A Minnesota jury slapped Wells Fargo with a $30 million judgment — prompting the bank to proclaim itself “pleased” with the outcome.
The judgment came Wednesday in a suit brought by four nonprofits that lost millions participating in Wells’ securities lending program.
The St. Paul, Minn. Jury found the bank breached its fiduciary duty and committed fraud in selling the supposedly safe investments to the Minneapolis Foundation, the Minnesota Medical Foundation, the Robins Kaplan Miller & Ciresi Foundation for Children, and the Minnesota Workers’ Compensation Reinsurance Association.
The nonprofits lost millions when the securities lending program suffered losses on investments in risky bubble-era structures known as structured investment vehicles. The plaintiffs argued the funds should have been placed in safer investments and claimed the bank prevented them from cashing in their stakes when the market turned sour.
The jury, which handed down the verdict after six weeks of testimony and a day of deliberations, found that Wells provided “false information” or used “a deceptive practice in the course of selling the securities lending services” to the organizations, the Minneapolis Star Tribune reported.
The jury awarded the plaintiffs $14 million for Wells’ breach of fiduciary duty and $16 million for fraud. But it rejected the plaintiffs’ biggest claim, that Wells engaged in “conversion” by taking their securities. The nonprofits had sought $374 million on that claim.
The bank could receive additional penalties after the jury decides on punitive damages, the paper reported. Lawyers are to present arguments on that subject today.
Yet even as it sports what looks like a $30 million shiner, the bank is portraying the decision as a victory of sorts.
“We are pleased that the jury denied the plaintiffs the amount of damages they were seeking, which was radically above the investment losses incurred, and validated that there was no breach of contract or conversion by Wells Fargo Securities Lending,” Wells told Bloomberg in an email.
Talk about defining victory down. Wells shares were off 1% at midday Thursday.