• August 19, 2014

Back in December, 2013, Minnesota Litigator had a post about Wells Fargo’s apparently inconsistent positions on “SLPs” and “SIVs” back in the go-go years in the U.S. mortgage industry (before the 2008 meltdown). Wells Fargo seemed to tell some investors that these Securities Lending Programs (“SLPs”) presented opportunities for risk-free gains while also saying publicly in other contexts that there were “enormously risky” and “nonsense.”

But another group of class action plaintiffs brought and have now settled another claim against Wells Fargo along the same lines, the final settlement of which was this week for $62 million for the class and $22 million for the class’ lawyers.

“Securities lending” is the practice of lending of securities owned by one party to another party (“the borrower”) for reasons such as market making, hedging and arbitrage. In cases such as this one, the process is facilitated by a financial institution such as Wells Fargo…By approximately 2006, the Wells Fargo program reached $23 billion in loaned securities….While [Wells Fargo] assured and promised Plaintiff that it would only invest in money market instruments, Wells Fargo invested a substantial portion of the collateral in extremely risky securities. Additionally, Wells Fargo invested in highly illiquid securities, including but not limited to structured investment vehicles (“SIVs”), asset- backed securities, and mortgage-backed securities….

The immense amounts of money that have sloshed around from bank accounts of pensions, to banks, and to lawyers is breath-taking.

But no one can doubt that the plaintiffs’ lawyers worked for it and took on significant risk:

During discovery in this case, the Plaintiffs’ Counsel produced and/or reviewed over approximately 7,000,000 pages of documents: in total, approximately 6,800,000 pages were produced by Wells Fargo, more than approximately 130,000 pages by Named Plaintiffs, and more than approximately 135,000 pages by third parties. Plaintiffs’ Counsel took, defended and/or had access to more than 90 depositions. These depositions resulted in approximately 22,725 pages of recorded testimony and the inclusion of approximately 2,399 exhibits. The parties filed various motions including motions for partial summary judgment…

The litigation costs, alone, exceeded $2 million. (And, as an aside, when will lawyers and courts stop referring to the volume of data by “pages”? Does any really think that Wells Fargo produce millions of “pages”? (And, as an aside to the aside, don’t be too dazzled by reviewing 7 million pages. For all we know, it was 3 Excel™ spreadsheets…))

Getting back on track, congratulations to plaintiffs’ counsel:

GLANCY BINKOW & GOLDBERG LLP, Peter A. Binkow, Casey Sadler, Elizabeth Gonsiorowski; ZIMMERMAN REED, PLLP, Carolyn G. Anderson, David Cialkoswki, June Hoidal, and THE MILLER LAW FIRM, P.C., E. Powell Miller; VANOVERBEKE MICHAUD & TIMMONY P.C., Thomas C. Michaud.

(This list comes from the plaintiffs’ amended complaint. The actual list of plaintiffs lawyers involved in this case was undoubtedly a far greater number of lawyers.)


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