In a lawsuit, the New York State Attorney General alleged that Wells Fargo Insurance Services breached a fiduciary duty owed to customers because the company failed to disclose that it received fees from companies to which it directed business.
The Attorney General believed Wells Fargo's recommendations would have been perceived differently if the company's "conflict of interest" had been openly revealed.
After the New York County Supreme Court threw the case out, the Appellate Division, First Department, and our state's highest court, affirmed the dismissal.
While insurance brokers have a special relationship with their clients, the New York State Court of Appeals didn't think there was a requirement to disclose the particulars of their financial arrangements with recommended insurance providers--particularly in the absence of any alleged wrongdoing.
While non-disclosure was seen as a "bad practice," the Court of Appeals thought the way to end it, was for the state to adopt regulations which prohibited such conduct.
Baaa!
To view a copy of the Court of Appeals's decision, please use this link: People v. Wells Fargo Ins. Serv., Inc.