WASHINGTON (CN) - Wells Fargo Brokerage Securities will pay $6.5 million to settle an SEC complaint that it sold mortgage-backed securities without disclosing their risks, the SEC said.
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The SEC said Wells Fargo sold asset-backed commercial paper based on high-risk mortgage-backed securities and collateralized debt obligations to municipalities, nonprofits and other customers.
"Wells Fargo did not obtain sufficient information about these investment vehicles and relied almost exclusively upon their credit ratings," the SEC said in a statement announcing the settlement. "The firm's representatives failed to understand the true nature, risks, and volatility behind these products before recommending them to investors with generally conservative investment objectives."
Wells Fargo will pay a $6.5 million fine and disgorge $81,600.
Its former vice president Shawn Patrick McMurtry will be suspended from the securities industry for 6 months and pay a $25,000 fine, the SEC said.
As is customary with the SEC, the defendants did not have to admit that they did anything wrong.
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