California Attorney General Edmund Brown on Thursday sued Wells Fargo (WFC) for $1.5 billion alleging the nation’s fourth-largest bank made false statements to investors about the liquidity of auction-rate securities.
From Reuters: California investors depended on the “false and deceptive advice that these investments were as safe and liquid as cash,” Brown said in a statement.
The Wells units sold the securities using fraudulent or deceptive means, marketed the investments to unsuitable investors, and failed to adequately supervise and train sales agents who sold the investments, the suit said.
Brown accused the bank of taking further advantage of investors by offering loan programs to those who were unable to access their money.
The case, filed in San Francisco Superior Court, accuses Wells Fargo Investments LLC, Wells Fargo Brokerage Services and Wells Fargo Institutional Securities of violating state securities laws.
According to Reuters, nearly 2,500 Californians were unable to access their investments, ranging from $25,000 to millions of dollars, after the $330 billion market collapsed in February of 2008.
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