Wells Fargo Must Face More Fannie Investor Claims: 2nd Circ.

Law360, New York (February 21, 2013, 3:48 PM EST) -- Wells Fargo Securities LLC must arbitrate additional claims that it touted Fannie Mae stock to investors before the mortgage entity’s 2008 federal bailout, the Second Circuit ruled Thursday, reversing a lower court decision.

The ruling by a three-judge panel keeps intact an arbitration proceeding in which Wells Fargo is accused of falsely praising Fannie Mae’s financial health while acting as a managing underwriter for its $2 billion stock offering in May 2008. The bank and other underwriters failed to disclose risks in Fannie Mae’s subprime mortgage...
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