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Release Date: 10/10/2002
Release Number: 169
Contact Name: Deanne Amaden
Phone Number: 415.975.4741
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San Francisco, California - The U.S. Department of Labor obtained a consent decree, entered today, requiring
Wells Fargo Bank, N.A. to develop stringent procedures for fairly and accurately
valuing non-publicly traded company stock purchased by employee stock ownership
plans (ESOPs) and certain other plan clients of Wells Fargo. The case was
brought to resolve allegations involving the purchase of the stock of Toms
Sierra Company, Inc. by its ESOP. |
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Toms Sierra operates bulk petroleum facilities, service stations, and tire
and auto parts stores in Northern California and Nevada. Wells Fargo, as
the ESOP trustee, approved the sale of the Toms family’s interests to the ESOP
in October 1998. Some 275 participants were covered by the plan at the
time. |
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The department’s settlement is contingent upon settlement of a class action
lawsuit. The department’s settlement resolves a lawsuit filed on December 3,
2001, against Wells Fargo Bank and the former owners of Toms Sierra, for
allegedly causing the ESOP to lose over $10 million by purchasing shares of
company stock from members of the Toms family at well above fair market value.
The department’s lawsuit continues against members of the Toms family. |
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Under the settlement, Wells Fargo will
cooperate with the Labor Department in reviewing certain plan clients that hold
non-publicly traded shares of the employer’s stock to assure compliance with
the Employee Retirement Income Security Act. In a separate settlement of a
private class action lawsuit, Wells Fargo agreed to restore $5.35 million in
losses to the Toms Sierra ESOP. Sierra Energy, which bought Toms Sierra in
1998, will pay an additional $5 million to the ESOP, and will receive the ESOP's
remaining shares of Toms Sierra stock owned by the ESOP upon approval of the
class action settlement brought by the plan's court-appointed trustee. |
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The settlement, entered in federal district court in Sacramento, resulted
from an investigation conducted by the San Francisco regional office of the
department’s Pension and Welfare Benefits Administration (EBSA). |
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(Chao v. Wells Fargo Bank, N.A.
Civil Action No. CIV-S-01-2211) |
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U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing
your request. Call 202.693.7773 or TTY 202.693.7755. |
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