Wells Fargo & Co. settled a federal class-action lawsuit led by the $132 million Farmington Hills (Mich.) Employees' Retirement System that claimed the bank breached its fiduciary duty when it lost money through its securities lending program, according to court documents.
A trial, the third against the bank over its now-shuttered securities lending program, had been scheduled to start Monday in U.S. District Court in St. Paul, Minn., but attorneys for both sides told federal Judge Donovan Frank they had reached a settlement.
Details of the settlement were not disclosed.
A hearing is scheduled for June 5, when a detailed settlement proposal will be presented to Mr. Frank for preliminary approval, according to court documents.
"We are pleased to reach a settlement of this lawsuit, for Wells Fargo and our clients that we served for many years through our securities lending program,” said a company statement provided by spokeswoman Peggy Gunn.
Officials at law firm Zimmerman Reed, representing the plaintiffs, did not return requests for comment or further details by press time.
Other parties in the lawsuit that was settled include the $68.6 billion Minnesota State Board of Investment, $7.7 billion Arizona Public Safety Personnel Retirement System, $499 million Omaha (Neb.) Police and Fire Retirement System and $225 million University of Arizona Foundation.
Last month, Mr. Frank ruled against the $256 million Blue Cross Blue Shield of Minnesota Pension Equity Plan, St. Paul, and six other pension funds that sued Wells Fargo in 2011 over securities lending-related losses. A federal court jury in August ruled in favor of Wells Fargo in suits filed by six other investors not covered by the Employee Retirement Income Security Act.
Wells Fargo no longer has a securities lending program. Its securities lending team joined BNP Paribas Securities Services in 2013.
