Wells Fargo & Co. has agreed to pay $125 million to settle accusations by investors that the bank misled them about the risks of mortgage-backed securities it sold. The Plaintiffs in the consolidated group case, or class action, include the General Retirement System of Detroit, New Orleans Employees’ Retirement System and other public pensions. The proposed settlement was filed last month in federal court in San Jose. Wells Fargo, the largest U.S. home lender, and several investment banks that underwrote the securities were sued in 2009 over alleged violations of securities laws in connection with sales of $36 billion in mortgage pass-through certificates in 2005 and 2006.
The securities were backed by pools of mortgage loans that Wells Fargo or its affiliates originated or purchased. In 28 offerings, the bank misrepresented the quality of the loans, failing to disclose that it hadn’t followed appropriate underwriting standards and loans were made based on inflated appraisals, investors said in a Complaint. The bank and the underwriters deny wrongdoing, according to the proposed accord, which is subject to a judge’s approval. Wells Fargo still faces claims in state courts in California, Illinois and Indiana filed by individual investors and federal home loan banks seeking to rescind billions of dollars of mortgage-backed securities purchases.
Bank of America Corp. agreed June 29 to pay $8.5 billion to resolve investor claims over sales of bonds backed by home loans by Countrywide Financial Corp., which it had acquired in 2008. The settlement covers 530 mortgage trusts with an original loan balance of $424 billion, according to the bank. David Stickney, a California, lawyer with Bernstein, Litowitz, Bergerto, Grossman, represented the Plaintiffs in the Wells Fargo case and he did a very good job.
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.