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 July 7 (In re Wells Fargo Mortgage-Backed Certificates Litigation, No. 09-1376, N.D. Calif.).
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.]) and New Orleans (Employees' Retirement System v. Wells Fargo Asset Securities Corp., et al. [No. 09-1620, N.D. Calif.]), 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 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.]
Download the document now:
Lexis.com - Document #57-110711-034B
Mealeysonline.com - Document #57-110711-034B
For more information, call editor Timothy J. Raub at 215-988-7740, or email him at email@example.com.
Lexis.com subscribers may search all Mealey Publications.
Non-subscribers may search for Mealey Publications stories and documents at www.mealeysonline.com or visit www.Mealeys.com.
For more information about LexisNexis products and solutions, connect with us through our corporate site.