class” referred to as Class Members or members of the Class. Because Named Plaintiffs believe that the wrongful conduct alleged in this case affected a large number of participants in Wells Fargo’s Securities Lending Program in a highly similar way, the Named Plaintiffs filed this case as a putative class action. United States Judge Donovan W. Frank is presiding over this case.
The Court has not expressed any opinions or reached any decisions on the ultimate merits of the Named Plaintiffs’ claims against Wells Fargo. Instead, the Named Plaintiffs and Wells Fargo have agreed to a Settlement to resolve the Action. In reaching the Settlement, they have avoided the cost and time of proceeding to trial, as well as an appeal of the Court’s certification ruling or trial outcome. As with any litigation, the Named Plaintiffs would face an uncertain outcome if this case proceeded further. Pursuing the case against Wells Fargo could result in a verdict offering relief greater than this Settlement, a verdict for less money than the Named Plaintiffs have obtained in this Settlement, or no recovery at all. Based on these risks and an evaluation of other unique risks presented by this case, the Named Plaintiffs and Plaintiffs’ Counsel believe the Settlement is in the best interests of all members of the Class. Additional information concerning the Settlement and these factors is available in the motion for preliminary approval of the Settlement, which may be obtained on the Court Documents page of this website.
As stated above, this Settlement is the product of extensive arm’s-length negotiations between Plaintiffs’ Counsel and Wells Fargo’s Counsel, all of whom are very experienced with respect to complex litigation of this type. Plaintiffs’ Counsel believe the proposed Settlement is fair, reasonable and adequate and in the best interest of the Class.
United States Judge Donovan W. Frank certified the following Class:
“All participants in Defendant Wells Fargo Bank, N.A.’s securities lending program (the “Program”), excluding Wells Fargo Bank, N.A., from any time in the period January 1, 2006 to the present who suffered losses due to the Program’s purchase and maintenance of high risk, long-term securities.”
If you are a member of the above Class, and have not previously submitted an Exclusion Request Form, your share of the Net Settlement Fund will be determined by the Court-approved Plan of Allocation.
A Gross Settlement Fund consisting of $62,500,000 (sixty-two million five-hundred thousand dollars) in cash, plus interest that accrues on this amount, is being established in this Action. Your actual recovery will depend upon the net amount in the Gross Settlement Fund (after disbursements and reserves for certain amounts as described in the Settlement, including expenses associated with Notice to the Class, Court-approved attorneys’ fees, expenses and Named Plaintiffs’ Service Awards, taxes and other costs related to the administration of the Gross Settlement Fund and implementation of the Plan of Allocation (the “Net Settlement Fund”)), which will be allocated and paid to Class Members according to a Plan of Allocation to be approved by the Court.
The Settlement will provide for either (i) cash payments to Class Members who have already exited Wells Fargo’s Securities Lending Program, or (ii) credit toward the payment of cash due to third-party borrowers for those Class Members who have not previously exited Wells Fargo’s Securities Lending Program. The treatment of any distribution or credit varies based upon the recipient’s tax status and treatment of his, her or its investments. The tax treatment of any distributions from the Net Settlement Fund, whether in the form of cash, or credit toward the payment of cash due to third-party borrowers for those Class Members who have not previously exited Wells Fargo’s Securities Lending Program, is the responsibility of each recipient. You should consult your tax advisor to determine the tax consequences, if any, of any distribution or credit to you.
In exchange for the Settlement payment, all Authorized Recipients and anyone claiming through them are deemed to fully release the Settled Claims, and are forever enjoined from bringing any of the Settled Claims against any of the Wells Fargo Releasees. The Wells Fargo Releasees are defined in the Settlement; generally, they are Wells Fargo and certain affiliated or otherwise related persons and entities. The Settled Claims, also defined in the Settlement, generally include, subject to certain limitations set forth in the Settlement, all claims asserted in this Action, as well as any claims that could have been asserted in any forum by or on behalf of the members of the Class which arise out of or are based on the allegations, transactions, facts, matters or occurrences, or alleged representations or omissions out of which the claims in this Action arose. This means that Authorized Recipients will not have the right to sue the Wells Fargo Releasees for any such claims if the Settlement is approved.
Class Members that have not previously exited Wells Fargo’s Securities Lending Program should be aware that Wells Fargo will be terminating its Securities Lending Program on the following terms. Within six months after Final Approval, each such Class Member will be required to make a capital contribution. The capital contribution will be equal to:
The Realized Loss figure, Current Cost Basis, and rebates due will be determined by Wells Fargo in good faith. Following Wells Fargo’s receipt of the required capital contribution from the Class Member, Wells Fargo will:
Wells Fargo will offer an optional bulk sale opportunity for the disposition of collateral portfolio assets in which such Class Members may, but need not participate. The Settlement does not release any Class Member’s obligation to make the required cash contribution or return any collateral due to third-party borrowers, or require Wells Fargo to continue operating its Securities Lending Program beyond six months after Final Approval.
