Wells Fargo and GreatBanc Trust Company, a plan trustee, will recover more than $131.8 million for retirement plan participants after an investigation by the Labor Department. The investigation found that from 2013 through 2018, the fund overpaid for company stock purchased for the plan.
The investigation found that those responsible for Wells Fargo's 401(k) plan paid more than fair market value for employer stock. The 401(k) plan paid between $1,033 and $1,090 per share for Wells Fargo preferred stock, according to ThinkAdvisor. Wells Fargo used the dividends paid on the preferred shares to defray its obligation to make contributions to the 401(k) plan, by using the dividends to repay the stock purchase loans."" The investigation revealed the transaction "was designed to cause the 401(k) plan to pay more for each share of stock than plan participants would ever receive.
As part of the settlement reached with the Labor Department, Wells Fargo agreed to pay a penalty of nearly $13.2 million. Wells Fargo and GreatBanc entered into the settlement without admitting or denying the allegations made by the department. Additionally, GreatBanc will no longer act as a fiduciary to a public company in connection with any future leveraged transaction involving an employee stock ownership plan unless the plan acquires only publicly traded stock and pays no more than the fair market value.
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