Wells Fargo has agreed to settle a lawsuit for $1.4 billion with regard to the company’s auction rate securities. Wells Fargo faced this lawsuit and an investigation by the California Attorney General for improperly marketing these risky investments. As part of the settlement, Wells Fargo will buy back securities from customers and pay a fine of $1.9 million.
Auction rate securities are bonds with interest rates that reset as frequently as every day. In early 2008 when the market froze because of the mortgage crisis, these securities became worthless and many investors were unable to get out and get any money back. Wells Fargo, Bank of America, Goldman Sachs, UBS, Citigroup and Merrill Lynch have all faced claims that they aggressively marketed these highly risky securities as being safe, when they were anything but. Amidst these allegations, Wells Fargo becomes the latest of these companies to agree to repurchase these securities to settle claims with investors.
But what about investors who saw their investments tumbling and transferred their ARS to a different account before the market bottomed out? These investors transferred their accounts at a loss and still have accounds that are worthless. Are these investors entitled to any money? To which company can they make a claim?
These investors need to seek legal assistance. Many of these investors can also make claims, though the language of the settlement agreements make it appear that they are not. For instance, investors who had UBS accounts, but transferred their ARS to another account (that is now basically worthless) before the market crashed may still make a claim against UBS. Our lawyers here at Shipman & Wright have handled several of these claims and would be happy to speak with you about your legal rights.