WASHINGTON (AP) — An investment fund owned by Wells Fargo & Co. has agreed to pay $40 million to settle federal charges that it inflated the value of a mutual fund that invested mainly in securities tied to home mortgages and only selectively told shareholders about the fund's problems.
The Securities and Exchange Commission on Monday announced the settlement with Boston-based Evergreen Investment Management Co., which did not admit or deny wrongdoing.
Evergreen and an affiliate agreed to pay $33 million to compensate fund shareholders, as well as civil fines totaling $4 million and around $3 million in restitution of allegedly ill-gotten gains.
San Francisco-based Wells Fargo acquired Wachovia Corp., Evergreen's parent company, in a $12.7 billion deal that closed Jan. 1. Evergreen had 76 mutual funds and $164 billion assets under management as of March 31.
Evergreen spokeswoman Laura Fay said it was in the best interests of the company and its clients "to resolve this matter and move forward."
The SEC alleged that Evergreen and its fund distributor, Evergreen Investment Services Inc., improperly valued the Ultra Short Opportunities Fund, which was ranked as a high performer in its class in 2007 and 2008.
If the fund had been accurately valued by Evergreen, it would have ranked near the bottom of its category during that period, the SEC said.
When Evergreen did assign more realistic values to some mortgage-backed securities held in the fund, it only let "select" shareholders know the reasons for the change and the likelihood of additional revisions in the future, according to the SEC. Those investors were able to cash out their shares in the fund and avoid losses, while other shareholders were left in the dark, the agency said.
The fund's management team also withheld the negative information on the securities from an Evergreen committee responsible for valuations of holdings, the SEC alleged.
Evergreen closed the Ultra Short Opportunities Fund in June 2008 following substantial cash-outs by shareholders after the holdings were re-priced.
"By picking and choosing to disclose negative information to some investors and not others, Evergreen gave certain shareholders an unfair advantage and left others in the dark," David Bergers, director of the SEC's regional office in Boston, said in a statement. "Evergreen harmed investors and prevented them from making informed decisions by overstating the value of its holdings in mortgage-backed securities."
by the associated press
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Showing posts with label Wells fargo. Show all posts
Showing posts with label Wells fargo. Show all posts
Monday, June 8, 2009
Wednesday, April 29, 2009
Wells Fargo Cheif Hope's Economy will Rebound
WASHINGTON — Federal Reserve policymakers are weighing whether additional steps are needed to brace the economy as an outbreak of the swine flu has emerged as a potential new danger that could aggravate the recession.
Fed Chairman Ben Bernanke and his colleagues opened a two-day meeting Tuesday afternoon to take fresh stock of already fragile economic and financial conditions.
The swine flu outbreak, which started in Mexico and has spread to the United States and elsewhere, could force American consumers to retrench further. That would deal a blow to the domestic economy, which has flashed some signs the recession could be letting up a bit.
Some good signs
Other hopeful signals emerged Tuesday. The Conference Board’s Consumer Confidence Index rose more than expected in April, jumping 12 points to 39.2, the highest level since November. And a housing index showed home prices dropped sharply in February, but for the first time in 25 months the decline was not a record. To ease the impact of the recession, economists predict the Fed will keep its targeted range for its bank lending rate between zero and 0.25 percent at this week’s meeting and probably well into next year.
With its key rate already at a record low, the Fed will examine the effectiveness of programs already in place to combat the worst financial crisis since the 1930s. Fed policymakers will consider whether programs designed to ease the credit crunch need to be expanded or changed, and whether new relief efforts need to be implemented. Any decisions would come at the conclusion of the Federal Reserve’s meeting this afternoon.
"This is a good meeting for Fed policymakers to pause and take stock of what they’ve done so far and allow programs to do their thing,” said Michael Feroli, economist at JPMorgan Economics.
Feroli and others aren’t expecting the kind of aggressive action the Fed took at its last meeting in mid-March. That was when the Federal Reserve decided to plow $1.2 trillion into the nation’s economy to try to lower interest rates and stimulate borrowing and spending.
Before the swine flu outbreak, many analysts were predicting the recession would ease further, with the economy shrinking at a rate of 2 to 2.5 percent in the current quarter.
However, analysts warn that any severe outbreak of the swine flu would not only clobber tourism, food and transportation industries, but crimp spending on other things if consumers get spooked.
For now, analysts are hopeful that any economic fallout will be limited and short-lived.
by associated press
Fed Chairman Ben Bernanke and his colleagues opened a two-day meeting Tuesday afternoon to take fresh stock of already fragile economic and financial conditions.
