Sarasota County files $40 million suit against Wells Fargo Bank

Sarasota County files $40 million suit against Wells Fargo Bank

June 28, 2010

A $40 million lawsuit has been filed by Florida's Sarasota County against Wells Fargo Bank NA, alleging improper investment advice with regard to the county’s securities lending portfolio prior to the market crash in 2008. Sarasota attorney Drew Clayton has been retained to prosecute the case on behalf of the county’s clerk of court and county comptroller, Karen Rushing. In her capacity as clerk of court and county comptroller, Rushing serves as the county’s top financial officer.
According to the lawsuit, which was filed in the circuit court in Sarasota County, Wachovia Bank failed to follow the county’s conservative investment policies when it placed $40 million worth of Lehman Brothers notes and another $40 million of mortgage-related securities in the county’s portfolio. Lehman Brothers went bankrupt in September, 2008. The other two securities, issued by Altius III Funding Ltd. and Option One Mortgage lost a substantial amount of their value at that time as well. Wells Fargo has been named as a defendant because it acquired Wachovia Bank at the end of 2008 and became responsible for its obligations.
Sarasota County is not the first governmental agency to file a suit of this nature as a result of Wachovia’s investment advice. A similar lawsuit was filed by the Charlotte-Mecklenburg Hospital Authority in North Carolina state court in December, 2008.
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