SAN FRANCISCO–(BUSINESS WIRE)–Wells Fargo Bank, N.A., and a group of institutional investors, including funds affiliated with BlackRock, Inc. and PIMCO, announced today that they have reached a settlement that resolves two class action lawsuits in federal and state court related to Wells Fargo’s role as trustee for certain residential mortgage-backed securities (RMBS) trusts created more than a decade ago. Under terms of the agreement, Wells Fargo will pay $43 million and Wells Fargo denies the claims in the litigation. Separate from the settlement amount the company is paying, up to $70 million from certain trust reserve accounts established in connection with the litigation will be released. The settlement also resolves a related action seeking declaratory relief against Wells Fargo, as well as claims by Wells Fargo against certain investment advisors. Federal and state cases alleging similar claims filed by certain other institutional investors are not part of the settlement.
“Consistent with our sound business practices, we believe that we appropriately fulfilled our duties as trustee by performing the responsibilities prescribed in the relevant contracts for these decade-old trusts,” said Troy Kilpatrick, head of Wells Fargo Corporate Trust Services. “While we disagree with the allegations, it is in the best interest of all parties to put this protracted litigation behind us and we are satisfied with this settlement.”
The agreement, which is subject to approval by the court, resolves claims regarding the fulfillment of Wells Fargo’s duties as trustee — including providing certain notifications to certificateholders — for 271 RMBS trusts created between 2004 and 2008. Wells Fargo’s duties were limited to administering the trusts, and it had no role in the origination or servicing of the mortgages at issue. The agreement resolves a significant portion of the claims asserted against the company in connection with its role as trustee for RMBS trusts. Separate lawsuits filed by certain other institutional investors concerning 58 trusts are not covered by the agreement.
“Following more than four years of litigation, including fact and expert discovery, we concluded that this agreement provides a fair and reasonable resolution of the claims,” said PIMCO, BlackRock and the other institutional investor plaintiffs through their counsel, Timothy A. DeLange of Bernstein Litowitz Berger & Grossmann LLP. “We appreciate Wells Fargo’s professionalism in reaching this agreement and commend their efforts to work with certificateholders to resolve the litigation. While we believe the claims are meritorious, the settlement provides an immediate and concrete benefit for class members, while bringing the litigation to a close.”
Wells Fargo has previously disclosed the RMBS Trustee litigation in its public filings, including in its most recent Quarterly Report on Form 10-Q. The settlement amount was fully accrued as of June 30, 2018.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,950 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 37 countries and territories to support customers who conduct business in the global economy. With approximately 262,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 26 on Fortune’s 2018 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.
PIMCO is one of the world’s premier fixed income investment managers. With its launch in 1971 in Newport Beach, California, PIMCO introduced investors to a total return approach to fixed income investing. In the 45+ years since, PIMCO has continued to bring innovation and expertise to its partnership with clients seeking the best investment solutions. Today PIMCO has offices across the globe and 2,150+ professionals united by a single purpose: creating opportunities for investors in every environment. PIMCO is owned by Allianz S.E., a leading global diversified financial services provider.