According to the Investment News, home loan giant Wells Fargo & Co. has agreed to pay $11.2 million to settle federal securities charges involving mortgage-based investments that Wachovia Capital Markets LLC sold to the Zuni American Indian tribe and other investors.
According to a complaint filed by the Securities and Exchange Commission, Wachovia sold the tribe and an individual investor collateralized debt obligations that were tied to the health of residential mortgage-backed securities. The SEC alleged that Wachovia sold the tribe the CDOs at prices that were 70% higher than its own estimate of the mark-to-market value of the securities.
The commission also claimed that Wachovia did not inform investors in another CDO that it had transferred 40 residential mortgage-backed securities from an affiliate at above-market prices to avoid losses on its own books, the commission said.
Wells Fargo, which bought Wachovia in 2008, agreed to pay restitution of $6.75 million and a $4.45 million penalty to settle the charges. Of the total, $7.4 million will be returned to investors who were harmed by the misconduct, the SEC said.
The firm settled the matter without admitting or denying the allegations.
If you have questions about a CMO or CDO investments you purchased through Wachovia Securities or Wells Fargo, the securities attorneys of The White Law Group may be able to help. For a free consultation, call the firm’s Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors and financial advisors in securities litigation matters. If you have questions about the way your investments have been handled, the securities attorneys of The White Law Group may be able to help.
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