SAN FRANCISCO -- Wells Fargo & Co. said yesterday that it has agreed to repay customers about $1.4 billion to settle a lawsuit and regulatory investigations that accused the company of improperly marketing risky investments as safe.
Jerry Brown, the attorney general of California, sued the bank last year. The North American Securities Administrators Association started an inquiry of the bank's subsidiaries over sales of auction-rate securities. The investments resemble corporate debt, except that the rate of interest they pay is frequently reset at auctions.
A number of companies, charities and individual investors were told the securities were as safe as cash. But the $330 billion market collapsed in February 2008, and investors' accounts were frozen.
Wells Fargo said it agreed to buy back the securities from customers nationwide. The company also agreed to pay a $1.9 million fine while not admitting any wrongdoing.
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