Wachovia Executives lies About Health of Stock Leads to half a Billion Payoff

[stockholmer]

http://www.teribuhl.com/2011/08/05/wachovia-executives-lies-about-health-of-stock-leads-to-half-a-billion-payoff/

Pension funds who bought faulty Wachovia preferred securities and bonds between mid-2006 to mid-2008 scored a big win today. The commercial bank, who was taken over by Wells Fargo when it failed in 2008, agreed to pay over half a billion for misleading institutional investors as to the health of their option ARM portfolio. The class action suit lead by Pennsylvania law firm Kessler Topaz scored a $590 million payout from Wachovia (paid for by Wells Fargo) and even got its auditor KPMG to pony up $37 million.

Orange County Employees’ Retirement System, Louisiana Sheriffs’ Pension fund and the Southeastern Pennsylvania Transportation Authority were the court appointed plaintiffs in the class action suit. Unfortunately since this was a settlement, former Wachovia bank executives, like CEO Robert Steel, didn’t admit wrong doing but the discovery tied to the section 11 (negligence part of the 1933 Securities act) charges the pension funds brought forward clearly scared the pants off these bankers. Considering the common shareholders just had their similar case against Wachovia thrown out, this reads like the institutional investors out lawyered the bank.

“We estimated actual losses to be proven at trial to be around $1.5bn -2bn. So we think a 25-40% out of court recovery like this is very successful,” said attorney David Kessler of Kessler Topaz.

Of course if the pension funds had paid attention to mortgage expert Mark Hanson’s warnings about Wachovia’s pick-a-pay book back in 2007 they might have not gotten themselves into this big of a loss in the first place. It was Hanson’s self made u-tube videos about the accounting games Wachovia and Wells Fargo were playing that made him a cult classic among hedge funds shorting these banks during the financial crisis. CNBC’s Herb Greenberg was one of the first pundits to publish his views in December 2007 after Hanson wrote http://seekingalpha.com/article/56596-some-straight-talk-on-the-mortgage-mess “The Hybrid-term ARM and Pay-Option implosion are all happening simultaneously and are about to heat up drastically”.


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my take:

1 FUCK Warren Buffett (Wells Fargo (which he has a huge stake in via Berkshire Hathaway) bought up Wachovia for pennies on the pound)

2 25-40% recovery of losses means that the banksters still are walking away doing 60-75% destructive damage to vital assets of hundreds of millions of people globally and are NOT being held 100% accountable. They should not only go to prison for life, but have to make the victims 100% whole. Meanwhile, The US, EU, and others keep shoveling trillions into their fucking gaping maws of endless greed. Wall Street paid itself $150 BILLION in bonuses alone just for 2010. That is more paid in bonuses than then the revenue lost to the odious Bush tax cuts on a yearly averaged basis from 2002 to 2006 versus 2001 revenue.

This is a sample of the Bush income tax cuts

1998 - 828.6 in billions of constant dollars (1998 = 100)
1999 - 860.5
2000 - 950.9
2001 - 915.1 Bush tax cuts passed in June 2001
2002 - 777.7
2003 - 703.1
2004 - 698.1
2005 - 773.8
2006 - 844.0 5 years later tax revenue was still down from 2001

source : http://www.koch2congress.com/7.html

:banghead:

[indurancevile]

1. knr