The Securities Exchange Commission (SEC) [official website] announced [press release] on Friday that it filed a subpoena enforcement action in the U.S. District Court for the Northern District of California [official website] against Wells Fargo & Company [corporate website] to force the company to hand over documents connected to the company's sale of nearly $60 billion in residential mortgage-backed securities to investors. The SEC is investigating Wells Fargo for potential fraud due to potential material misrepresentations or omitted material facts in a series of offerings between 2006 and 2008, as well as whether Well Fargo misrepresented to investors that the loans complied with the company's underwriting standards. Wells Fargo has allegedly failed to produce documents requested in a September 2011 SEC subpoena. The SEC is also investigating several other firms for whether they failed to disclose material facts to investors pertaining to weaknesses in offerings and has informed Goldman Sachs Group Inc. and JPMorgan Chase [corporate websites] that they may also face charges [Bloomberg report].
Earlier this month Wells Fargo and the country's four other largest mortgage service providers reached a $25 billion settlement [JURIST report] with the Department of Justice, the Department of Housing and Urban Development [official websites] and 49 state attorneys general over mortgage loan servicing and foreclosure abuses. The settlement was initially announced [JURIST report] in February. The settlement does not prevent civil suits by individual homeowners or criminal charges pursued by federal or state authorities.