Wells Fargo to return $1.4 billion to duped investors

A branch of Wells Fargo bank is shown in San Francisco, Thursday, April 9, 2009. Wells Fargo & Co. said Thursday it expects record first-quarter earnings of $3 billion, easily surpassing analysts' estimates and providing an encouraging sign for the banking industry. The North American Securities Administrators Association says Wells Fargo has agreed to repurchase about $1.3 billion in soured auction-rate securities from clients.(AP Photo/Eric Risberg)

November 18, 2009 7:00:13 PM PST
San Francisco-based Wells Fargo agreed to pay $1.5 billion, to settle a lawsuit filed by the state on behalf of some investors.

"It's like having your money stolen from you and then returned to you," says Boris Levine, an investor.

In Levine's case, it involves a lot of money. His translation company, Technical Language Service, invested $400,000 last year in so-called auction rate securities through Wells Fargo and then, he never saw a dime of it.

"We didn't know if ever this money would be available to us again," says Levine.

It will be now because Attorney General Jerry Brown sued the bank in April, accusing it of deceptive tactics and giving misleading advice to thousands of investors, small businesses and charities to push what turned out to be risky investments.

Wells Fargo has now agreed repay $1.4 billion to those investors -- half of whom are based in California.

"When the people who sell a product and making money out of it, they have a duty to be very clear about whatever risks are entailed when this money is exchanged," said Brown.

Brown says the bank misrepresented the investments as completely liquid and safe. Investors believed they could exchange their securities for cash every eight days, but when the auction market collapsed last year, investors' accounts were frozen.

Wells Fargo admitted no wrongdoing in the settlement.

In a statement the bank said: "While there has been progress, redemptions by issuers have not occurred as fast as anyone would have hoped or predicted. We are glad to have resolved this for our customers through an actual repurchase of their auction rate securities."

For Levine, it is a happy ending.

"They retained a customer for themselves by playing by the rules," says Levine.

Wells Fargo has earned $9.5 billion year to date and this billion dollar settlement represents just 10 percent of that. The attorney general says customers can expect to reclaim their money from this settlement in a matter of months.

If you lost money in that investment, you should now contact Wells Fargo directly to get reimbursed. If that doesn't work, contact the state attorney general's office.

LINKS:

Wells Fargo Bank

A.G. Brown's office


Load Comments