Wells Fargo pulls out of MBIA transformation lawsuit
Wells Fargo (WFC) dropped out of a high-profile lawsuit that publicly challenged monoline insurer MBIA's structural transformation in the wake of the financial crisis. The original suit, which included Wells Fargo and 20 other banking entities, challenged MBIA's plan to transform its business under New York state's Article 78. The complaint was filed after MBIA created a second firm using $5 billion siphoned from the company's original insurance subsidiary. Financial firms involved in the suit ended up challenging MBIA's structural transition and the New York Insurance Department's approval of the plan. A Wells Fargo spokesperson said Tuesday, "We can confirm we reached a settlement, the terms are private, any financial impact has been account for, and we're pleased to have the matter resolved." Well's exit from the complaint reduces the total number of plaintiffs challenging MBIA's transformation to eight with several others dropping out and some merging. No reason was provided for Wells Fargo's exit from the case. However, court records show both sides agreed to pay their own court costs and attorneys fees. Wells could not be reached for comment. Plaintiffs still named in the suit include BNP Paribas, HSBC Bank USA (HBC), Merrill Lynch International, Bank of America (BAC), Morgan Stanley Capital Services Inc. (MS), Natixis, Natixis Financial Products, The Royal Bank of Scotland (RBS), Societe Generale and UBS AG. Write to Kerri Panchuk.