The brokerage arm of Wells Fargo & Company (NYSE:WFC) said on Tuesday it is willing to settle, for $6.58 million, charges against it that it did not inform investors about risks attached to mortgage securities it had sold to them.
The company, which has shifted its base of operations to Charlotte in North Carolina an changed its name to Wells Fargo Securities has agreed to pay $6.5 million as fine and another $81,571 in restitution and interest.
The Securities and Exchange Commission which has been investigating the charges said that the brokerage firm had sold the high-risk investments to cities and towns, non-profit institutions and other investors in 2007 at the time that the sub-prime mortgage crisis was unravelling.
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This settlement is part of the ongoing investigations that the SEC launched in 2008 following the financial crisis in the United States, in which several banks went bust and eroded investor confidence. The SEC is investigating the culpability of the banks and institutions involved in the crisis.
Wells Fargo spokesman Ancel Martinez said, ""We are pleased to put this matter behind us. Our current policies and procedures are not the subject of this settlement."
Wells Fargo, which is the fourth largest bank in the U.S. in terms of assets, had acquired Wachovia Corp in December 2008 in a merger transaction.
Shares in Wells Fargo, that closed unchanged on Tuesday have risen more than 5 percent in the last three months.
Other major financial institutions that have had to make settlement payouts on similar charges are Goldman Sachs, JP Morgan Chase and Citigroup.