Jan 27 (Reuters) - Wells Fargo & Co on Friday won a federal judge's preliminary approval of a $75 million settlement to resolve shareholder claims that the former Wachovia Corp misled investors about its troubled mortgage operations.

U.S. District Judge Richard Sullivan in Manhattan called the settlement fair, reasonable and adequate. He scheduled a June 1 hearing to consider final approval. According to court papers, the plaintiffs are led by 10 New York City public pension funds.

The accord is part of Wells Fargo's effort to end litigation tied to its shotgun $12.5 billion purchase during the 2008 financial crisis of similarly-sized Wachovia.

At the time that bank was struggling with mounting losses from home loans and the beginnings of a run on deposits.

Last August, Wells Fargo agreed to pay $590 million to bondholders that also sued over Wachovia's alleged misrepresentations and which Sullivan believed made a stronger case.

Based in San Francisco, the combined company is the nation's fourth-largest bank by assets and largest mortgage lender.

The shareholders accused Wachovia of misrepresenting the quality, underwriting standards, and methods for writing off losses in its $120 billion "Pick-A-Pay" loan portfolio.

These loans were adjustable-rate mortgages that allowed borrowers to pay less than the interest and principal due, causing their balances to rise.

Wachovia inherited many of these loans when it bought California's Golden West Financial Corp in 2006 and continued to make them even as the housing market became more stressed.

Wells Fargo does not make Pick-A-Pay loans.

Last March, Sullivan dismissed the shareholder litigation, but the shareholders appealed to a higher court. Wells Fargo settled while that appeal was pending.

The case covered shareholders between May 8, 2006, around the time Wachovia announced the Golden West purchase and its shares traded near $59, and Sept. 29, 2008, when Citigroup Inc tried to buy parts of Wachovia for $1 a share.

Wells Fargo later bought the entire company for a higher price. It agreed in 2010 to pay Citigroup $100 million to resolve related litigation. Wachovia ultimately reported a $23.9 billion loss for the third quarter of 2008.

The case is In re: Wachovia Equity Securities Litigation, U.S. District Court, Southern District of New York, No. 08-06171.

For lead plaintiffs: Ira Press of Kirby mcInerney.

For Wells Fargo: Doublas Flaum of Fried, Frank, Harris, Shriver & Jacobson.

(Reporting by Jonathan Stempel)

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