KPMG to Pay $37M in Wachovia Suit

Wachovia Corp. auditor KPMG will shell out $37 million to help settle a federal class action lawsuit brought by investors in New York, reported Reuters. The suit alleges that Well Fargo Co. subsidiary Wachovia was intentionally less than transparent about the viability of certain home loans it sold before the financial crisis, said Reuters.

Wells Fargo, the country’s largest U.S. home mortgage lender, will pay $590 million, bringing the settlement total to $627 million, said Bloomberg.

In the complaint against Wachovia, which was acquired by Wells Fargo in 2008 during the height of the financial crisis, investors claimed it made “untrue statements of material fact” related to the quality of bonds and securities sold between July 2006 and May 2008, said Dow Jones Newswires.

The settlement, which Darren Robbins, a lawyer for the plaintiffs, called “a major victory for investors,” still needs a court’s stamp of approval, according to Reuters. Robbins told the Los Angeles Times that this is the largest settlement so far of any securities class-action claim stemming from the credit and housing crisis.

Representatives from KPMG and Wells Fargo issued separate statements saying they agreed to the settlement only in order to avoid the costs of going to court and that the settlement did not represent an admission of guilt, according to the Sacramento Bee.