An investment management firm now owned by Wells Fargo (WFC) has agreed to pay $25 million to settle claims that it misled investors about the makeup of a mutual fund it once marketed.
Evergreen Investment Management Company, which Wells inherited when it acquired Wachovia in 2009, was sued by institutional investors in 2010 for allegedly marketing its Evergreen Ultra Short Opportunities Fund as an ultra-short bond fund when it actually was invested in risky and illiquid mortgage-backed securities. Evergreen liquidated the fund in mid-2008 after the fund's value had declined by more than 40% in a 10-month span.
The case was scheduled to go to trial in early June, but it was put on hold in May when the parties told the judge in U.S. District Court in Boston that they had reached a settlement. Reuters reported late Monday that Evergreen had agreed to pay the plaintiffs $25 million, though it continued to deny any wrongdoing.
Evergreen also paid $33 million to the Securities and Exchange in 2009 to settle claims that it misled investors about the bond fund. In all, plaintiffs' lawyers estimate that they will ultimately recover $97 million for their clients in connection with the case, Reuters reported.
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