Stull, Stull & Brody of New York has filed a class-action lawsuit with the U.S. District Court for the Northern District of California against Wells Fargo & Co. and its H.D. Vest Investment Services subsidiary on behalf of shareholders in Federated mutual funds.Although the suit charges 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, it is only on behalf of investors in Federated funds.The suit charges that between June 20, 2000 and June 8, 2005, investors in those funds were steered to invest in the preferred fund families by the two firms and their brokers, who received shelf-space payments in exchange for promoting those funds, but failed to tell their clients of this potential conflict of interest. Thus, the lawsuit accuses the firm of violating federal securities laws.
Further, Stull, Stull & Brody says that Wells Fargo had revenue-sharing agreements specific to its own Wells Fargo mutual fund family.