Settlement Obtained on Charges of Selling Complex Investments Without Disclosing Risks

The SEC found that, from January 2007 to August 2007, respondent Wells Fargo did not obtain or disclose sufficient information about asset-backed commercial paper structured with high-risk mortgage-backed securities and collateralized debt obligations that it sold to municipalities, non-profit institutions, and other customers. The firm/its representatives relied almost exclusively on the credit ratings of these investments, and improperly recommended them for generally conservative objectives. Defendant McMurtry, a former vice president of the firm, exercised discretionary authority in violation of internal policy by selecting the particular issuer of ABCP for a customer.