Wells Fargo Bank will pay a total of $43 million to settle two class-action lawsuits filed by a group of institutional investors including BlackRock (BLK) and Pacific Investment Management Co. over the bank's role as trustee of residential mortgage-backed securities trusts.
The bank, which denies the allegations in the lawsuits, also will release up to $70 million from certain trust reserve accounts established in connection with the litigation, according to a joint news release from Wells Fargo and PIMCO issued Nov. 9.
The suits were filed in U.S. District Court in New York and New York Superior Court, according to Wells Fargo's latest 10-Q filing with the Securities and Exchange Commission. According to the 10-Q filing, the lawsuits claimed Wells Fargo did not meet its duties as trustee of 271 RMBS trusts created between 2004 and 2008.
Wells Fargo said in the release that its duties were limited to administering the trusts, and it had no role in the origination or servicing of the mortgages at issue.
Separate lawsuits filed by other institutional investors concerning 58 trusts are not covered by the agreement, according to the news release.
"Following more than four years of litigation, including fact and expert discovery, we concluded that this agreement provides a fair and reasonable resolution of the claims," according to a statement from the plaintiffs in the case issued through their attorney, Timothy A. DeLange, partner at the law firm of Bernstein Litowitz Berger & Grossmann.