{"id":5151,"date":"2011-04-07T00:00:00","date_gmt":"2011-04-07T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2011\/04\/wells_fargo_settles_sec_securi"},"modified":"2022-04-04T13:22:43","modified_gmt":"2022-04-04T18:22:43","slug":"wells-fargo-settles-sec-securi","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/wells-fargo-settles-sec-securi\/","title":{"rendered":"Wells Fargo Settles SEC Securities Fraud Allegations Over Sale of Complex Mortgage-Backed Securities by Wachovia for $11.2M"},"content":{"rendered":"

For a payment of $11.2 million, Wells Fargo & Co. will settle US Securities and Exchange Commission allegations that Wachovia Capital Markets LLC misled investors and improperly sold two collateralized debt obligations in 2007 and 2006. Wachovia was bought by Wells Fargo in 2008.<\/p>\n

Wells Fargo Securities now manages Wachovia. By agreeing to settle, the investment bank is not admitting to or denying the findings.<\/p>\n

According to the SEC, Wachovia Capital Markets LLC, now called Wells Fargo Securities, violated securities law anti-fraud provisions when it sold the complex mortgage-backed securities to investors despite the red flags indicating that there was trouble brewing with the US housing market.<\/p>\n

The SEC says that Wachovia charged excessive markups in the sale of part of a $1.5 billion CDO called Grand Avenue II. Unable to sell the CDOs $5.5 million equity portion in October 2006, it kept the shares on the trading desk while dropping their value to 52.7 cents on the dollar. Wachovia later sold the shares for 90 and 95 cents on the dollar to an individual investor and the Zuni Indian tribe. Both did not know that they had purchased the shares at a price that was 70% above their accounting value. The transaction went into default in 2008.<\/p>\n

The SEC claims that in 2007, Wachovia Capital Markets misrepresented to investors in Longshore 3, a $1.3 billion CDO, that assets had been acquired from Wachovia affiliates on an \u201carms\u2019-length basis\u201d when actually, 40 residential mortgage-backed securities were transferred at $4.6 million over market prices. The SEC contends that Wachovia was trying to avoid sustaining losses by transferring the assets at \u201cstale\u201d prices.<\/p>\n

Related Web Resources:<\/strong><\/p>\n

Wells Fargo-Wachovia settles CDO claim with SEC for $11 million<\/a>, Housing Wire, April 5, 2011<\/p>\n

CDO News<\/a>, New York Times<\/p>\n

Mortgage-Backed Securities<\/a>, SEC.gov<\/p>\n

More Blog Posts:<\/strong><\/p>\n

Houston Man Indicted in Alleged $17M Texas Securities Fraud<\/a>, Stockbroker Fraud Blog, December 23, 2010<\/p>\n

Goldman Sachs COO Says Investment Firm Shorted 1% of CDOs Mortgage Bonds But Didn\u2019t Bet Against Clients<\/a>, Stockbroker Fraud Blog, July 14, 2010<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

For a payment of $11.2 million, Wells Fargo & Co. will settle US Securities and Exchange Commission allegations that Wachovia Capital Markets LLC misled investors and improperly sold two collateralized debt obligations in 2007 and 2006. Wachovia was bought by Wells Fargo in 2008. Wells Fargo Securities now manages Wachovia. By agreeing to settle, the […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3742,3752,3757,3741,3963,3821,3836],"tags":[],"class_list":["post-5151","post","type-post","status-publish","format-standard","hentry","category-collateralized-debt-obligation","category-financial-firms","category-mortgagebacked-securities","category-securities-fraud","category-securities-law-and-regulations","category-wachovia","category-wells-fargo"],"yoast_head":"\nWells Fargo Settles SEC Securities Fraud Allegations Over Sale of Complex Mortgage-Backed Securities by Wachovia for $11.2M — Investor Lawyers Blog — April 7, 2011<\/title>\n<meta name=\"description\" content=\"For a payment of $11.2 million, Wells Fargo & Co. will settle US Securities and Exchange Commission allegations that Wachovia Capital Markets LLC — April 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