Wells Fargo Securities LLC has agreed to settle Securities and Exchange Commission (SEC) charges that Wachovia Capital Markets LLC engaged in misconduct in the sale of two collateralized debt obligations (CDOs) tied to residential mortgage-backed securities, the SEC reports.
The SEC's order found that Wachovia Capital Markets violated securities laws in two ways: by charging undisclosed excessive markups in the sale of certain preferred shares or equity of a CDO, and by misrepresenting to investors in a CDO that it acquired assets from affiliates "on an arm's-length basis" and "at fair market prices."
Wachovia Capital Markets, which has since been renamed Wells Fargo Securities, has agreed to settle the SEC's charges by paying more than $11 million in disgorgement and penalties, with $7.4 million going to investors who have been harmed.
Wells Fargo settled without admitting or denying the SEC's findings.
SOURCE: SEC