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Wells Fargo must face litigation on defective mortgages: U.S. judge

Justice League

A federal judge on Thursday said Wells Fargo & Co (WFC.N) must face litigation seeking to hold it responsible for billions of dollars of claimed investor losses stemming from its alleged failures as a trustee overseeing risky residential mortgage-backed securities.

U.S. District Judge Katherine Polk Failla in Manhattan said the plaintiffs, including a few dozen funds from BlackRock Inc (BLK.N), Pacific Investment Management Co (ALVG.DE), Prudential Financial Inc (PRU.N) and TIAA-CREF, may pursue breach of contract and conflict of interest claims related to 53 trusts.

Failla also said the investors may pursue some claims alleging breaches of fiduciary duty and due care, but she dismissed claims alleging general negligence and the violation of a New York law governing mortgage trusts. Failla also denied Wells Fargo’s bid to dismiss claims by Germany’s Commerzbank AG (CBKG.DE).

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