SEC takes Wells Fargo to court to enforce subpoenas

Fri Mar 23, 2012 7:04pm EDT
 
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By Sarah N. Lynch and Rick Rothacker

(Reuters) - U.S. securities regulators accused Wells Fargo & Co on Friday of repeatedly ignoring its subpoenas for documents in connection with a probe into the bank's $60 billion sale of mortgage-backed securities.

The Securities and Exchange Commission's filing in a San Francisco federal court seeks to compel the fourth largest U.S. bank to hand over documents. The SEC said it has issued several subpoenas since September.

A Wells Fargo spokeswoman called the SEC's action "inappropriate" and pledged the bank would "vigorously defend itself in court" against the SEC action.

"Wells Fargo has extensively cooperated in the commission's investigation and believed it had an understanding with the SEC staff with regard to the outstanding document requests; the filing of this action violates that understanding," said Wells Fargo spokeswoman Mary Eshet.

The SEC said on Friday it is looking into whether Wells Fargo made "material misrepresentations or omitted material facts" in offerings it made to investors from September 2006 through early 2008, a period that included the beginnings of the financial crisis.

The SEC charges that a due diligence review of a sampling of the securitized loans was done, and some of those loans would be dropped because they failed to meet the bank's underwriting standards.

But the regulator said it "does not appear that Wells Fargo took any steps to address similar deficiencies in the remainder of the loans in the pool, which were securitized and sold to investors."

Eshet said that the SEC had inaccurately described its conduct with regard to residential mortgage backed securities and that no enforcement action was warranted.   Continued...

 
A customer uses an ATM machine at a Wells Fargo bank in Los Angeles, Calfornia March 8, 2012. REUTERS/Fred Prouser