Wells Fargo & Co. was cleared by a jury of claims it misrepresented a securities-lending program to Blue Cross Blue Shield of Minnesota and other institutional investors and a demand it pay for $8.2 million of losses.
A federal court jury in St. Paul, Minn., on Thursday returned a verdict rejecting allegations in the plaintiffs' 2011 lawsuit that the bank marketed a risky program as safe, leading to losses the bank blamed on the financial crisis alone.
“The verdict validates that Wells Fargo was focused at all times on serving our clients' interests,” the lender said in a statement. Wells Fargo sought “to achieve the best results for all participants in the securities-lending program during extremely difficult economic conditions.”
Plaintiffs' lawyer Michael V. Ciresi declined to comment.
The case is one of at least five filed in Minnesota against Wells Fargo over the securities-lending program, which was based in the state.
The San Francisco-based bank lost the first case to go to trial in 2010, when a state court jury awarded Minnesota Workers' Compensation Reinsurance Association and three foundations about $30 million. That judgment was upheld on appeal.
The current trial before U.S. District Judge Donovan W. Frank involved allegations by Blue Cross Blue Shield of Minnesota, the $300 million El Paso County (Colo.) Retirement Plan and 10 other non-profit groups seeking reimbursement of losses and punitive damages.
The company sold most of its securities-lending program to Citigroup Inc. in 2011, Laura Fay, a spokeswoman for Wells Fargo, said in June. The bank remains liable for any damages awarded in the lawsuits, she said.
The bank is scheduled for a third trial on the same claims in March in a class action brought in federal court on behalf of about 100 other institutional investors. Two more cases are pending in federal court, including one by Minnesota Life Insurance Co. seeking $40 million in damages. Those cases are also set for trial next year.