Wells Fargo Sued over Subprime Securities
Wells Fargo & Co. (WFC), HSBC Holdings Plc (HSBA), Bank of New York Mellon Corp. (BK) and Deutsche Bank AG (DBK) were sued by an Irish securities firm that claims the banks failed to protect investors in their role as trustees of securities backed by home loans that defaulted after the 2008 credit crisis.
Phoenix Light SF Ltd. accused the banks, in complaints filed yesterday in Manhattan federal court, of failing to safeguard the interests of investors as required by their contracts. The securities were sold from 2005 to 2007.
Phoenix Light and related investors sued Deutsche Bank over 21 securitization trusts on which they claimed $183 million in losses. BNY Mellon was sued over 27 offerings for claimed damages of $269 million. Wells Fargo was sued for $237 million in losses on 12 securitizations and HSBC for $170 million on 11 securitizations.
The suits are part of a move by investors to target trustees of mortgage securities over their role in the crisis. Trustees have been sued by the National Credit Union Administration and by other investors, including hedge funds.