A federal judge gave preliminary approval to a $75 million cash settlement of a class-action lawsuit against Wachovia Corp. over mortgage loans.
U.S. District Judge Richard Sullivan approved the settlement on behalf of buyers of Wachovia stock from May 2006 to September 2008, according to a filing today in Manhattan. A hearing on the settlement is scheduled for June 1.
The plaintiffs, which include the pension funds of New York City public employees, sued in 2008, claiming that Wachovia, after acquiring mortgage lender Golden West Financial Corp. in 2006, began to focus on nontraditional mortgage loans, lowering standards for borrowing and marketing aggressively to build volume. The lawsuit claims the company made “false and misleading statements” to shareholders.
Those who acquired Wachovia stock through its purchase of Golden West are also entitled to the settlement, according to the filing.
Wachovia was acquired by Wells Fargo & Co. in 2009. Wells Fargo, based in San Francisco, rose 55 cents, or 1.9 percent, to $29.60 in New York Stock Exchange composite trading.
The case is In re Wachovia Equity Securities Litigation, 08-06171, U.S. District Court, Southern District of New York (Manhattan).