Wells Fargo and its H.D. Vest Investment Services subsidiary were named in a class-action lawsuit filed in a California federal court by law firm Stull, Stull & Brody in November.
The suit, on behalf of shareholders in Federated mutual funds, alleges that Wells Fargo had special shelf-space agreements with 19 mutual fund companies and that H.D. Vest has such agreements with 12 fund companies.
H.D. Vest is one of the original broker-dealers for accountants and was acquired by Wells Fargo in the summer of 2001.
The lawsuit charges that between June 2000 and June 2005, investors in the Federated funds were steered to invest in the fund families by both firms and their brokers, who received shelf-space payments in exchange for promoting the funds. The lawsuit accuses Wells Fargo and H.D. Vest of violating federal securities laws for failing to disclose those incentives.
Stull, Stull & Brody also accuses Wells Fargo of having revenue-sharing agreements related to the company's Wells Fargo mutual fund family.Other firms, including Milberg Weiss Bershad & Schulman LLP and Brodsky & Smith LLC, have also filed similar class-action lawsuits.
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