Wachovia says SEC is considering action
Wachovia Corp. said Monday that the Securities and Exchange Commission is considering civil and administrative action against it in connection with bidding for municipal bonds.
The Charlotte bank gave few details. But it and other financial firms, including Bank of America Corp., have been sued this year over municipal bonds. The lawsuits say that employees of various banks rigged the auctions that determine the return that a municipality can get on its bond investment. Cities, counties, school districts and other government entities issue bonds to raise money for public projects, like roads or sewer plants.
Wachovia also said it has been subpoenaed by “various” state attorneys general over municipal bonds. The bank said it is cooperating with investigations.
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The bank also detailed several lawsuits filed against it over its 2006 purchase of Golden West Financial Corp., a mortgage lender that has since been blamed for much of the bank's current losses. The lawsuits, filed either by shareholders or employees, claim that Wachovia made misleading disclosures about Golden West's portfolio and its own exposure to mortgage-backed securities.
Seven class-action lawsuits claim that Wachovia should not have permitted its common stock to remain an investment option in its employee savings plan. The suits say that misleading disclosure made Wachovia's stock “a risky and imprudent investment for employee retirement accounts,” the bank said.
The bank said those suits are in preliminary stages, and that it intends to “defend vigorously” each case.