Wells Fargo, Goldman Sachs in the Lion’s Den

The Securities and Exchange Commission has indicated that a four-year-long investigation into the mortgage-backed securities imbroglio may be coming to a head, issuing Wells notices to Goldman Sachs (NYSE:GS) and Wells Fargo (NYSE:WFC).

Don’t Miss: These Banks are in Trouble with the SEC.

These notices are warnings that the SEC may recommend enforcement of civil claims, “a big deal given the level of anticipation that has been in the markets about whether there would be further actions,” said Jacob Frenkel, a former SEC lawyer now with Shulman Rogers Gandal Pordy & Ecker PA in Potomac, Maryland. “These cases were complicated and time-consuming and the government has said for a long time that its investigations were continuing. These Wells notices are the manifestation of these investigations coming to their conclusion.”

Goldman was apparently served the notice on February 24, and said it “will be making a submission to, and intends to engage in a dialogue with, the SEC staff seeking to address their concerns.” Wells Fargo disclosed its receipt of an SEC notice in its annual report, and only commented that the government was examining offer documents and whether the bank had complied with fair-lending standards. Wells Fargo said it was cooperating in the investigations.

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