OAKLAND, Calif. — California Attorney General Jerry Brown announced a $1.4 billion settlement with three Wells Fargo & Co. affiliates to pay back investors, charities and small businesses that purchased auction-rate securities.
Under the settlement, Brown said, Wells Fargo will buy back $1.4 billion in non-liquid auction-rate securities from thousands of retail customers, charities and small businesses nationwide, including about $700 million to California investors. Wells Fargo will also pay legal costs and future monitoring expenses incurred by Brown's office, Brown said.
Earlier this year, Brown filed a suit against three Wells Fargo affiliates — Wells Fargo Investments, LLC; Wells Fargo Brokerage Services, LLC; and Wells Fargo Institutional Securities, LLC — for violating California's Securities Law. Brown's suit contended that Wells Fargo routinely misrepresented, marketed and sold auction-rate securities as safe, liquid and cash-like investments, omitting material facts. The company was also charged with failing to supervise and train its sales agents and selling unsuitable investments.
