Wells Fargo will pay a $6.5 million civil money penalty along with disgorgement and prejudgment interest to the SEC. The payment is based on the SEC’s finding that Wells Fargo violated Sections 17(a)(2) and 17(a)(3) of the Securities Act. The SEC alleged that from January 1, 2007 until August 17, 2007, “Wells Fargo and certain of its registered representatives recommended and sold complex forms of [Structured Investment Vehicle]-issued asset-backed commercial paper to institutional customers without obtaining sufficient information and understanding about the nature and risk of these products.” In accepting the settlement, Wells Fargo neither admits nor denies any wrongdoing.
The announcement of the settlement with Wells Fargo follows the August 6, 2012 notification by the SEC that it would not institute civil litigation over certain mortgage-related disclosures allegedly made by Goldman Sachs (“Goldman”). At issue in that investigation were disclosures contained in the offering documents used in connection with a 2006 offering of approximately $1.3 billion of subprime residential mortgage-backed securities underwritten by Goldman. As set forth in Goldman’s August 9, 2012 10-Q filing, earlier this month, SEC staff notified Goldman that the investigation into this offering was completed and that the SEC did not intend to recommend any enforcement action against Goldman with respect to this offering.