SOURCE: Bernstein Litowitz Berger & Grossmann LLP; Kessler Topaz Meltzer & Check, LLP; Robbins Geller Rudman & Dowd LLP

August 05, 2011 10:39 ET

Counsel for Lead Plaintiffs Announce Settlement of Wachovia Preferred Securities and Bond/Notes Litigation for $627 Million

NEW YORK, NY--(Marketwire - Aug 5, 2011) - Counsel for Lead Plaintiffs, the Orange County Employees' Retirement System, the Louisiana Sheriffs' Pension and Relief Fund, and the Southeastern Pennsylvania Transportation Authority, the court-appointed representatives of a class of investors who purchased certain Wachovia Corporation (Wachovia) (NYSE: WFC) bonds and preferred securities pursuant or traceable to numerous public offerings between July 31, 2006 and May 29, 2008, today announced that, on behalf of the class, a global settlement of the matter has been reached with all defendants for a total recovery of $627 million. The recovery is comprised of a $590 million settlement with Wachovia and its affiliated entities (including certain former Wachovia officers and directors, as well as various underwriters) and an additional $37 million settlement with Wachovia's auditor, KPMG LLP ("KPMG").

The combined $627 million recovery is among the 15 largest securities class action recoveries in history. It also is believed to be the largest settlement ever in a class action case asserting only claims under the Securities Act of 1933. The case also represents one of the handful of largest securities class action recoveries ever obtained where there were no parallel civil or criminal securities fraud actions brought by government authorities.

The claims asserted were based on allegations that the Wachovia offering materials at issue misrepresented and/or omitted to disclose material facts concerning the nature and quality of Wachovia's multi-billion dollar option-ARM (adjustable rate mortgage) "Pick-A-Pay" mortgage loan portfolio, and that Wachovia's publicly disclosed loan loss reserves were materially inadequate at all relevant times, in violation of Generally Accepted Accounting Principles ("GAAP"). The Complaint alleges that the undisclosed problems in the "Pick-A-Pay" mortgage loan portfolio brought Wachovia to the brink of insolvency by September 2008. Wachovia was one of the largest financial institutions to be "bailed out" during the financial crisis, when Wells Fargo & Company (NYSE: WFC) agreed to acquire it in early October 2008.

Co-Lead Counsel for the class, Bernstein Litowitz Berger & Grossmann LLP, Kessler Topaz Meltzer & Check, LLP; and Robbins Geller Rudman & Dowd LLP, issued the following statement: "We are very pleased to announce such a significant recovery in this matter on behalf of the bond and preferred security purchasers we represent as members of the class. We believe that these settlements reflect an outstanding result for bond and preferred security purchasers who were damaged as a result of false and misleading offering materials issued in connection with Wachovia's public offerings."

Both settlements must be reviewed and approved by Judge Richard J. Sullivan of the United States District Court for the Southern District of New York, after formal notice is provided to the class.

Contact Information

  • CONTACT:
    Max Berger or William Fredericks
    Bernstein Litowitz Berger & Grossmann LLP
    (212) 554-1400

    Darren Check
    Kessler Topaz Meltzer & Check, LLP
    (610) 822-2235

    Darren Robbins
    Robbins Geller Rudman & Dowd
    (619) 231-1058