California sues Wells Fargo Bank for $1.5 billion: "deceptive marketing."

[Auggie]

San Francisco Chronicle, 4-24-09:

Attorney General Jerry Brown filed a securities fraud lawsuit against Wells Fargo & Co. on Thursday that accuses the San Francisco bank of deceptively marketing a financial instrument and seeks to recover more than $1.5 billion for thousands of California investors.

The Superior Court suit claims that three affiliates of the company falsely proclaimed auction-rate securities "as safe and liquid as cash," even though about 2,400 state residents who invested in the financial instruments have been unable to recover their money for months.

An auction-rate security is a long-term debt tool that in normal times functions like a short-term one, because it trades regularly through auctions. Until recently, people could get their money out in a matter of days and earned slightly higher returns than on a savings account. But the auction market collapsed and the assets froze in February 2008, as the credit markets tightened and companies that insured the underlying bonds suffered ratings downgrades.

"More than 2,000 California investors who thought they could get their money back when they needed it now can't," Brown said at a news conference in San Francisco. "What we're seeing today is another example of the complicated financial transactions, the so-called financial products that have been part of this massive financial bubble that burst."

MORE: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/04/23/BUOI177TVN.DTL&type=business

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Thank you, Jerry Brown

[annm4peace]

1. this should be on greatest page, please kick

I'm very glad Jerry Brown is doing this

[mackerel]

2. It would be great if the also went after BofA