Friday, March 26, 2010

STEAL HOMES FROM YOUR CUSTOMERS? TRICK THEM INTO BAD LOANS? LIE TO YOUR INVESTORS? IT'S TIME TO PAY FOR ALL THOSE 'CLASSY ACTIONS', WELLS FARGO! WITH LOTS OF CLASS ACTIONS.


Federal Judge Nixes 

Dismissal of Wells Fargo

Class Action

By Lynn Hume, Bond Buyer
March 26, 2010
¦
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WASHINGTON — A federal judge in Manhattan has refused to dismiss
class action claims filed by local governments alleging that Wells Fargo &
Co. and 15 other banks, broker-dealers and investment brokers conspired
to rig bids and fix prices of guaranteed investment and derivatives contracts
in the municipal market.


Judge Victor Marrero, of the U.S. District Court for the Southern District 
of New York, denied the firms’ motion for dismissal in a 57-page order 
issued Thursday and ordered the parties to appear at a pretrial conference 
on April 30.
Hinds County, Miss., and other municipal issuers had initially filed the class 
action suit against more than 40 firms on Aug. 22, 2008. Most of the 
defendants in the 
suit filed a motion to 
dismiss the suit, claiming 
the issuers failed to make 
specific allegations of 
involvement in the
 conspiracy.  Marrero 
dismissed the suit on 
April 29, 2009, but 
agreed to allow the local 
governments to replead 
their case.
The issuers filed a second 
consolidated class action 
suit against 16 of the firms on June 18, 2009, this time including more specific 
information obtained from an unidentified confidential witness at Bank of 
America, now Bank of America Merrill Lynch. The bank has been cooperating 
with the plaintiffs in the suits and with the Justice Department’s criminal 
investigation of these matters in return for indemnity against criminal charges. 
The suit also contained allegations from the Internal Revenue Service and other 
investigations.
All but one of the defendant firms moved to dismiss the second suit. They 
claimed the issuers failed to state an antitrust conspiracy claim, that the issuers’ 
claims were time-barred, and that Internal Revenue Code and Treasury regulations 
precluded the antitrust claims.
But Marrero refused to dismiss the suit, saying that the allegations “support a plausible 
inference” that each of the remaining defendants “participated in the alleged conspiracy.” 
The judge also said the second suit “cures the deficiencies” of the first one and “pleads 
fraudulent concealment with sufficient particularity.”
In rulings in previous cases, courts have found that the statute of limitations for antitrust 
violations are “tolled” or halted if the plaintiff “can show fraudulent concealment,” 
Marrero said.
In addition, the judge said IRS regulatory enforcement “does not result in remedies for 
the underlying conduct alleged here ... collusive bidding or price fixing.” As a result he 
said, “IRS regulations do not implicitly preclude private enforcement.”
The plaintiff issuers in this suit, in addition to Hinds County, include Baltimore, the 
University of Mississippi Medical Center, the University of Southern Mississippi, the 
Mississippi Department of Transportation, the University of Mississippi, the Bucks
County Water & Sewer Authority, the Central Bucks School District.
The defendants, besides Wells Fargo, include: Bank of America, Bear Stearns
& Co., JPMorgan Chase & Co., Morgan Stanley, National Westminster
Bank PLC, Piper Jaffray & Co., Societe Generale SA, UBS AG, 
Wachovia NA, Natixis SA, Investment Management Advisory Group Inc., 
CDR Financial Products, Winters & Co., George K. Baum & Co.,
and Sound Capital Management Inc.
Marrero’s ruling comes as Los Angeles and 13 other local governments in California 
that filed 11 separate suits against Wells Fargo and more than 40 other firms are set to
file their opposition tomorrow against the firms’ motion to dismiss the suits. Technically
all of the suits — the ones by Hinds County, Miss., and other governments, and the ones
by the California localities — have all been consolidated.
But the California localities’ suits currently are being treated separately because they 
were filed beginning in July 2008 in California state courts and were later transferred to
the court in Manhattan.

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