Wells Fargo & Co., with branches and lending operations throughout Connecticut, has agreed to pay $125 million to a group of pension funds and other investors to settle allegations the bank failed to warn investors of the risks the poorly-written mortgage backed securities, The Associated Press reports.
The proposed settlement was filed Wednesday in a California federal court and represents lawsuits filed by the pension funds of Detroit, Alameda County, New Orleans, Guam, and other plaintiffs. The settlement is subject to court approval.
The mortgage-backed securities were sold by Wells Fargo in 2005 and 2006. The investors said in their complaint that in its bid to collect fees, the bank misstated and omitted details that show the securities were backed by poor quality mortgages sold to people without proper documentation. The bank denied any wrongdoing.
Wells Fargo entered Connecticut with its 2008 takeover of former Wachovia Corp.
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