Wells Fargo & Co. plans to pay $590 million to settle a class action lawsuit regarding Wachovia preferred securities and debt, the company said Friday.
The 2009 class action case was filed in a federal court in New York City on behalf of buyers of certain Wachovia bonds and preferred securities. Those buyers alleged that Wachovia misrepresented its residential-mortgage holdings in offering documents during the lead-up to the financial crisis.
The settlement is not expected to hurt Wells Fargo’s financial position, it said in its quarterly filing with the U.S. Securities and Exchange Commission.
Darren Robbins, a lawyer for the plaintiffs, said that auditor KPMG LLP, another defendant in the case, agreed to pay $37 million to settle the case, bringing the total recovery for plaintiffs to $627 million.
Robbins said it would be the largest recovery in a case stemming from the credit crisis. In February, a federal judge in Los Angeles approved a $601.5 million settlement of a class action lawsuit against Countrywide Financial Corp. over allegations it misled investors about its financial condition and lending practices.
The settlements are subject to court approval.
The case is In re: Wachovia Preferred Securities and Bond/Notes Litigation, U.S. District Court, Southern District of New York, No. 09-06351.
(Reporting by Andrew Longstreth; Editing by Derek Caney)
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