SAN JOSE, Calif. - (Mealey's) Lead plaintiffs
and Wells Fargo Bank, N.A., its subsidiary and four officers and directors have
agreed to a $125 million settlement of claims filed by investors in connection
with Wells Fargo's offering of $36 billion in mortgage pass-through
certificates, according to documents filed in California federal court and made
available yesterday (In re Wells Fargo Mortgage-Backed
Certificates Litigation, No. 09-1376, N.D. Calif.) [enhanced version available to lexis.com subscribers].
As
part of the settlement agreement, Wells Fargo, Wells Fargo Asset Securities
Corp., Wells Fargo Asset Chief Executive Officer David Moskowitz, Chief
Financial Officer Franklin Codel and directors Douglas K. Johnson and Thomas
Neary will pay $125 million to resolve the claims against them.
In
exchange, the defendants will be released from "any and all causes of action of
every nature and description, whether known or Unknown, whether arising under
federal, state, common or foreign law, or any other law, rule, or regulation,
that were asserted, could have been asserted, or that arise out of the same
transactions or occurrences as the claims that were asserted, in the Action."
The
proposed settlement is subject to court approval.
Shareholders filed two class action
complaints in the U.S. District Court for the Northern District of California (General
Retirement System of the City of Detroit v. The Wells Fargo Mortgage Backed
Securities 2006-AR18 Trust, et al. [No. 09-1376, N.D. Calif.] [enhanced
version]
and New Orleans Employees' Retirement System v. Wells Fargo Asset Securities
Corp., et al. [No. 09-1620, N.D. Calif.]) [enhanced
version],
stating similar claims regarding alleged violations of the Securities Act of
1933 against Wells Fargo Mortgage Backed Securities 2006-AR15 Trust (WFMBS
2006-AR15 Trust) and others for alleged misrepresentations
made in the offering documents for mortgage-backed certificate offerings.
The
District Court consolidated the action and named plaintiffs, who filed a
consolidated complaint that alleged violations of Sections 11, 12(a)(2) and 15
of the Securities Act based on sales of mortgage pass-through
certificates sold through 54 separate offerings.
The
District Court granted in part and denied in part the defendants' motion to
dismiss, ruling that although the lead plaintiffs had properly stated claims
under Sections 11 and 15, they lacked standing to state claims based on 37
offerings because they had not invested in them.
The
shareholders amended their complaint, adding five named plaintiffs who are
alleged to have purchased securities in 10 of the 37 previously dismissed
offerings.
Additionally,
the lead plaintiffs, on behalf of all purchasers of mortgage-backed
pass-through certificates pursuant to Wells Fargo Asset Securities Corp.'s July
29, 2005, Oct. 25, 2005, or Sept. 27, 2006, registration statements, allege
that Wells Fargo Asset and Wells Fargo (collectively Wells Fargo defendants),
nine underwriters of the securities and the individual defendants violated
Sections 11, 12(a)(2) and 15 by issuing a series of false and misleading
statements in the offering documents for the three securities offerings.
The
underwriter defendants moved to dismiss the refiled claims, and Judge Lucy H.
Koh granted the motion on Oct. 5.
[Editor's
Note: Full coverage will be in the July 2011 issue of Mealey's Emerging Securities Litigation.
In the meantime, the motion for preliminary approval of settlement is available
at www.mealeysonline.com or by calling the
Customer Support Department at 1-800-833-9844. Document
#57-110711-034B. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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