Wells Fargo & Company is a financial services and bank holding company headquartered in San Francisco, California.
According to the Complaint, following the issuance of the Certificates, disclosures began to emerge revealing the Defendant routinely disregarded the underwriting guidelines in its mortgage loan origination. These disclosures were confirmed by substantially higher rates of delinquencies and foreclosures on collateral for such highly rated debt issues. These disclosures, and the poor performance of the collateral, caused the Rating Agencies to review and revise the ratings assigned to the Certificates due to the fact that the true nature of the collateral had not been properly assessed at the time of the Offerings. The rating agencies dramatically downgraded the Certificates beginning in August 2008, resulting from the revelations regarding the true underwriting practices used to originate the collateral and the true value and quality of the Certificate collateral, which subsequently caused the substantial decline in the value of the Certificates.
Plaintiff purchased certificates issued by one or more of the Defendants pursuant to filed Registration Statements. However, as of the date the within action was commenced, Plaintiff's investment suffered a decline of over 60 percent. The claims asserted herein under the Securities Act do not sound in or arise from allegations of fraud.
Several class action Complaints have also been filed in the U.S. District Court for the Northern District of California on behalf of purchasers of Wells Fargo Asset Securities Corporation Mortgage Pass-Through Certificates pursuant and/or traceable to the false and misleading July 29, 2005 Registration Statement and Prospectus Supplements, October 20, 2005 Registration Statement and Prospectus Supplements or the false and misleading September 27, 2006 Registration Statement and Prospectus Supplements (collectively, the "Certificates").
On April 6, 2009, the Complaint filed by Boilermaker-Blacksmith National Pension Trust in the U.S. District Court for the Southern District of New York was voluntarily dismissed pursuant to Rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure. The case continued in similar actions filed in the U.S. District Court for the Northern District of California.
On July 16, 2009, Judge Susan Illston signed the order denying the pending motion to change venue and granted the motion for consolidation, appointment of lead Plaintiff and selection of lead Counsel. According to the Order, the cases are consolidated under General Retirement System of the City of Detroit, et al. v. The Wells Fargo Mortgage Backed Securities 2006-AR18 Trust, et al., case number 09-CV-01376. Louisiana Sheriffs' Pension and Relief Fund, Alameda County Employees' Retirement Association, New Orleans Employees' Retirement System and the Government of Guam Retirement Fund were appointed lead Plaintiffs. Bernstein Litowitz Berger & Grossmann LLP was selected as lead Counsel for the class. On August 31, 2009, the lead Plaintiffs filed a Consolidated Class Action Complaint for Violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. On October 30, 2009, the various Defendant groups filed three motions to dismiss the Consolidated Class Action Complaint.
On February 3, 2010, a Memorandum Opinion was entered dismissing Defendants The McGraw-Hill Companies and Moody’s Inc.
According to the Order entered on April 22, 2010, the Court granted the Rating Agency Defendants’ motion to dismiss without leave to amend. (Docket No. 157). The Court granted in part and denied in part the Underwriter Defendants’ and the Wells Fargo Defendants’ motions to dismiss (Docket No. 160, 161). Plaintiffs were granted leave to amend their claims against the Underwriter Defendants and Wells Fargo Defendants and were instructed to file their amended Complaint no later than May 7, 2010.
On June 2, 2010, the lead Plaintiffs filed a Amended Consolidated Class Action Complaint. On June 25, 2010, the Defendants filed two motions to dismiss the Amended Consolidated Class Action Complaint. On October 5, 2010, Judge Lucy H. Koh granted in part and denied in part the motion to dismiss filed by Defendants Wells Fargo Bank, Wells Fargo & Co., and the individual Defendants. The underwriter Defendants' motion to dismiss was granted. The Plaintiffs filed a Notice of Appeal from that order granting the underwriter Defendants' motion to dismiss. On November 18, 2010, the Plaintiffs filed a motion of entry judgment, which was granted on December 27, 2010. A Notice of Appeal was filed as to that order.
On February 11, 2011, the Plaintiffs filed a motion to certify the class.
According to a press release dated July 7, 2011, Wells Fargo & Co. agreed to pay $125 million to settle accusations by investors that the bank misled them about the risks of mortgage-backed securities it sold. The Plaintiffs in the consolidated group case, or class action, include the General Retirement System of Detroit, New Orleans Employees' Retirement System and other public pensions, according to the proposed settlement filed July 6, 2011 in federal court in San Jose, California. Wells Fargo, the largest U.S. home lender, and several investment banks that underwrote the securities were sued in 2009 over alleged violations of securities laws in connection with sales of $36 billion in mortgage pass-through certificates in 2005 and 2006. The securities were backed by pools of mortgage loans that Wells Fargo or its affiliates originated or purchased. In 28 offerings, the bank misrepresented the quality of the loans, failing to disclose that it hadn't followed appropriate underwriting standards and loans were made based on inflated appraisals, investors said in a Complaint. The bank and the underwriters deny wrongdoing, according to the proposed accord, which is subject to a judge's approval.
On July 26, 2011, the Court issued an order preliminarily approving the settlement pending notice and scheduling hearing.
