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Case Status:    SETTLED
On or around 08/30/2016 (Other)

Filing Date: June 06, 2008

The complaint alleges that Defendants misled investors by falsely representing that Wachovia had strict and selective underwriting and loan origination practices and a conservative lending approach that set it apart from other lenders. Such reassurances were repeated by defendants throughout the Class Period in order to artificially support Wachovia's stock price in the midst of a weakening mortgage market. In response to increased market concern with the mortgage lending industry, and Wachovia's option ARMs in particular, Wachovia falsely represented that its loan underwriting practices were much better than at other banks and that this would allow it to prosper while lenders with less exacting standards and procedures would fare much worse. In reality, Wachovia's actual lending practices differed materially from the description of those practices in statements made to investors. The Company's ability to weather the deterioration in the real estate and credit markets was grossly exaggerated by Defendants, at precisely the worst time, when analysts began to ask tough questions. The Company, moreover, had inadequate loan loss reserves and falsely represented that its capital position was sufficient to fund its dividend.

Shortly after last assuring the market of its liquidity, the strength of its underwriting practices, and the adequacy of its reserves, Wachovia reported a surprise quarterly loss, undertook emergency measures to increase capital, and cut its dividend. On April 14, 2008, before the open of ordinary trading, Wachovia reported a loss of $350 million, or $0.20 per share, for the first quarter of 2008. The Company attributed the results to: (1) a $2.8 billion increase credit loss reserves, including $1.1 billion specifically for "Pick-A-Pay" reserve build, the lending program highly touted by the Company during the Class Period. The need to increase Pick-A-Pay reserves was attributed to Wachovia's adoption of a "refined reserve modeling" that resulted in "higher than expected loss factors on Pick-a-Pay"; and (2) $2 billion in mark-to-market losses for mortgage backed securities, including a "$729 million loss on unfunded leveraged finance commitments." In order to shore-up its capital, Wachovia announced the following steps: (1) reduce the dividend 41% to $0.375; and (2) plan to raise capital by $7-8 billion through public offerings. In reaction to the news, shares fell from $27.81 to $25.55 (8.13%) on abnormally high volume.

This marks the third separate action filed against Wachovia in 2008. The other two cases are related to Auction Rate Securities and stock offerings.

On August 07, 2008, a notice of voluntary dismissal and order dismissing case action without prejudice against the defendants was filed by the plaintiffs. A related action continues in SDNY under 08-CV-06171.

The parties entered into a Stipulation of Settlement on January 20, 2012. Preliminary approval was granted on January 27, 2012. Final approval was granted on June 12.


Sector: Financial
Industry: Money Center Banks
Headquarters: United States


Ticker Symbol: WB
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data

"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: S.D. New York
DOCKET #: 08-CV-02844
JUDGE: Hon. Samuel Conti
DATE FILED: 06/06/2008
CLASS PERIOD END: 04/11/2008
  1. Berman DeValerio Pease Tabacco Burt & Pucillo (CA)
    425 California Street, Suite 2025, Berman DeValerio Pease Tabacco Burt & Pucillo (CA), CA 94104
    415.433.3200 415.433.6382 ·
  2. Labaton Sucharow LLP
    140 Broadway, Labaton Sucharow LLP, NY 10005
    212.907.0700 212.818.0477 ·
No Document Title Filing Date
COURT: S.D. New York
DOCKET #: 08-CV-6171
JUDGE: Hon. Samuel Conti
DATE FILED: 05/28/2010
CLASS PERIOD END: 09/29/2008
  1. Kirby McInerney LLP (New York)
    825 Third Avenue, Kirby McInerney LLP (New York), NY 10022
    212.371.6600 212.371.6600 ·
No Document Title Filing Date
No Document Title Filing Date