The state of California sued Wells Fargo yesterday alleging that the bank misled investors about the safety and liquidity of the auction-rate securities that it sold. DealBook reports that the lawsuit seeks $1.5 billion from Wells Fargo.
In a statement yesterday, Attorney General Jerry Brown (pictured) said that “Wells Fargo’s affiliates promised investors auction-rate securities were as safe and liquid as cash, when in fact they were not, and now investors are unable to get their money when they need it.” Brown’s office said that about 2,400 Californians who had invested with Wells Fargo were unable to redeem more than $1.5 billion worth of securities.
Wells Fargo Investments, Wells Fargo Brokerage Services and Wells Fargo Institutional Securities are also reportedly named in the lawsuit. Wells Fargo denied the claims against it, stating that it “could not have predicted these extraordinary circumstances, and even with the benefit of hindsight is not responsible for them.”