Wells Fargo is on the hook for hundreds of millions of dollars after a jury in Florida found the bank charged unauthorized fees and mishandled a trust fund established for minors.
The law firm representing the Seminole Minors Per Capita Payment Trust, a trust fund set up by the Seminole Tribe of Florida to safeguard the financial futures of around 2,000 children, says Wells Fargo is set to pay $825 million in damages and over $7 million compensation for the unauthorized fees charged.
The lawsuit accused Wells Fargo and eight of its executives of breaching fiduciary duty to the tribe and its children. The eight Wells Fargo executives were ordered to individually pay token damages of between $50 to $500.
According to the plaintiffs’ lawyer, Wells Fargo relationship manager Kim Scott confessed to the bank’s wrongdoing during cross-examination
“…Scott admitted Wells Fargo knowingly mismanaged funds, maintained inadequate records, and collected millions in unauthorized fees. Scott also revealed he had never fully reviewed the Trust’s governing documents, despite managing one of the bank’s largest accounts.”
Wells Fargo was fired as the trust fund’s trustee in 2016 after officials of the Seminole Tribe conducted a review of the rate of returns. Wells Fargo’s investment strategy reportedly resulted in returns that barely kept pace with inflation. The leaders of the Seminole Tribe also questioned illegal fees amounting to $7.6 million that Wells Fargo had charged the trust.
Following the jury verdict, Wells Fargo says it will appeal. A spokesperson for Wells Fargo’s Wealth and Investment Management department, Meghan McDonald, says.
“We followed the [Seminole] Tribal Government’s clear and repeated instructions about the management of the trust, abided by our fiduciary duty, and delivered financial results consistent with the Trust’s mandate for the children of the Tribe during our time as Trustee. Our goal for the appeal is to address multiple courtroom rulings that we believe prevented us from sharing the full story with the jury.”
The Seminole Minors Per Capita Payment Trust was set up two decades ago with the sole trustee being Wachovia Bank, which Wells Fargo acquired in 2008. The trust derived its resources primarily from the Tribe’s gaming enterprises. Currently, estimates place the trust’s assets at nearly $3 billion.
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