CN) — Wells Fargo must face fraud claims over $163 million in securities that Wachovia, now owned by Wells Fargo, allegedly used as a “dumping ground” for assets it wanted off its books, a federal judge ruled.
A number of specialized investment entities sued Wells Fargo in New York after three collateralized debt obligations marketed by Wachovia Capital Markets defaulted following the 2008 financial crisis.
These entities, led by Loreley Financing No. 3, invested a total of $163 million in the CDOs, which they now claim were used as a “private dumping ground for rapidly deteriorating assets” that Wachovia wanted to get rid of.
Wells Fargo is the successor in interest to Wachovia, having purchased the bank in 2008 in an FDIC-brokered deal following Wachovia’s heavy losses in the subprime mortgage crisis.
The Second Circuit upheld the plaintiffs’ primary fraud claim last year, and Wells Fargo did not attempt to…