As discussed here by Securities Litigation Watch, while credit-crisis securities class action filings have seemingly dropped off the map credit crisis related settlements are just hitting their stride. Today, lead plaintiff counsel in In Re Wachovia Preferred Securities and Bond/Notes Litigation announced a $627 million settlement against Wells Fargo, who acquired Wachovia in early October 2008 for $12.7 billion. The deal, also reflected in Wells Fargo's Quarterly Report to the SEC today, is comprised of a $590 million settlement with Wachovia and its affiliated entities and an additional $37 million settlement with Wachovia's auditor, KPMG LLP.

The consolidated class action complaint, filed by lead plaintiffs Orange County Employees' Retirement System, the Louisiana Sheriffs' Pension and Relief Fund, and the Southeastern Pennsylvania Transportation Authority, accused Wachovia of making misleading disclosures relating to the sale of securities between 2006 and 2008. The statements related to the quality of assets linked to the mortgage portfolio of Golden West Financial, a California home lender it had acquired. Specifically, the claims asserted that the Wachovia offering materials at issue misrepresented and/or omitted to disclose material facts concerning the nature and quality of Wachovia's  "Pick-A-Pay" mortgage loan portfolio, and that Wachovia's publicly disclosed loan loss reserves were in violation of Generally Accepted Accounting Principles ("GAAP").

According to Bloomberg News, Wells Fargo agreed to the settlement in order to avoid the "distraction, risk and expense of ongoing litigation," but admits no liability on the part of Wachovia. If the settlement is ultimately approved by Judge Richard J. Sullivan of the U.S. District Court for the Southern District of New York it would be among the 14th or 15th largest securities class action recoveries. It would also eclipse the Countrywide settlement ($624 million) as the largest credit-crisis related settlement to date. According to MarketWatch it is believed to be the largest settlement ever in a class action case asserting only claims under the Securities Act of 1933. And, it represents one of the handful of largest securities class action recoveries ever obtained where there were no parallel civil or criminal securities fraud actions brought by government authorities.