NEW YORK — Wells Fargo & Co. said Tuesday it received a Wells notice from the Securities and Exchange Commission relating to disclosures in its mortgage-backed securities offering documents.
The disclosure came in the bank's annual report to shareholders. Wells Fargo said government agencies continue to investigate mortgage related practices at the bank, including whether it violated fair lending or other laws regarding mortgage origination and whether it properly disclosed facts and risks associated with mortgage-backed securities in its offering documents for those products.
A Wells notice is the SEC's warning that a civil enforcement action could be coming and gives the recipient a chance to argue why one shouldn't be filed.
In its filing Tuesday, Wells Fargo said it "continues to provide information requested by the various agencies in connection with certain investigations."
Several other banks face potential civil probes by the SEC as regulators examine whether Wall Street misrepresented the poor quality of the loans they were packaging into securities for sale to investors. The Wall Street Journal reported earlier this month that the SEC was examining Ally Financial Inc., Bank of America Corp., Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc. and other banks.
In that earlier story, the SEC's enforcement chief said the agency's mortgage-bond probe was looking to see whether banks failed to disclose important information when selling the securities.
In other disclosures, Wells Fargo lowered its outlook for reasonably possible litigation losses. In the filing, the bank said the high end of the range "in excess of its liability for probable and estimable" losses was $1.2 billion as of Dec. 31, down from $1.6 billion at the end of the third quarter.
Banks disclose such projections when there is at least a "reasonable possibility" that a loss has been incurred and are required to report the range of the potential losses.
Wells Fargo also provided a breakdown of its share of the $25 billion settlement big banks reached with the Justice Department, the Department of Housing and Urban Development and 49 state attorneys general.
The bank, whose tab is a $5.3 billion commitment, said it will provide $3.4 billion in aggregate consumer relief and assistance programs, a $900 million payment relief over the life of refinanced loans and $1 billion paid directly to the federal government and the participating states for "their use to address the impact of foreclosure challenges as they see fit," the filing said.
Shares of Wells Fargo rose 0.9%, to $31.30, in afternoon trading.
