Wells Fargo becomes the latest bank to be held accountable by the SEC for not disclosing risks of certain investments to its customers.
Πηγή: Proactive Investors
By Carrie White
August 15 2012
Wells Fargo & Co. (NYSE:WFC) Tuesday conceded to pay over $6.5 million to settle charges by the Securities and Exchange Commission (SEC) that the bank's brokers didn't properly inform customers about the risk of mortgage-backed investments.
According to its filing, the SEC alleged that from January to August 2007, Wells Fargo sold customers asset-backed commercial paper that was structured with risky mortgage-related securities including collateralized debt obligations, that later resulted in "substantial losses" for investors after the mortgage-backed complex products defaulted.
Wells Fargo & Co will now pay to settle civil charges alleging it sold these investments to municipalities and non-profits during the financial crisis without fully disclosing the risks.
The SEC has said that broker-dealers "must do their homework" before recommending complex investments to their customers.
According to a report form the Wall Street Journal, Shawn McMurtry, a former salesman who was a VP at Wells Fargo, was suspended from the securities industry for six months and had to pay a $25,000 penalty, the SEC said.
In June, McMurtry left Wells Fargo voluntarily, a spokeswoman for the bank said.
The Wells Fargo's brokerage unit, based in Minneapolis, has agreed to settle the case without admitting or denying the charges. It will pay a $6.5 million penalty, plus $65,000 in disgorgement and more than $16,000 in prejudgment interest.
The SEC said the money will be placed into a fund for the benefit of harmed investors.
The case is one of the latest to come about as the SEC tries to hold banks accountable for their actions during the crisis. It was brought by the agency's enforcement unit that specializes in municipal securities and public pensions.
Last September, Royal Bank of Canada (TSE:RY) agreed to pay $30.4 million to settle SEC charges that it inappropriately sold unsuitable investments to five Wisconsin school districts.
In 2010, Goldman Sachs (NYSE:GS) paid $550 million to settle SEC allegations that it misled investors in sub-prime mortgage derivatives by failing to disclose certain information about the role of hedge fund Paulson & Co. Inc.
Last year, J.P. Morgan Chase & Co. (NYSE:JPM) paid $153.6 million to settle SEC charges that it misled investors in a complex mortgage securities transaction.
August 15 2012
Wells Fargo & Co. (NYSE:WFC) Tuesday conceded to pay over $6.5 million to settle charges by the Securities and Exchange Commission (SEC) that the bank's brokers didn't properly inform customers about the risk of mortgage-backed investments.
According to its filing, the SEC alleged that from January to August 2007, Wells Fargo sold customers asset-backed commercial paper that was structured with risky mortgage-related securities including collateralized debt obligations, that later resulted in "substantial losses" for investors after the mortgage-backed complex products defaulted.
Wells Fargo & Co will now pay to settle civil charges alleging it sold these investments to municipalities and non-profits during the financial crisis without fully disclosing the risks.
The SEC has said that broker-dealers "must do their homework" before recommending complex investments to their customers.
According to a report form the Wall Street Journal, Shawn McMurtry, a former salesman who was a VP at Wells Fargo, was suspended from the securities industry for six months and had to pay a $25,000 penalty, the SEC said.
In June, McMurtry left Wells Fargo voluntarily, a spokeswoman for the bank said.
The Wells Fargo's brokerage unit, based in Minneapolis, has agreed to settle the case without admitting or denying the charges. It will pay a $6.5 million penalty, plus $65,000 in disgorgement and more than $16,000 in prejudgment interest.
The SEC said the money will be placed into a fund for the benefit of harmed investors.
The case is one of the latest to come about as the SEC tries to hold banks accountable for their actions during the crisis. It was brought by the agency's enforcement unit that specializes in municipal securities and public pensions.
Last September, Royal Bank of Canada (TSE:RY) agreed to pay $30.4 million to settle SEC charges that it inappropriately sold unsuitable investments to five Wisconsin school districts.
In 2010, Goldman Sachs (NYSE:GS) paid $550 million to settle SEC allegations that it misled investors in sub-prime mortgage derivatives by failing to disclose certain information about the role of hedge fund Paulson & Co. Inc.
Last year, J.P. Morgan Chase & Co. (NYSE:JPM) paid $153.6 million to settle SEC charges that it misled investors in a complex mortgage securities transaction.
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