WASHINGTON (Reuters) -A unit of Wells Fargo & Co settled civil charges on Tuesday alleging that Wachovia violated federal securities laws when it sold mortgage-backed securities to investors in the lead-up to the housing crisis.
The Securities and Exchange Commission said that Wells Fargo Securities will pay $11 million in disgorgement and penalties to settle the administrative charges against Wachovia Capital Markets, a unit of Wachovia, acquired by Wells Fargo in late 2008.
The SEC said Wachovia had violated the law in two different ways. In one instance, it sold overpriced collateralized debt obligations, or CDOs, to the Zuni Indian Tribe and another individual investor.
In another case, meanwhile, the SEC said Wachovia misrepresented to investors in a second CDO that it had acquired assets at fair market prices when actually the prices were above market value.
The SEC said Wachovia did not act improperly in how it structured the mortgage-backed products.
Reporting by Sarah N. Lynch, editing by Gerald E. McCormick