KPMG US has agreed to pay $37 million to
settle a class-action put forward by institutional investors of
former audit client Wachovia.
The US Securities and Exchange Commission’s
quarterly filling reveals that on top of KPMG’s payout another $590
million will paid by Wells Fargo & Co, the current owners of
the financial services company, to settle the suit. This brings the
settlement total to $627 million.
KPMG US said they have agreed to settle “to
avoid the cost of litigation and to put this matter behind us”.
Wachovia investors alleged in the suit the
company misrepresented ‘pick-a-pay’ mortgage loans that brought the
company to the brink of insolvency in September 2008.
The plaintiffs claimed Wachovia’s publicly
disclosed loan loss reserves were materially inadequate at all
relevant times and in violation of US GAAP.
Wachovia was one of the largest financial
institutions bailed out by US tax payers and became a part of Wells
Fargo & Co in late 2008.
The settlements are still subject to court
approval.
