LBBW Luxemburg SA sued Wells Fargo & Co. and its Wachovia Corp. unit over $40 million in collateralized debt obligation investments.
The lawsuit, filed Sept. 28 in federal court in New York, seeks to recover the $40 million, according to the complaint. The claims are based on a 2006 transaction in which Wells Fargo sold LBBW what it claimed were “highly-rated” securities collateralized by residential mortgages, according to a statement from lawyers representing LBBW. The securities defaulted within a year, according to the statement.
“Wells Fargo had determined that the securities were not worth the purchase price and were riskier than promised,” lawyers for LBBW said in the statement.
Elise Wilkinson, a spokeswoman for San Francisco-based Wells Fargo, didn’t immediately return a call seeking comment on the lawsuit.
The case is LBBW Luxemburg S.A. v. Wells Fargo Securities LLC, 12-cv-7311, U.S. District Court, Southern District of New York.