The description of the Settlement in the Notice is only a summary. The complete terms, including the definitions of the Wells Fargo Releasees and Settled Claims, are set forth in the Settlement (including its exhibits), which may be obtained on the Court Documents page of this website, or by contacting Class Counsel listed below.
At the Final Approval Hearing, Plaintiffs’ Counsel will request the Court approve the Plan of Allocation attached to the Notice as Exhibit 1. The Plan of Allocation describes the manner by which the Net Settlement Fund will be distributed to Authorized Recipients. In general terms, the Net Settlement Fund will be allocated to Authorized Recipients in accordance with the Plan of Allocation attached to the Notice as Exhibit 1. Because the Net Settlement Fund will be less than the total losses alleged to have been suffered in the Action, each Authorized Recipient’s proportionate recovery will be less than its, his or her alleged loss. You are not responsible for calculating the amount you may be entitled to receive under the Settlement. This calculation will be done as part of the implementation of the Settlement, and will be based on reasonably available information. Many factors will affect the ultimate amount of your share of the Net Settlement Fund.
No Authorized Recipient whose pro rata share of the Net Settlement Fund is less than $5.00 shall receive a distribution from the Net Settlement Fund. Rather, that Authorized Recipient’s pro rata share of the Net Settlement Fund shall be redistributed among all remaining Authorized Recipients.
You do not need to take any further action to receive your portion of the recovery either in the form of cash or as a credit toward the payment of cash due to third-party borrowers for those Class Members who have not previously exited Wells Fargo’s Securities Lending Program, as set forth in the Plan of Allocation attached to the Notice as Exhibit 1. However, it is recommended that you contact the Settlement Administrator to ensure that your contact information is up to date.
Payment is conditioned on several matters, including the Court’s approval of the Settlement and that approval becoming Final and no longer subject to any appeals. Upon satisfaction of various conditions, the Net Settlement Fund will be distributed to Authorized Recipients in the form of cash, or used for their benefit as a credit toward the payment of cash due to third-party borrowers for those Class Members who have not previously exited Wells Fargo’s Securities Lending Program. These payments and credits will occur pursuant to the terms of the Plan of Allocation (attached to the Notice as Exhibit 1) as soon as practicable after Final Approval has been obtained for the Settlement, including the exhaustion of any appeals. Any appeal of the Final Approval could take more than a year. Interest accrued on the Gross Settlement Fund will be included in the amount allocated and paid to the eligible Authorized Recipients. The Settlement may be terminated on several grounds, including if the Court does not approve or otherwise materially modifies the terms of the Settlement. If the Settlement is terminated, the Action will proceed as if the Settlement had not been reached.
No. If you did not previously submit an Exclusion Request Form, you are unable to exclude yourself from the Settlement. You do, however, have an opportunity object to the Settlement as discussed in FAQ 12, below.
The Court has appointed Glancy Binkow & Goldberg LLP, The Miller Law Firm P.C., VanOverbeke Michaud & Timmony P.C., and Zimmerman Reed PLLP as Class Counsel for the Named Plaintiffs and the Class. You will not be charged directly by these firms or the other firms representing the Named Plaintiffs in this case. If you want to be represented by your own lawyer, you may hire one at your own expense.
Class Counsel will apply to the Court for an award of attorneys’ fees and reimbursement of expenses for their work. The application for attorneys’ fees will not exceed 33.3% of the Gross Settlement Fund (equal to $20,833,333), exclusive of costs and expenses incurred in connection with the prosecution of this Action. Class Counsel’s request for reimbursement of expenses will not exceed $2,450,000. Any award of fees and expenses incurred by Class Counsel in prosecuting the Action on behalf of the Class will be paid from the Gross Settlement Fund prior to allocation and payment to Authorized Recipients. The written application for fees and expenses, together with the application for Service Awards to the Named Plaintiffs, will be filed by July 10, 2014, and the Court will consider this application at the Final Approval Hearing. A copy of the application will be available on the Court Documents page of this website or by a requesting a copy from Class Counsel.
To date, Class Counsel have not received any payment for their services in prosecuting this Action on behalf of the Class, nor have counsel been reimbursed for their out-of-pocket expenses incurred in connection with litigating this Action. The fee requested by Class Counsel would compensate appointed counsel for their efforts in achieving the Settlement for the benefit of the Class and for their risk in undertaking this representation on a contingency basis. The Court will determine the actual amount of the award.
