SAN FRANCISCO - Attorney General Edmund G. Brown announced today that 3,500 investors, whose holdings in auction rate securities were frozen in the financial crisis of 2008, have recovered $1.4 billion through a settlement the Attorney General hammered out with Wells Fargo affiliates.
"We went to bat for people who believed their investments were like cash," Brown said, "but discovered after the financial meltdown that they couldn't get their hands on even a dime of their money for two long years. Now, because of the settlement, they have all of their money back."
The investors, big and small, included retirees, working families, small businessmen, and charities. Nearly half are Californians, who received $695 million through buybacks of their securities by Wells Fargo.
Many invested in the securities because of assurances they were "like cash" -- safe and liquid. The securities turned out to be neither. Unable to sell the securities, investors were stuck.
More than 90 percent of the owners of the securities elected to take the Wells Fargo buyback offer under the settlement.
"Getting this money back takes a lot of pressure off me," said Johanna Markley of Newport Beach, who suffers from cancer. "I wondered who would fight for us."
"I'm retired and over 70 years old," said William O'Brien of El Dorado County. "It was frustrating to have that money just sitting there for over two years and being unable to access it when we needed it."
"Getting the investment back has helped save jobs in our company," said Boris Levine, a San Francisco businessman.
Brown said Wells Fargo was co-operative throughout the repayment process and did what it said it would do.
In November, the Attorney General reached a settlement with Wells Fargo Investments, LLC; Wells Fargo Brokerage Services, LLC; and Wells Fargo Institutional Investors, LLC. The buybacks were made pursuant to that agreement.
Auction rate securities are long-term bonds whose interest rates are adjusted frequently at auction. If there are no takers for the bonds, they can become frozen and effectively worthless.
The Attorney General's Office has submitted a request for dismissal of its action against Wells Fargo in San Francisco Superior Court, signaling the successful completion of the repayments.
"We went to bat for people who believed their investments were like cash," Brown said, "but discovered after the financial meltdown that they couldn't get their hands on even a dime of their money for two long years. Now, because of the settlement, they have all of their money back."
The investors, big and small, included retirees, working families, small businessmen, and charities. Nearly half are Californians, who received $695 million through buybacks of their securities by Wells Fargo.
Many invested in the securities because of assurances they were "like cash" -- safe and liquid. The securities turned out to be neither. Unable to sell the securities, investors were stuck.
More than 90 percent of the owners of the securities elected to take the Wells Fargo buyback offer under the settlement.
"Getting this money back takes a lot of pressure off me," said Johanna Markley of Newport Beach, who suffers from cancer. "I wondered who would fight for us."
"I'm retired and over 70 years old," said William O'Brien of El Dorado County. "It was frustrating to have that money just sitting there for over two years and being unable to access it when we needed it."
"Getting the investment back has helped save jobs in our company," said Boris Levine, a San Francisco businessman.
Brown said Wells Fargo was co-operative throughout the repayment process and did what it said it would do.
In November, the Attorney General reached a settlement with Wells Fargo Investments, LLC; Wells Fargo Brokerage Services, LLC; and Wells Fargo Institutional Investors, LLC. The buybacks were made pursuant to that agreement.
Auction rate securities are long-term bonds whose interest rates are adjusted frequently at auction. If there are no takers for the bonds, they can become frozen and effectively worthless.
The Attorney General's Office has submitted a request for dismissal of its action against Wells Fargo in San Francisco Superior Court, signaling the successful completion of the repayments.
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