LAWSUITS NEWS & LEGAL INFORMATION
$627M Settlement Reached in Wachovia Preferred Securities and Bond Litigation
This is a settlement for the Securities/Stock Fraud lawsuit.
New York, NY: The Orange County Employees' Retirement System, the Louisiana Sheriffs' Pension and Relief Fund, and the Southeastern Pennsylvania Transportation Authority, the court-appointed representatives of a class of investors who purchased certain Wachovia Corporation (Wachovia) bonds and preferred securities pursuant or traceable to numerous public offerings between July 31, 2006 and May 29, 2008, announce that, on behalf of the class, a global settlement of the matter has been reached with all defendants for a total recovery of $627 million.
The recovery is comprised of a $590 million settlement with Wachovia and its affiliated entities (including certain former Wachovia officers and directors, as well as various underwriters) and an additional $37 million settlement with Wachovia's auditor, KPMG LLP ("KPMG").
The combined $627 million recovery is among the 15 largest securities class action recoveries in history. It also is believed to be the largest settlement ever in a class action case asserting only claims under the Securities Act of 1933. The case also represents one of the handful of largest securities class action recoveries ever obtained where there were no parallel civil or criminal securities fraud actions brought by government authorities.
The claims asserted were based on allegations that the Wachovia offering materials at issue misrepresented and/or omitted to disclose material facts concerning the nature and quality of Wachovia's multi-billion dollar option-ARM (adjustable rate mortgage) "Pick-A-Pay" mortgage loan portfolio, and that Wachovia's publicly disclosed loan loss reserves were materially inadequate at all relevant times, in violation of Generally Accepted Accounting Principles ("GAAP"). The Complaint alleges that the undisclosed problems in the "Pick-A-Pay" mortgage loan portfolio brought Wachovia to the brink of insolvency by September 2008. Wachovia was one of the largest financial institutions to be "bailed out" during the financial crisis, when Wells Fargo & Company agreed to acquire it in early October 2008.
Both settlements must be reviewed and approved after formal notice is provided to the class.
Published on Aug-5-11
The recovery is comprised of a $590 million settlement with Wachovia and its affiliated entities (including certain former Wachovia officers and directors, as well as various underwriters) and an additional $37 million settlement with Wachovia's auditor, KPMG LLP ("KPMG").
The combined $627 million recovery is among the 15 largest securities class action recoveries in history. It also is believed to be the largest settlement ever in a class action case asserting only claims under the Securities Act of 1933. The case also represents one of the handful of largest securities class action recoveries ever obtained where there were no parallel civil or criminal securities fraud actions brought by government authorities.
The claims asserted were based on allegations that the Wachovia offering materials at issue misrepresented and/or omitted to disclose material facts concerning the nature and quality of Wachovia's multi-billion dollar option-ARM (adjustable rate mortgage) "Pick-A-Pay" mortgage loan portfolio, and that Wachovia's publicly disclosed loan loss reserves were materially inadequate at all relevant times, in violation of Generally Accepted Accounting Principles ("GAAP"). The Complaint alleges that the undisclosed problems in the "Pick-A-Pay" mortgage loan portfolio brought Wachovia to the brink of insolvency by September 2008. Wachovia was one of the largest financial institutions to be "bailed out" during the financial crisis, when Wells Fargo & Company agreed to acquire it in early October 2008.
Both settlements must be reviewed and approved after formal notice is provided to the class.
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