The proposed deal was filed in federal court yesterday and both sides will be back in court July 21 in San Jose asking for judicial approval of the deal.
Several pension funds sued in 2009 claiming the bank misled investors in 28 offerings of mortgage-backed securities, in 2005 to 2006, about the quality of the underlying loans bundled for resale.
The plaintiffs in the case include the General Retirement Sysem of Detroit, the Alameda County Employees’ Retirement Association, the New Orleans Employees’ Retirement System and retirement systems of Mississippi, Vermont and Guam, among others.
Wells Fargo [WFC] of mortgage loans and bundled them into securities that could be resold to investors. The institutional investors say the bank failed to follow accepted underwriting standards and that some loans were handed out based on inflated appraisals.
The bank and underwriters deny any wrongdoing, according to the agreement.
The settlement comes just little more than a week after Bank of America Corp. [BAC] agreed to pay $8.5 billion to settle similar claims that it misled investors in the sale of bonds that were backed by Countrywide Financial Corp., now owned by Bank of America.
Case: In re Wells Fargo Mortgage-Backed Certificates Litigation, No. C09-1376 (N. Dist. of Calif.)