Objecting to the Attorneys’ Fees
By following the procedures described in the answer to FAQ 12, you can tell the Court that you do not agree with the fees and expenses the attorneys intend to seek and ask the Court to deny their motion or limit the award.
Any Authorized Recipient may appear at the Final Approval Hearing and explain why he or she thinks the Settlement of the Action against Wells Fargo as embodied in the Settlement Agreement should not be approved as fair, reasonable and adequate and why a judgment should not be entered thereon, why the attorneys’ fees and expenses should not be awarded, in whole or in part, or why the Named Plaintiffs should not be awarded a Service Award, in whole or in part. However, no Authorized Recipient shall be heard or entitled to contest these matters unless such Authorized Recipient has filed with the Court written objections (which state all supporting bases and reasons for the objection, set forth proof of their membership in the Class, clearly identify any and all witnesses, documents and other evidence of any kind that are to be presented at the Final Approval Hearing in connection with such objections, and further describe the substance of any testimony to be given by themselves as well as by any supporting witnesses).
To object, you must send a letter or other written statement saying that you object to the Settlement, the attorneys’ fee award, expenses, and/or the Service Awards in The City of Farmington Hills Employees Retirement System, et al. v. Wells Fargo Bank, N.A., Case No. CIV 10-4372-DWF-JJG. Be sure to include your name, address, telephone number, signature, and a full explanation of all reasons why you object to the Settlement. Your written objection must be filed with the Court, and served upon the counsel listed below, by no later than July 24, 2014:
File with the Clerk of the Court:
|Clerk of the Court
District of Minnesota
Warren E. Burger Federal Building and United States Courthouse, Suite 100,
St. Paul, Minnesota 55101
Re: The City of Farmington Hills Employees Retirement System, et al. v. Wells Fargo Bank, N.A., Case No. CIV 10-4372-DWF-JJG
And, by the same date, serve copies of all such papers by mail to each of the following:
Peter A. Binkow
Glancy Binkow & Goldberg LLP
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
|Wells Fargo’s Counsel:
Zelle Hofmann Voelbel & Mason LLP
500 Washington Avenue South, Suite 4000
Los Angeles, CA 90067
Minneapolis, MN 55415
|E. Powell Miller
The Miller Law Firm, P.C.
950 W. University Drive, Suite 300
Rochester, MI 48307
UNLESS OTHERWISE ORDERED BY THE COURT, ANY CLASS MEMBER WHO DOES NOT OBJECT IN THE MANNER DESCRIBED HEREIN WILL BE DEEMED TO HAVE WAIVED ANY OBJECTION AND SHALL BE FOREVER FORECLOSED FROM MAKING ANY OBJECTION TO THE PROPOSED SETTLEMENT AND THE APPLICATION FOR ATTORNEYS’ FEES AND EXPENSES AND SERVICE AWARDS.
The Court will hold a Final Approval Hearing at 9:00 a.m. on August 14, 2014, in Courtroom 7C before the Honorable Donovan W. Frank in the United States District Court for the District of Minnesota, Warren E. Burger Federal Building and United States Courthouse, St. Paul, Minnesota 55101.
IF YOU DO NOT WISH TO OBJECT TO THE PROPOSED SETTLEMENT OR THE APPLICATION FOR ATTORNEYS’ FEES AND EXPENSES AND SERVICE AWARDS, YOU NEED NOT ATTEND THE FINAL APPROVAL HEARING.
At the hearing, the Court will consider whether the Settlement is fair, reasonable and adequate. If there are objections, the Court will consider them. After the Final Approval Hearing, the Court will decide whether to approve the Settlement. The Court will also consider the motions for attorneys’ fees, expenses and Service Awards to the Named Plaintiffs, as well as the proposed Plan of Allocation. We do not know how long these decisions will take.
Class Counsel will answer any questions that the Court may have about the Settlement at the Final Approval Hearing. You are not required to attend the Final Approval Hearing but are welcome to come at your own expense. If you send an objection, you do not have to come to Court to discuss it. As long as you filed your written objection on time, it will be before the Court when the Court considers whether to approve the Settlement as fair, reasonable and adequate. You may also have your own lawyer attend the Final Approval Hearing at your expense, but such attendance is not mandatory.
If you are a Class Member and you have filed a timely objection, if you wish to speak, present evidence or present testimony at the Final Approval Hearing, you must state in your objection your intention to do so, and must identify any witnesses you intend to call or evidence you intend to present.
The Final Approval Hearing may be rescheduled by the Court without further notice to the Class. If you wish to attend the Final Approval Hearing, you should confirm the date and time with Class Counsel.