The Securities and Exchange Commission (SEC) says it has filed a subpoena enforcement action with a California federal court against Wells Fargo because the bank has failed to produce documents requested by the SEC.
According to the filing, the SEC is investigating possible fraud in connection with Wells Fargo's sale of nearly $60 billion in residential mortgage-backed securities (RMBS) to investors.
The federal agency subpoenaed Wells Fargo for material related to the RMBS exchange as far back as September 2011. At that time, the SEC says, Wells Fargo agreed to produce the documents, but to date, agency officials have not received what they need from the San Francisco-based lender.
The SEC is investigating whether Wells Fargo made material misrepresentations or omitted material facts in a series of offerings between September 2006 and early
2008. The federal agency explains that, in connection with the securitization of the loans, a due diligence review of a loan sample from each offering was performed.
Certain loans within that sample were dropped from the offering for failure to comply with Wells FargoÃ¢â‚¬â„¢s loan underwriting standards, however, the SEC says it does not appear that Wells Fargo took any steps to address similar deficiencies in the remainder of the loans in the pool, which were securitized and sold to investors.
Ã¢â‚¬Å“The Commission [SEC] is investigating, among other things, whether Wells Fargo misrepresented to investors that the loans being securitized complied with the bankÃ¢â‚¬â„¢s loan underwriting standards,Ã¢â‚¬Â the SEC said in a statement.
The SECÃ¢â‚¬â„¢s San Francisco regional office has issued several subpoenas to Wells Fargo since September 2011 seeking materials related to due diligence and the bankÃ¢â‚¬â„¢s underwriting guidelines. The agency says Wells Fargo initially set forth a timetable for providing the documents, yet has failed to produce many of the requested materials.
Wells Fargo did not immediately respond to DSNews.comÃ¢â‚¬â„¢s request for comment.
The SEC is seeking an order from the federal district court compelling Wells Fargo to comply with its administrative subpoenas and to produce all responsive materials to the staff.
The SEC noted in its statement that the agency is continuing to conduct a fact-finding inquiry and has not concluded that anyone has broken the law.