SEC Division of Corporation Finance no-action letter: Wachovia Bank, N.A., now known as Wells Fargo Bank, N.A.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

DIVISION OF
CORPORATION FINANCE
December 9, 2011
Karen Patton Seymour, Esquire
Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004-2498
Re: SEC v. Wachovia Bank, N.A., now known as Wells Fargo Bank, N.A., successor by merger, Civil Action No. 11-7135 (D.N.J.) Waiver Request under Regulation A and Rule 505 ofRegulation D Dear Ms. Seymour:
This responds to your letter dated today, written on behalfofWells Fargo Bank, N.A. ("Wells Fargo Bank"), and constituting an application for reliefurtder Rule 262 ofRegulation A and Rule 505(b )(2)(iii)(C) ofRegulation D urtder the Securities Act of 1933 (the "Securities Act"). You requested relief from disqualifications from exemptions available urtder Regulation A and Rule 505 that arose by reason ofthe Final Judgment as to Wells Fargo Bank entered on December 9, 2011 by the United States District Court for the District ofNew Jersey in SEC v. Wachovia Bank, N.A., now known as Wells Fargo Bank, N.A. successor by merger, Civil Action No. 11-7135 (the "Judgment"). The Judgment permanently enjoins Wells Fargo Bank from violating
Section 17(a) ofthe Securities Act and orders Wells Fargo Bank to pay disgorgenient in the amourtt
of $13,802,984, prejudgment interest thereon in the amourtt of $7,275,607, and a civil penalty in the amourtt of $25,000,000 urtder Section 20(d) ofthe Securities Act. For purposes ofthis letter, we have assumed as facts the representations set forth in your letter and the findings supporting entry ofthe Judgment. We also have assumed that Wells Fargo Bank will comply with the Judgment. On the basis ofyour letter, I have determined that you have made showings of good cause urtder Rule 262 and Rule 505 that it is not necessary urtder the circumstances to deny the exemptions available urtder Regulation A and Rule 505 by reason of entry ofthe Judgment against Wells Fargo Bank. Accordingly, pursuant to delegated authority, on behalf ofthe Division ofCorporation Finance, I hereby grant relieffrom the disqualifications from exemptions otherwise available under Regulation A and Rule 505 that arose by reason of entry ofthe Judgment against Wells Fargo Bank. Very truly yours, ~-¥I!J.Y~ Chief, Office of Small Business Policy

SULLIVAN & CROMWELL LLP

TELEPHONE:
FACSIMILE:
1-212-558-4000
1-212-558-3588 125[!IJ~~ WWW.SULLCROM.COM o/~.. JP'J/10004-24.98 LOS ANGELES. PALO ALTO. WASHINGTON, D.C. FRANKFURT. LONDON. PARIS SEUING. HONG KONG. TOKYO MELBOURNE. SYDNEY December 9,2011 By Hand and Via E-mail Gerald Laporte, Esq. Chief, Office of Small Business Policy Division of Corporation Finance U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: SEC v. Wachovia Bank, NA., nlkla Wells Fargo Bank, NA., Case No. 11-cv-07135 CD.N.J.) Dear Mr. Laporte:
We are writing on behalf of our client, Wells Fargo Bank, N.A., successor by merger to Wachovia Bank, N.A. ("Wells Fargo Bank"), and the settling party in the above-captioned action (the "Action") brought by the U.S. Securities and Exchange Commission (the "Commission"). The Action relates to alleged violations ofthe federal securities laws by Wachovia Bank (prior to its merger with and into Wells Fargo Bank) in connection with the bidding on and sale ofmunicipal derivative transactions. Wells Fargo Bank requests, pursuant to Rule 262 ofRegulation A and Rule 505(b)(2)(iii)(C) ofRegulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act"), a waiver of any disqualification from exemptions under Regulation A and Rule 505 ofRegulation D that may be applicable to Wells Fargo Bank or any of its affiliates, or any issuer, offering participant or other person as a result ofthe entry ofthe Final Judgment,I as described below. We request that this waiver be made effective upon entry ofthe Final Judgment. It is our understanding that the Division of Enforcement does not oppose the granting ofthe requested waiver. Securities and Exchange Commission v. Wachovia Bank, N.A., nlkla Wells Fargo Bank, N.A., Case No. ll-cv-07135 (D.N.J.) (Final Judgment) (Dec. 9,2011).

