In the past few years, Wells Fargo, once thought of as a shining example in the financial services industry, has been dragged down by scandal after scandal followed by settlement after settlement.
Well, guess what? It’s a day that ends in “y,” and that means it’s time for another Wells Fargo settlement.
Wells Fargo announced late last week that it reached a settlement with a group of institutional investors, which includes funds affiliated with investing giants BlackRock and PIMCO, to bring a pair of class action lawsuits to a close.
The settlement will see Wells Fargo pay out $43 million over its role as trustee for residential mortgage-backed securities trusts that were created between 2004 and 2008.
According to Wells Fargo, the settlement will also see as much as $70 million that’s been kept in trust reserve accounts established in connection with the litigation released.
In a statement, Wells Fargo said that the settlement is still subject to final approval by the courts overseeing the lawsuits.
But the settlement would resolve claims against Wells Fargo over its role as trustee for 271 RMBS trusts that were created between 2004 and 2008.
“Wells Fargo’s duties were limited to administering the trusts, and it had no role in the origination or servicing of the mortgages at issue,” the bank said in a statement. “The agreement resolves a significant portion of the claims asserted against the company in connection with its role as trustee for RMBS trusts.”
Wells Fargo also said that it denies the claims in the lawsuits, but is choosing to settle nonetheless.
“Consistent with our sound business practices, we believe that we appropriately fulfilled our duties as trustee by performing the responsibilities prescribed in the relevant contracts for these decade-old trusts,” Troy Kilpatrick, head of Wells Fargo Corporate Trust Services, said. “While we disagree with the allegations, it is in the best interest of all parties to put this protracted litigation behind us and we are satisfied with this settlement.”
But Wells Fargo notes that separate lawsuits filed by certain other institutional investors involving 58 other RMBS trusts are not covered by this new agreement.
“Following more than four years of litigation, including fact and expert discovery, we concluded that this agreement provides a fair and reasonable resolution of the claims,” PIMCO, BlackRock and the other institutional investor plaintiffs said through their counsel, Timothy DeLange of Bernstein Litowitz Berger & Grossmann.
“We appreciate Wells Fargo’s professionalism in reaching this agreement and commend their efforts to work with certificateholders to resolve the litigation,” the plaintiffs continued. “While we believe the claims are meritorious, the settlement provides an immediate and concrete benefit for class members, while bringing the litigation to a close.”
