WASHINGTON (AP) — Wells Fargo's brokerage firm has agreed to pay $6.58 million to settle federal civil charges that it failed to adequately inform investors about the risks tied to mortgage securities it sold.
The Securities and Exchange Commission says Minneapolis-based Wells Fargo Brokerage Services improperly sold the high-risk investments to cities and towns, non-profit institutions and other investors in 2007, when the housing bust was under way.
The firm, now called Wells Fargo Securities and based in Charlotte, N.C., is paying a $6.5 million civil fine and $81,571 in restitution plus interest in the settlement announced Tuesday.
A former firm vice president, Shawn McMurtry, also agreed to settle the charges. He's paying a $25,000 civil fine and will be suspended for six months from the securities industry.
San Francisco-based Wells Fargo & Co., the fourth-largest U.S. bank by assets, and McMurtry neither admitted nor denied wrongdoing.
A Wells Fargo spokesman said the brokerage firm was "completely revamped" after Wells Fargo acquired Wachovia Corp. in a merger in December 2008.
"We are pleased to put this matter behind us," spokesman Ancel Martinez said. "Our current policies and procedures are not the subject of this settlement."
The settlement was the SEC's latest enforcement action related to the financial crisis since it began a broad investigation in late 2008 into the actions of Wall Street banks and other financial firms.
In a major SEC case, Goldman Sachs & Co. agreed in July 2010 to pay $550 million to settle charges of misleading buyers of a complex mortgage investment. JPMorgan Chase & Co. resolved similar charges in June 2011 and paid $153.6 million. Citigroup Inc. agreed to pay $285 million to settle similar charges, though that settlement was struck down by a federal judge last November.
An attorney representing McMurtry didn't immediately return a telephone call seeking comment.