undisclosed excessive markups

Wells Fargo Pays $11.2 Million to Settle SEC Investigation Relating to Alleged ’33 Act Violations by Wachovia in Sales of CDOs

On April 5, 2011, Wells Fargo agreed to pay $11.2 million to resolve SEC regulatory claims that Wachovia, acquired by Wells Fargo in 2008, improperly sold two CDOs tied to the performance of certain RMBS. The SEC alleged that Wachovia charged “undisclosed excessive markups” to the Zuni Indian Tribe and other investors and falsely claimed that assets purchased from an affiliate at above-market prices were arm’s-length purchases at fair market prices. Settlement Order. The $11.2 million settlement consists of $6.75 million in disgorgement and $4.45 million in civil penalties. Wells Fargo resolved the matter without admitting or denying wrongdoing by Wachovia. Wells Fargo SEC Settlement Order.