Gerald Laporte, Esq. -2
BACKGROUND
The conduct ofWachovia Bank alleged in the Action involved the bidding on and sale ofmunicipal derivative transactions to municipalities and other issuers of tax￾exempt debt. The Commission alleges in the complaint ("Complaint") that Wachovia Bank engaged in fraudulent practices, misrepresentations, and omissions that affected the prices ofthe reinvestment instruments, deprived the municipalities of a conclusive presumption that their reinvestment instruments were purchased at fair market value, and/or jeopardized the tax-exempt status of certain securities. Specifically, the Commission alleges that, from at least 1997 to at least 2005, certain Wachovia Bank employees conspired with bidding agents and other providers ofmunicipal derivative transactions to rig at least 29 such transactions for Wachovia Bank to win; the Commission further alleges that certain Wachovia Bank employees provided at least 29 deliberately non-winning bids for municipal derivative transactions so as to facilitate the rigging ofthose transactions for other providers to win. Based on the alleged misconduct in the Complaint, Wachovia Bank allegedly violated Section 17(a) ofthe Securities Act. In connection with the Action, Wells Fargo Bank and the Division of Enforcement reached an agreement to settle the Action as described below, and Wells Fargo Bank submitted to the Commission an executed consent in which, for the purpose ofthis Action, it consents to the imposition of a Final Judgment, including imposition of an injunction, without admitting or denying the matters set forth in the Complaint (except as to the jurisdiction ofthe Commission). In the Final Judgment, Wells Fargo Bank is enjoined from violating
Section 17(a) ofthe Securities Act. The Final Judgment also orders Wells Fargo Bank to
disgorge $13,802,984, pay pre-judgment interest in the amount of $7,275,607, and pay a civil penalty in the amount of $25,000,000. DISCUSSION Wells Fargo Bank understands that the Final Judgment disqualifies it, its affiliated entities and issuers, offering participants and other persons from participating in certain offerings otherwise exempt under Regulation A and Rule 505 ofRegulation D promulgated under the Securities Act insofar as Wells Fargo Bank is subject to a court order enjoining it from future violations of Section 17(a) ofthe Securities Act. The Commission has the authority to waive the exemption disqualifications under Regulation A and Rule 505 ofRegulation D upon a showing of good cause that such disqualifications are not necessary under the circumstances. See Rule 262 ofRegulation A and Rule 505(b)(2)(iii)(C) ofRegulation D.2 Wells Fargo Bank Fargo requests that the We note in support of this request that the Commission has in other instances granted relief under Rule 262 ofRegulation A and Rule 505(b )(2)(iii)(C) ofRegulation D. See, e.g., UBS Financial Services Inc., SEC No-Action Letter (pub. avail. May 9,2011); Citigroup, Inc., SEC No-Action Letter (pub. avail. October 19,2010); Goldman Sachs & Co., SEC No-Action Letter (pub. avail. July 20, 2010); Evergreen Investment Management Company, LLC, SEC No-Action Letter (pub. 2

Gerald Laporte, Esq. -3
Commission waive any disqualifying effects that the Final Judgment may have under Regulation A and Rule 505 ofRegulation D with respect to Wells Fargo Bank, its affiliates or any issuer, offering participant or other person on the following grounds:

1. The conduct ofWells Fargo Bank alleged in the Complaint does not relate
   to offerings under Regulation A or Rule 505 ofRegulation D.
2. The disqualification of Wells Fargo Bank, its affiliates and other persons
   from the exemptions under Regulation A and Rule 505 ofRegulation D would have an adverse impact on third parties that retain or provide services to Wells Fargo Bank or any ofits affiliates in connection with transactions that may need to be made in reliance on these exemptions.
3. The disqualification ofWells Fargo Bank, its affiliates and other persons
   from the exemptions under Regulation A and Rule 505 ofRegulation D would be unduly and disproportionately severe, given that the Commission staff has negotiated a settlement with Wells Fargo Bank and reached a satisfactory conclusion to this matter.

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In light ofthe foregoing, Wells Fargo Bank believes that it has shown good cause that relief should be granted. Accordingly, we respectfully request that the Commission, pursuant to Rule 262 ofRegulation A and Rule 505(b)(2)(iii)(C) of Regulation D, waive, effective as ofthe entry ofthe Final Judgment, the disqualification provisions in Regulation A and Rule 505 ofRegulation D to the extent they may be applicable to Wells Fargo Bank, any ofits affiliates or any issuer, offering participant or other person as a result ofthe Final Judgment or any related state order, judgment or decree. avail. July 8, 2009); Banc ofAmerica Investment Services, Inc., SEC No-Action Letter (pub. avail. June 20, 2008); Hartford Investment Financial Services, SEC No-Action Letter (pub. avail. May 14,2008); Friedman, Billings, Rarmsey & Co, Inc., SEC No-Action Letter (pub. avail. January 16, 2007).

Gerald Laporte, Esq. -4
If you have any questions regarding this request, please contact the undersigned at (212) 558-3196, Matthew Fitzwater at (212) 558-1632 or Christopher Viapiano at (202) 956-6985. Sincerely, A~?~/c~ll Karen Patton Seymour cc: Mark R. Zehner, Esq. (U.S. Securities and Exchange Commission) Douglas R. Edwards (Wells Fargo Law Department)