Wells Fargo to Repurchase $1.4 Billion of Securities: WHAT THAT MEANS TO YOU

Posted on November 19, 2009 by LivingLies dot WordPress dot com

can use this information by establishing “probable cause” in the mind
of the Judge or jury right off the bat — we know they lied to
investors, are we now supposed to believe they told the truth to the

is the kind of news article buried deep into a newspaper or far down on
the list of on-line articles that leaves everyone — homeowners,
attorneys, judges, legislators and regulators — in the dark. Wells
Fargo is settling one of many claims that it lied to investors about
the mortgage backed securities they bought which funded your loan and
which filled the pockets of Wall Street “innovators” for years. It
doesn’t actually tell us what they lied about — you’ll need to look up
the complaint (which I hope someone will do and send to me in pdf
format) but it does say that those investors are now paid off in full
and that Wells Fargo is buying back what they sold.

Wells Fargo will attempt to use that purchase as proof that it is the
“INVESTOR” ignoring the ill-gotten gains that preceded it, and
attempting to establish itself as the holder in due course, long after
the securities were in default, long after the underlying asset
mortgages were in default, and long after Wells Fargo received payoffs
in credit default swaps that easily cover what they paid the investors
and then some.

point here is that the shell game continues. The regulators are not
sophisticated or motivated enough to actually express this for what it
is. Even the media gets totally confused. Instead of saying that many
loans were paid off or sold back to Wells Fargo for $1.4 billion, it
says something about “auction rate securities” which means nothing to
practically everyone. What this REALLY means is that you have a
defendant (actually several of them — see below) who has actually and
demonstrably committed fraud as part of the securitization scheme that
funded the financial loan products sold to homeowners — except that so
far everyone is concentrating on the fraud on investors. Why is that?
The little guy who was lied to, abused and shaken by this ordeal
doesn’t matter. It’s just the people with the money that count. You
can use this information by establishing “probable cause” in the mind
of the Judge or jury right off the bat — we know they lied to
investors, are we now supposed to believe they told the truth to the

Wells Fargo to Repurchase $1.4 Billion of Securities


Wells Fargo & Company
said on Wednesday that it had agreed to buy back $1.4 billion in
auction-rate securities it sold to investors before the market for
those securities dried up last year.

The decision settles a lawsuit brought against the firm by
California’s attorney general, which accused it of violating the
state’s securities laws. Wells Fargo, which is based in San Francisco, also agreed to pay the state’s expenses related to the lawsuit.

The brokerage arm of the bank marketed the securities, which
resemble corporate debt and whose interest rates were regularly reset
by auctions, as an alternative to cash for years, even after analysts
warned that the market could freeze up. In February 2008, banks stopped
participating in the auctions and effectively locked up investors’ cash.

The suit, brought by the California attorney general, Jerry Brown,
contended that Wells Fargo had routinely misrepresented, marketed and
sold auction-rate securities as safe, liquid and cashlike investments,
omitting material facts.

“Wells Fargo convinced thousands of investors to purchase
auction-rate securities with promises of robust returns and liquidity,
but when the market collapsed, investors were left out in the cold,”
Mr. Brown said in a statement.
“Based on misleading advice, investors bought these risky securities.
Now, retail investors and small businesses are finally getting their
money back.”

Under the terms of the settlement, Wells Fargo agreed to buy back at
par value by April 2010 all auction-rate securities bought through its
brokerage unit by investors before the market froze up.

About half of the auction-rate securities sold by Wells, which is based in San Francisco, were bought by California residents.

Mr. Brown and Wells reached a settlement agreement Tuesday night, people briefed on the matter said.

The settlement arises in part from an investigation led by
Washington State’s Department of Financial Institutions, according to a
statement by the North American Securities Administrators Association.
Washington State filed an administrative action against Wells before
California filed its own case. That matter has also been settled.

State regulators have secured settlements in which banks have agreed
to repurchase more than $61 billion in auction-rate securities from
investors. Among the firms that have settled these lawsuits are UBS, Bank of America, Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup and Credit Suisse.

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