The swine flu outbreak, which started in Mexico and has spread to the United States and elsewhere, could force American consumers to retrench further. That would deal a blow to the domestic economy, which has flashed some signs the recession could be letting up a bit.
Some good signs
Other hopeful signals emerged Tuesday. The Conference Board’s Consumer Confidence Index rose more than expected in April, jumping 12 points to 39.2, the highest level since November. And a housing index showed home prices dropped sharply in February, but for the first time in 25 months the decline was not a record. To ease the impact of the recession, economists predict the Fed will keep its targeted range for its bank lending rate between zero and 0.25 percent at this week’s meeting and probably well into next year.
With its key rate already at a record low, the Fed will examine the effectiveness of programs already in place to combat the worst financial crisis since the 1930s. Fed policymakers will consider whether programs designed to ease the credit crunch need to be expanded or changed, and whether new relief efforts need to be implemented. Any decisions would come at the conclusion of the Federal Reserve’s meeting this afternoon.
"This is a good meeting for Fed policymakers to pause and take stock of what they’ve done so far and allow programs to do their thing,” said Michael Feroli, economist at JPMorgan Economics.
Feroli and others aren’t expecting the kind of aggressive action the Fed took at its last meeting in mid-March. That was when the Federal Reserve decided to plow $1.2 trillion into the nation’s economy to try to lower interest rates and stimulate borrowing and spending.
Before the swine flu outbreak, many analysts were predicting the recession would ease further, with the economy shrinking at a rate of 2 to 2.5 percent in the current quarter.
However, analysts warn that any severe outbreak of the swine flu would not only clobber tourism, food and transportation industries, but crimp spending on other things if consumers get spooked.
For now, analysts are hopeful that any economic fallout will be limited and short-lived.
by associated press
Tuesday, April 21, 2009
Health of banks worries Wall Street
WASHINGTON — Anxiety is growing again over the health of the nation’s largest banks, and with Congress hesitant to commit more money, the Obama administration is exploring ways to strengthen them in the face of an unrelenting recession.
Results of the federal government’s "stress tests” on big banks are due May 4, and Wall Street is increasingly worried they will show some banks are in worse shape than expected.
The renewed bank fears drove the stock market down on Monday in its worst showing in six weeks.
Bank of America stock lost nearly a quarter of its value, and the Dow Jones industrial average fell almost 290 points.
Bank of America reported a first-quarter profit of $2.8 billion, joining other banks whose earnings reports have looked positive at first blush. But some analysts say accounting steps are concealing the depth of the financial industry’s woes.
19 banks face tests
The banks have been helped by income from trading and cheap borrowing, but they are still struggling with bad debt, said Joe Saluzzi, co-head of equity trading at Themis Trading LLC.
Investors are "looking at bank numbers and are saying they are not that great,” he said.
Among the ideas being explored by the administration is converting the government’s loans into equity stakes, which would improve the banks’ bottom lines by increasing their capital reserves.
The Treasury Department will outline Friday how it plans to structure the stress tests, which aim to gauge the health of 19 big banks.
So far, investors have been too optimistic about the results, warned Jaret Seiberg, a financial services policy analyst at Washington Research Group.
"What we’re seeing is a re-evaluation of those positions,” he said. "Until we have finality on what the stress tests will tell us, the markets will be very jittery about the banks.”
Results of the federal government’s "stress tests” on big banks are due May 4, and Wall Street is increasingly worried they will show some banks are in worse shape than expected.
The renewed bank fears drove the stock market down on Monday in its worst showing in six weeks.
Bank of America stock lost nearly a quarter of its value, and the Dow Jones industrial average fell almost 290 points.
Bank of America reported a first-quarter profit of $2.8 billion, joining other banks whose earnings reports have looked positive at first blush. But some analysts say accounting steps are concealing the depth of the financial industry’s woes.
19 banks face tests
The banks have been helped by income from trading and cheap borrowing, but they are still struggling with bad debt, said Joe Saluzzi, co-head of equity trading at Themis Trading LLC.
Investors are "looking at bank numbers and are saying they are not that great,” he said.
Among the ideas being explored by the administration is converting the government’s loans into equity stakes, which would improve the banks’ bottom lines by increasing their capital reserves.
The Treasury Department will outline Friday how it plans to structure the stress tests, which aim to gauge the health of 19 big banks.
So far, investors have been too optimistic about the results, warned Jaret Seiberg, a financial services policy analyst at Washington Research Group.
"What we’re seeing is a re-evaluation of those positions,” he said. "Until we have finality on what the stress tests will tell us, the markets will be very jittery about the banks.”
by the associated press
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