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Regulation

Chattanooga’s Fire and Police Pension Fund Sues Wells Fargo

Tennessee fund accuses trustee of committing ‘systemic nondisclosures.’

By Michael Katz

Chattanooga, Tennessee’s Fire and Police Pension Fund has filed a lawsuit against its trustee, Wells Fargo, claiming the bank provided inaccurate and incomplete information about revenue it received that was intended for the fund.

In court filings, the fund accused Wells Fargo of “what appears to be systemic nondisclosures, or incomplete disclosures, of revenue paid by third parties.”

The fund’s board of directors said it has been investigating potential fraud and overcharging by Wells Fargo for the last several months in connection with compensation paid by mutual funds to Wells Fargo. The fund said that Wells Fargo’s “answers have changed over time” revealing ever-greater amounts of undisclosed revenue sharing, systemic errors, and incomplete records.

“The board has lost confidence that the answers provided by Wells [Fargo] to date are complete,” said the fund on its website, adding that it “is also concerned that other trust and fiduciary accounts may have been similarly harmed.”

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The fund said it is “appropriate” to file a whistleblower complaint with the SEC and Commodity Futures Trading Commission (CFTC), providing regulators with original information regarding its investigation.

In the lawsuit, the fund said that once the potential overcharging was found that Wells Fargo “proceeded to provide inaccurate and/or incomplete information related to undisclosed, or incompletely disclosed, revenue sources from third parties that conflict, or may conflict, with its fiduciary and contractual obligations to the fund and its beneficiaries.”

The fund said the lawsuit is intended to compel Wells Fargo “to fulfill its contractual and fiduciary obligations to the fund and its beneficiaries by fully accounting for and disclosing all revenue sources received … related to defendant’s role as trustee for the fund.”

Wells Fargo, which has been having public relations issues over the past few years over charges it opened millions of accounts and new credit cards in its customers’ names without their knowledge or permission, admitted it made mistakes as the trustee for the pension fund, but said it corrected the errors.

“We acknowledge that because there was a change directed by the client in 2017, we made an error in setting up the revenue sharing associated with that change appropriately and the revenue share rebates did not occur as intended,” said Leslie Ingberg, vice president of corporate communications for Wells Fargo, according to the Chattanooga Times Free Press. “We are sorry this error occurred, and upon discovery the issue was fixed and the total revenue share received from the third-party fund companies (approximately $15,000) was returned to the pension fund.”

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Home > News > Research > Canadian Pension Funds Invest C$25 Billion in Asia-Pacific
Research

Canadian Pension Funds Invest C$25 Billion in Asia-Pacific

Report finds investments focused on Asia-Pacific region have been mutually beneficial.

By Michael Katz

Canadian pension funds have invested C$25 billion ($19.45 billion) in the Asia-Pacific region between 2003 and 2017, led by the Canada Pension Plan Investment Board, which accounted for 73% of all pension fund investment in the region, according to a new report from The Asia Pacific Foundation of Canada.

The report said the pension funds are focusing their investments on key markets that contain an increasing share of the world’s middle-class consumers, such as India and China.

“As consumption grows in the world’s two most populous countries, the bottom line of Canadians’ retirement packages may benefit from the increased performance of the pension fund investments in these economies,” said the report. It also said that Canadian pension fund investments are providing necessary capital to help spur growth in major sectors in Asia. 

“Investments in sectors such as real estate and logistics are currently the way in which these pension funds are tapping into these high-growth markets,” said the report, adding that “it looks like, at least for the immediate future, tying Canadian pensions to Asia is paying dividends on both sides of the Pacific.”

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During the 15-year span covered by the report, Canadian foreign direct investment into the Asia Pacific has seen “a dramatic shift” from greenfield investments to mergers and acquisitions. A greenfield investment is an investment in a new venture outside its own economy that includes building new facilities, such as distribution hubs, factories, and offices.

From 2013 to 2017, “the share of capital being invested in M&A overtook greenfield, accounting for 50.2% and 49.8% of investment value, respectively,” said the report. “However, when looking at the volume of deals, greenfield investment has been the most popular mode of entry for the past 15 years.”

The report also found that natural resources investments are a major focus of Canadian pension funds in the region.

“Agriculture and forestry, mining and chemicals, and energy, are an important focus for Canadian companies in many Asia Pacific economies,” said the report. “They play a particularly prominent role in Australia, Mongolia, and Indonesia.”

It also said the focus on natural resources is often mutual, with multinational corporations from Australia and China making multiple large investments in Canada’s natural resources sector as well.

After natural resources, Canadian investment in the Asia Pacific target industries and services that benefit from the growing global middle class in the region, such as finance, and industrial goods and services.

“When it comes to finance, 34% of all Canadian investment value in the industry is focused on the real estate sector, and 49% is focused on the retail banking and investment services sectors,” said the report. “With respect to investment in industrial goods and services, the largest target of Canadian investment is logistics services, accounting for 50% of all investment in industrial goods and services.”

The report also found that in recent years, Canadian pension fund investments have moved away from China, and more toward Australian and Indian investments. It said that despite the number of Canadian investments in China rising from 2003 to 2010, the investment values in the country have been declining since 2008. 

At the same time, the volume and scale of investments in Australia has been steadily rising since 2013, and investment into consumer-driven sectors in India have “been on the upswing” since 2010 as Canadian firms position themselves to capitalize on India’s projected consumption growth.

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