SAN FRANCISCO — California Attorney General Jerry Brown on Thursday accused subsidiaries of Wells Fargo & Co. of fraud in a lawsuit alleging the bank improperly marketed risky investments as “safe and liquid as cash.”
The lawsuit filed in San Francisco Superior Court is the latest of a flurry of legal actions taken against banks nationwide related to the February 2008 collapse of the $330 billion market for so-called auction-rate securities.
The market involved investors buying and selling instruments that resembled corporate debt, except the interest rates were reset at regular auctions, some as often as once a week. A number of companies and individual investors bought the securities because they could treat their holdings almost like cash.
