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- Written by: Editor
"Wells Fargo convinced thousands of investors to purchase auction-rate securities with promises of robust returns and liquidity, but when the market collapsed, investors were left out in the cold," Brown said. "Based on misleading advice, investors bought these risky securities. Now, retail investors and small businesses are finally getting their money back."
Under the settlement, Wells Fargo will buy back $1.4 billion in non-liquid auction-rate securities from thousands of retail customers, charities, and small businesses nationwide, including about $700 million to California investors.
The company also has agreed to pay $1.9 million in fines and expenses.
“We have been working with ARS issuers since the auction rate market froze, and while there has been progress, redemptions by issuers have not occurred as fast as anyone would have hoped or predicted. We are glad to have resolved this for our customers through an actual repurchase of their ARS,” said Charles W. Daggs, chief executive officer of Wells Fargo Investments LLC.
In February 2008, nationwide auction markets froze, and investors have been unable to sell their securities.
Earlier this year, Brown filed the suit against three Wells Fargo affiliates-Wells Fargo Investments LLC; Wells Fargo Brokerage Services LLC; and Wells Fargo Institutional Securities LLC-for violating California's Securities Law.
Brown's suit contended that Wells Fargo routinely misrepresented, marketed and sold auction-rate securities as safe, liquid and cash-like investments, omitting material facts.
The company also was charged with failing to supervise and train its sales agents and selling unsuitable investments.
The lawsuit alleged that Wells Fargo ignored clear industry and internal warnings about risk and previous auction failure.
In March 2005, the Securities and Exchange Commission (SEC), the "Big 4" accounting firms, and the Financial Accounting Standards Board all determined that auction-rate securities should not be considered "cash equivalents."
Despite these warnings, Brown alleged Wells Fargo continued to aggressively sell and falsely market auction-rate securities as safe, liquid, cash-like investments until the nationwide auction markets froze in early 2008.
In marketing and selling these investments, the Attorney General's Office held that Wells Fargo failed to inform investors about how auction-rate securities or the auction process worked, as well as the risks and consequences of auction failure.
Wells Fargo maintained that, since shortly after the liquidity crisis hit in 2008, and well before any firm agreed to a buyback in connection with an ARS settlement, it has been voluntarily providing significant liquidity to customers who purchased Auction Rate Preferred Securities (ARPs).
The company reported that, since April 2008, these customers have had access to up to 90 percent of the par value of their ARPs through a Wells Fargo loan at advantageous rates that is non-recourse as to principal. The loan was intended to provide temporary liquidity until issuers refinanced their ARS.
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The Clear Lake Chamber of Commerce is holding a business holiday decorating contest.
There is no fee to enter.
Judges will visit businesses and first, second and third prize winners will be announced.
Prizes include fabulous holiday snack baskets for all staff to enjoy. Get all your employees involved and enjoy the season.
The deadline to enter is Dec. 1.
Call the Clear Lake Chamber at 707-994-3600 to enter.
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- Written by: State Controller's Office
While year-to-date revenues remain below the amended 2009-10 budget’s estimates by $854 million, October receipts alone were up $285 million (7.1 percent).
“October’s receipts are a welcome break from a largely negative trend line for the last two years,” said Controller Chiang. “However, high unemployment, excessive borrowing, an ailing construction industry and legal challenges to the budget remain real threats to the State’s cash outlook.”
The state started the fiscal year with an $11.9 billion cash deficit in the General Fund, which grew to $23 billion by Oct. 31. Those deficits are being covered with a combination of $14.2 billion of internal borrowing from special funds and $8.8 billion in short-term revenue anticipation notes.
With expenditures running $1.2 billion below projections and $1 billion in additional external borrowing, the State’s overall cash position on October 31 was $1.2 billion ahead of projections.
Personal income tax revenues for the month were $10.5 million above estimates (0.4 percent), corporate taxes were up $248 million (151.3 percent), yet sales taxes came in $102 million lower than expected (-8.9 percent).
The October financial statement and the summary analysis can be found on the Controller’s Web site at www.sco.ca.gov .
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- Written by: California Department of Agriculture
Funding allocated under the Market Access Program and the Foreign Market Development Cooperator Program will help California trade organizations and companies match industry funds with federal government funds to expand international markets for California products.
“International trade is vital to California agriculture,” said California Agriculture Secretary A.G. Kawamura. “This funding will assist in opening foreign markets, reducing trade barriers and increasing consumer purchases of California grown products around the world.”
California is the largest agricultural producer and exporter in the nation with more than $36.6 billion in agricultural production and $10.9 billion in exports.
On average, California farmers export an estimated 28 percent of the products they produce.
Leading export markets for California include: Canada ($2.2 billion); the European Union ($2.1 billion); Japan ($957 million); and China/Hong Kong ($638 million). Top export products in 2007 included: almonds ($ 1.8 billion); dairy and products ($963 million); wine ($815 million); table grapes ($553 million); and cotton ($505 million).
California trade organizations that received USDA program allocations included:
Blue Diamond Growers/Almond Board of California, $2,869,947;
California Agricultural Export Council, $1,120,951;
California Asparagus Commission, $138,313;
California Cherry Advisory Board, $701,732;
California Cling Peach Advisory Board, $163,267;
California Fresh Tomato Growers/Florida Tomato Committee, $121,743;
California Kiwifruit Commission, $289,770;
California Pear Advisory Board, $479,327;
California Pistachio Export Council/Cal-Pure Pistachios Inc., $950,000;
California Dried Plum Board, $3,499,819;
California Strawberry Commission, $618,693;
California Table Grape Commission, $3,648,818;
California Tree Fruit Agreement, $2,375,233;
California Walnut Commission $4,604,059;
Raisin Administrative Committee, $2,905,258;
Sunkist Growers Inc., $2,137,619;
Wine Institute, $7,171,958.