The settlement resolves charges that Wachovia Capital Markets misled investors to sell mortgage bonds in late 2006 and early 2007.
The SEC said Wachovia had violated the law in two different ways. In one instance, it sold overpriced collateralized debt obligations, or CDOs, to the Zuni Indian Tribe and another individual investor.
Wells Fargo assumed responsibility for any wrongdoing by Wachovia when it acquired the lender in 2008.
A second set of charges concern Wachovia’s marketing of a CDO whose underlying mortgage bonds supposedly were acquired "on an arm’s length basis" and "at fair market prices."
In fact, the SEC said, Wachovia overpaid an affiliate by $4.6m.
The bank wanted to hide losses by the affiliate, but did not acknowledge that the investments already had lost value, the SEC said.
Wachovia was negligent in failing to disclose the pricing issue to investors, the SEC said.
Wells Fargo settled the charges without admitting or denying them, according to an SEC news release.
