Wells Fargo (WFC) Settles for $11 Million in Wachovia CDO Charges

Wells Fargo (NYSE:WFC) settled charges with the SEC in relationship to Wachovia Capital Markets having overpriced two collateralized debt obligations, or CDOs, for $11 million.

The charges came with the acquisition of Wachovia by Wells Fargo in 2008, whereby they assumed all liabilities connected to the company.

The SEC alleged Wachovia overpriced two CDOs in 2006 and 2007 and sold them to the Zuni Indian Tribe and individual investors.

Per the settlement, there was no admission or denial of having done anything wrong in the situation.

The SEC has said:

"Wachovia Capital Markets violated the securities laws in two respects. First, Wachovia Capital Markets charged undisclosed excessive markups in the sale of certain preferred shares or equity of a CDO called Grand Avenue II to the Zuni Indian Tribe and an individual investor. As detailed in the order, Wachovia Capital Markets marked down $5.5 million of equity to 52.7 cents on the dollar after the deal closed and it was unable to find a buyer. Months later, the Zuni Indian Tribe and the individual investor paid 90 and 95 cents on the dollar. Unbeknownst to them, these prices were over 70 percent higher than the price at which the equity had been marked for accounting purposes.

"Second, Wachovia Capital Markets misrepresented to investors in a CDO called Longshore 3 that it acquired assets from affiliates “on an arm’s-length basis” and “at fair market prices” when, in fact, 40 residential mortgage-backed securities were transferred from an affiliate at above-market prices. Wachovia Capital Markets transferred these assets at stale prices in order to avoid losses on its own books."

Wells Fargo was trading at $32.05, gaining $0.06, or 0.19 percent, as of 12:27 PM EDT.

Dynegy (DYN) May Declare Chapter 11 Bankruptcy

Shares of Dynegy (NYSE:DYN) are down today, following the filing of their 10-K with the U.S. Securities and Exchange Commission yesterday where they revealed they may have to seek Chapter 11 protection in the case they not be able to amend or replace their existing credit facility.

The company also said in their latest quarterly report that they will no longer issue guidance: "In light of recent management and board changes that may affect the company’s strategic plans, Dynegy currently does not intend to provide guidance estimates for 2011."

Here's what Dynegy said in their filing: "In light of our likely non-compliance, we are attempting to amend or replace our existing Credit Facility. If we are able to amend our Credit Facility or enter into a new facility, we expect that capacity of any such facility to be less than the current capacity of $1.8 billion and to be at a higher cost, which reduced capacity and increased costs could have a material adverse effect on our ability to successfully run our business. We may also seek additional sources of liquidity in an effort to secure sufficient cash to meet our operating needs. These additional sources of liquidity could include asset sales, public or private issuances of debt, equity or equity-linked securities, debt for equity swaps, or any combination of these. However, we cannot provide any assurances that we will be successful in accomplishing any of these plans. If we are unable to successfully execute our plan to amend or replace our Credit Facility or otherwise obtain additional sources of liquidity, it may be necessary for us to seek protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, or an involuntary petition for bankruptcy may be filed against us."

Dynegy was trading at $5.69, dropping $0.10, or 1.73 percent, as of 12:04 PM EST.

Las Vegas Sands (LVS) Subpoenaed by SEC

Shares of Las Vegas Sands (NYSE:LVS) are down today on news they have been subpoenaed by the Securities and Exchange Commission in relationship to compliance to the Foreign Corrupt Practices Act.

The Sands also revealed they were being investigated by the Department of Justice.

TheStreet noted, "Las Vegas Sands said it is fully cooperating with the government and providing all documentation with respet to its Macau operations and dealings with the government going back several years.

"Analysts believe these allegations stem from claims made by former Sands China CEO, Steve Jacobs, regarding the bribing of officials. Las Vegas Sands has publicly denied these allegations.

"Jacobs has alleged that he was fired from the company without cause after refusing to carry out demands made by Las Vegas Sands CEO Sheldon Adelson.

"'While handicapping the end results of investigations of this sort are nearly impossible, we believe the headline risk will serve as an overhang on shares in the near term until more on the matter is known," Wells Fargo analyst, Carlo Santarelli, wrote in a note. "That said, we believe the Jacobs lawsuit has quietly been a drag on shares in recent months given the nature of the claims and the potential for something like this to occur.'"

Las Vegas Sands was trading at $43.89, down $2.75, or 5.90 percent, as of 11:47 AM EST.

Bank of America (NYSE:BAC) Settles with SEC in Municipal Bond Fraud

Bank of America Corp. (NYSE:BAC) closed another negative chapter in their recent history, as they settled with the SEC in a fraud case for $137 million.

The money will be distributed among several government agencies and numerous victims of the fraud.

This centers around rigging bids when selling municipal bond derivatives to a number of government entities and nonprofits.

A Bank of America spokesman said, "Bank of America is pleased to put this matter behind it, and has already voluntarily undertaken numerous remediation efforts."

Because Bank of America first brought it to the attention of authorities they were granted amnesty concerning civil penalties.