Reuters: Regulatory News: UPDATE 1-Wells Fargo, SEC told to meet in subpoena dispute

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UPDATE 1-Wells Fargo, SEC told to meet in subpoena dispute Mar 30th 2012, 17:21 Fri Mar 30, 2012 1:21pm EDT * Judge rejects SEC demand to compel subpoena compliance * SEC probes bank's sale of $60 bln mortgage debt * SEC says has sought documents since September By Jonathan Stempel March 30 (Reuters) - A federal judge rejected the U.S. Securities and Exchange Commission's demand that Wells Fargo & Co comply with subpoenas related to a probe of the bank's sale of $60 billion of mortgage-backed securities, but directed both sides to meet. In an order dated Thursday, U.S. Magistrate Judge Laurel Beeler in San Francisco directed the parties to try to resolve their dispute, and if they failed to explain why in writing. On March 23, the SEC had accused Wells Fargo of repeatedly ignoring its subpoenas, six of which had been issued since Sept. 30, and demanded compliance. The regulator is looking into whether Wells Fargo fraudulently misled investors about the risks of securities it sold from September 2006 to early 2008, including whether the underlying home loans complied with underwriting standards. Wells Fargo spokesman Ancel Martinez said the bank was pleased with the judge's decision. "This proceeding, which was filed without any notice to Wells Fargo, should never have been brought before this court," he said. "The application falsely accuses Wells Fargo of not cooperating in connection with an investigation by the SEC staff." The bank made 68 separate document productions of more than 750,000 pages and had responded to the "vast majority" of the staff's 96 requests, Martinez said. More than 100 people, including Wells' internal and outside counsel, have spent thousands of hours gathering and producing documents to the SEC, he said. The bank "looks forward to addressing the lack of merit of the underlying substantive issues addressed by the SEC," he added. The SEC declined to comment. Wells Fargo is based in San Francisco, and is the nation's fourth-largest bank by assets and largest mortgage lender. The bank has not been accused of wrongdoing. It has called the SEC's March 23 demand inappropriate, believing there had been an understanding with SEC staff about the document requests. Several major US banks have been faulted over their packaging and marketing of mortgage debt that proved riskier than expected. This debt was a major factor in both the 2008 financial crisis and the roughly five-year U.S. housing slump. The case is SEC v. Wells Fargo & Co, U.S. District Court, Northern District of California, No. 12-mc-80087. Link this Share this Digg this Email Reprints

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