While some auction rate securities have been repurchased from investors, the vast majority of the more than 600 investors who purchased an estimated $227 million in auction rate securities through Wells Fargo brokerages and were unable access their funds will benefit from this settlement.
The Securities Division entered a Statement of Charges (PDF)* in the matter on Nov. 20, 2008.
Under the terms of the settlement, Wells Fargo agreed to buy back at par value by approximately April 18, 2010 all auction rate securities purchased through its brokerage unit by investors before February 13, 2008. The settlement agreement also calls for Wells Fargo to:
- Fully reimburse certain investors who sold their auction rate securities at a discount after the market failed;
- Consent to a special, public arbitration procedure to resolve claims of consequential damages suffered by investors covered by the settlement as a result of their inability to access their funds; and
- Pay to the states monetary penalties of $1.9 million.
The investigation included work from the state securities regulators in California, Georgia, Missouri, Oregon, Texas, Utah and Washington who investigated the matter and led settlement negotiations.