Wells Fargo & Co. has agreed to pay $590 million to settle lawsuits filed by bondholders alleging Wachovia misrepresented the quality of its residential mortgages from 2006 to 2008, according to a securities filing today.

Wachovia's auditor, KPMG, has also agreed to a $37 million settlement.

The settlement is one of the 15 largest securities class-action recoveries, counsel for the plaintiffs said in a news release.

Large stock and bond holders filed suit against Charlotte-based Wachovia after it revealed in April 2008 growing losses in its portfolio of "Pick-A-Pay" mortgages. The bank inherited these "option adjustable-rate mortgages" in its 2006 acquisition of Golden West Financial Corp. and continued to make the loans even as the housing market showed cracks.

Growing losses in this portfolio weighed on the bank during the 2008 financial crisis, contributing to its emergency sale to San Francisco-based Wells that fall.

The proposed settlement, which needs court approval, applies to cases filed by investors who purchased bonds and preferred securities from Wachovia in public offerings from July 31, 2006 to May 29, 2008.

In March, U.S. District Court Judge Richard Sullivan of the Southern District of New York dismissed similar cases brought by investors who bought Wachovia stock. In April, the plaintiffs appealed that decision.

Wells said in today's filing that the proposed settlement has already been reflected in its financial statements.

"Wells Fargo agreed to this settlement in order to avoid the distraction, risk and expense of on-going litigation," Wells spokeswoman Mary Eshet said. "The settlement agreement does not constitute an admission of Wells Fargo of liability or any violation of law by Wachovia."

KPMG spokesman George Ledwith said the firm agreed to the settlement to "avoid the cost of litigation and to put this matter behind us."