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Wells Fargo Settles ARS Debacle

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Wells Fargo has become the latest firm to offer a belated "my bad" on auction-rate securities.
The bank's Wells Fargo Investments today agreed to repay clients who bought the unfortunate securities some $1.3 billion. It's also paying an additional "I'm sorry" penalty of $1.9 million, for allegedly promising clients that ARS were highly liquid and that nothing could possibly go wrong.
Of course, something did go wrong: The ARS market collapsed in February 2008 and all of those billions--Wells Fargo sold some $2.95 billion in ARS--were frozen.

The settlement follows more than a dozen others, many with larger, better banks, including Goldman Sachs, Deutsche Bank, JPMorgan Chase and Credit Suisse, as well as with lesser banks, like Bank of America and Merrill Lynch (separately) and Citigroup. Those deals have won more than $61 billion back for woebegone investors.
In exchange for the ARS buybacks and making investors who sold their investments at a loss whole, the state securities regulators behind the deal have agreed to stop looking into what else Wells Fargo did wrong with ARS. But here at Dealbreaker, we will continue to investigate the obvious link between these awful products and Times-boy.
NASAA press release
Wells Fargo to Buy Back $1.3 Billion in Auction-Rate Securities [Bloomberg]
Wells Fargo To Repay Clients Who Held Auction Rate Securities [WSJ]


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