Wells Fargo to return $1.3 billion to ARS customers

The North American Securities Administrators Association says a brokerage unit of Wells Fargo & Co agreed to a $1.3 billion settlement involving auction rate securities (ARS).

The settlement requires Wells Fargo to offer to rebuy ARS from nationwide customers by mid-February 2010.

The settlement resulted from an investigation by Washington state regulators into allegations that Wells Fargo falsely assured clients that ARS were a safe and liquid alternative to cash or certificates of deposit.

Wells Fargo will also pay $1.9 million in penalties to the states under the settlement.