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.
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