{"id":5468,"date":"2013-06-21T00:00:00","date_gmt":"2013-06-21T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2013\/06\/securities_lending_trial_again"},"modified":"2022-05-04T14:12:23","modified_gmt":"2022-05-04T19:12:23","slug":"securities-lending-trial-again","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/securities-lending-trial-again\/","title":{"rendered":"Securities Lending Trial Against Wells Fargo & Co. is Underway"},"content":{"rendered":"\n

It will be up to 11 jurors to determine if Wells Fargo & Co. (WFC) is guilty of grossly mismanaging a securities lending program and lying about the degree of risk involved or whether the economic crisis was actually at fault. The program was marketed to institutional clients, including pension funds. According to investors, the bank committed fraud by taking huge risks with what they were under the impression was a conservative program. Nearly 15% of the portfolio\u2019s by 2007\u2019s fall season had defaulted or was distressed. (Citigroup (C) <\/a>has since bought most of Wells Fargo\u2019s Clearland securities lending business.)<\/p>\n

The plaintiffs contend that rather than investing money in higher grade market instruments and other safe investments, which is what they thought was being done), managers bet on structured investment vehicles and other high-risk financial instruments. Cheyne Finance, one SIV involving subprime mortgages that the bank invested in, was placed in receivership. The securities case, filed in 2011, focuses on cash collateral investments primarily made by Wells Fargo between 2005 and 2008.<\/p>\n

Wells Fargo denies the allegations. Contrary to the attorneys for the investors, the bank\u2019s lawyers are arguing that the securities lending business\u2019s investments were conservative and safe and that it\u2019s track record was pretty solid until the economic crisis. Even then, contend the attorneys, the losses suffered were not a big portion of the program. Also, claims Wells Fargo, the securities lending program was overseen at a level that was \u201cextraordinarily high\u201d and the investors\u2019 best interests were primary. The banks\u2019 legal team noted that investors were given written warnings that losses were likely.<\/p>\n

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

It will be up to 11 jurors to determine if Wells Fargo & Co. (WFC) is guilty of grossly mismanaging a securities lending program and lying about the degree of risk involved or whether the economic crisis was actually at fault. The program was marketed to institutional clients, including pension funds. According to investors, 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":[3752,3836],"tags":[2610],"class_list":["post-5468","post","type-post","status-publish","format-standard","hentry","category-financial-firms","category-wells-fargo","tag-securities-lending"],"yoast_head":"\nSecurities Lending Trial Against Wells Fargo & Co. is Underway — Investor Lawyers Blog — June 21, 2013<\/title>\n<meta name=\"description\" content=\"It will be up to 11 jurors to determine if Wells Fargo & Co. 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