Feds say Wells Fargo won't turn over documents
SAN FRANCISCO (AP) — Federal securities regulators are asking a federal court to order Wells Fargo & Co. to turn over documents in an investigation of the bank's sale of $60 billion in mortgage-backed securities.
The Securities and Exchange Commission said in a statement Friday that Wells Fargo agreed to produce the documents under subpoenas dating to September of 2011, but the bank has failed to hand over much of the requested material.
The agency has asked U.S. District Court in San Francisco to order the nation's largest mortgage lender to turn over the paperwork. The SEC is investigating possible fraud in the bank's sale of securities that were made up of multiple mortgage loans between September 2006 and early 2008.
Wells Fargo called the SEC's action "inappropriate and unwarranted." Spokeswoman Mary Eshet said Saturday in an e-mailed statement the bank will vigorously defend itself in court. The bank has cooperated with the SEC, and the agency violated an understanding that both sides had about the remaining documents, the statement said.
The SEC said it is investigating whether the San Francisco-based Wells Fargo "made material misrepresentations or omitted material facts" in securitizing the loans. The company would perform a due diligence review of a sample of the loans within the securities and would drop loans that didn't meet its underwriting standards, the SEC said. But the agency said it doesn't appear that Wells Fargo took steps to drop bad loans from the rest of the securities.
"The commission is investigating, among other things, whether Wells Fargo misrepresented to investors that the loans being securitized complied with the bank's loan underwriting standards," the SEC statement said.
The SEC said it is gathering facts and has not determined if any laws have been broken.
Wells Fargo also said the SEC inaccurately described its conduct involving mortgage-backed securities and that no enforcement action by the agency is warranted.
Wells Fargo hasn't been under as much public scrutiny as companies like Goldman Sachs Group Inc. and Bank of America Corp. for its sales of mortgage-backed securities to investors.