March 30, 2012

A federal judge rejected the U.S. Securities and Exchange Commission's demand that Wells Fargo & Co comply with subpoenas related to a probe of the bank's sale of $60 billion of mortgage-backed securities, but directed both sides to meet.

In a order dated Thursday, U.S. Magistrate Judge Laurel Beeler in San Francisco directed the parties to try to resolve their dispute, and if they failed to explain why in writing.

On March 23, the SEC had accused Wells Fargo of repeatedly ignoring its subpoenas, six of which had been issued since Sept. 30, and demanded compliance.

The regulator is looking into whether Wells Fargo fraudulently misled investors about the risks of securities it sold from September 2006 to early 2008, including whether the underlying home loans complied with underwriting standards.

Wells Fargo is based in San Francisco, and is the nation's fourth-largest bank by assets and largest mortgage lender.

The bank has not been accused of wrongdoing. It has called the SEC's March 23 demand inappropriate, believing there had been an understanding with SEC staff about the document requests.

Several major US banks have been faulted over their packaging and marketing of mortgage debt that proved riskier than expected. This debt was a major factor in both the 2008 financial crisis and the roughly five-year U.S. housing slump.

The case is SEC v. Wells Fargo & Co, U.S. District Court, Northern District of California, No. 12-mc-80087. (Reporting By Jonathan Stempel in New York; Editing by Gerald E. McCormick)

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