State Attorney General Jerry Brown has announced he has filed suit in San Francisco Superior Court to recover $1.5 billion he says was fraudulently solicited from California investors in Wells Fargo Bank.
Brown claims more than 2,000 California investors were victimized by bank sales employees who, up until the fall of 2008, had marketed Wells Fargo auction-rate debt securities and auction-rate preferred securities as liquid, or available to be exchanged for cash at any time.
Brown, speaking to reporters gathered in downtown San Francisco, admitted that he, himself, also bought some of the securities.
Wells Fargo released a statement denying the charges, saying it will vigorously defend itself. Wells Fargo shares moved higher throughout the day.
"These securities were marketed as liquid," Brown said, adding that customers had no idea their money would be locked up. "These customers are still waiting for their money."
Not willing to expand on many details of the case, Brown said he will be seeking to recover nearly $2 billion invested in these bank securities nationwide.
He said misrepresentation of financial products on the part of institutions selling them to individuals was "part of the massive financial bubble that burst."