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Wells Fargo settles case for $6.5 million
U.S. regulators said Wells Fargo had agreed to a $6.5 million settlement to end a case against it alleging poorly managed toxic securities.
The Securities and Exchange Commission said the bank and a broker had sold bundled securities in the early months of the bursting housing bubble that the bank simply did not research well or understand.
“Broker-dealers must do their homework before recommending complex investments to their customers,” said head of the SEC Municipal Securities and Public Pensions Unit Elaine Greenberg in a statement.
The New York Times said Tuesday that Wells Fargo made a profit of $16 billion in 2011, making the $6.5 million settlement, all things being relative, about as worrisome as a parking ticket to some.
The SEC has had mixed results pursuing cases related to the bursting housing bubble. It has pursued cases in which banks helped choose securities that went into a bundled package. The banks sold these as solid investments, but the big banks did not reveal that they were making bets that the securities would drop in value.
On the other hand, the SEC recently announced it was dropping a case against Goldman Sachs concerning a 2006 mortgage deal.
The SEC on Tuesday said it had also settled a case against Shawn McMurtry, a former Wells Fargo broker, who will pay a fine of $25,000 and be prohibited for six months from working in the securities industry, the newspaper said.
Copyright 2012 by United Press International