The plaintiffs in the class action include the General Retirement System of Detroit, New Orleans Employees’ Retirement System and other public pensions, according to the San Francisco Chronicle, citing the proposed settlement filed Wednesday in federal court in San Jose.
Wells Fargo 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, according to the report. Those 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 remains subject to court approval.
Last month the Securities and Exchange Commission announced that J.P. Morgan Securities LLC had agreed to pay $153.6 million to settle SEC charges that it misled investors in a complex mortgage securities transaction just as the housing market was starting to plummet (see Institutional Investors to Get Lost Assets Back from J.P. Morgan).
The case is In Re Wells Fargo Mortgage-Backed Certificates Litigation, 09-1376, U.S. District Court, Northern District of California (San Jose).
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