This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices Law.
Institutional investors stated Minnesota consumer protection claims against Wells Fargo Bank, N.A. for allegedly misrepresenting its securities lending program, according to the federal district court in St. Paul, Minnesota.
Wells Fargo held participants’ securities in custodial accounts and made temporary loans of those securities to brokers, and marketed that the program would return a profit for participants. The investors alleged that Wells Fargo failed to properly monitor and manage the program, failed to disclose material information about the status of the program, and failed to put the interests of investors ahead of the interests of the bank.
To state a Minnesota Consumer Fraud Act (CFA) claim, the investors needed to show they were consumers and that the suit benefitted the public.
The investors stated CFA claims against Wells Fargo, according to the court. Any person injured by a violation of the CFA may bring a civil action and recover damages. That the investors were sophisticated investors did not preclude them from bringing the claims. More than 100 investors were harmed by Wells Fargo’s marketing. Failure to seek injunctive relief does not preclude a plaintiff from satisfying the public benefit requirement.
The investors also sufficiently stated Minnesota Unfair Trade Practices Act (UTPA) and Deceptive Trade Practices Act (DTPA) against Wells Fargo, according to the court. The investors sufficiently alleged that Wells Fargo misrepresented the true quality of the program, the representations were ongoing, and that the misrepresentations occurred in connection with the sale of merchandise under the UTPA. The investors also showed a continuing wrong under the DTPA.
The decision is Blue Cross and Blue Shield of Minnesota v. Wells Fargo Bank, N.A., CCH State Unfair Trade Practices Law ¶32,462.
Further information regarding CCH State Unfair Trade Practices Law appears here.