By Karen Freifeld
NEW YORK, Jan 23 (Reuters) - Wells Fargo Bank, N.A. was sued
Wednesday by a German government agency that accused it of
mismanaging a collateralized debt obligation, resulting in more
than $160 million in losses.
Wells Fargo and Collineo Asset Management GMBH, a German
financial services company, allowed investments of overly risky
assets not permitted under the contracts governing House of
Europe Funding I Ltd, a Cayman Islands CDO issuer, according to
the lawsuit filed in Manhattan federal court.
The German agency, Erste Abwicklungsanstalt, and the CDO
itself both sued Wells as trustee and Collineo as asset manager
for allowing the ineligible purchases.
House of Europe Funding I's investments in other CDOs far
exceeded the limit of 15 percent of the portfolio, the lawsuit
said.
Since April 2006, House of Europe Funding I purchased over
$171 million of CDO securities in at least six separate
transactions, all in breach of contract, according to the
complaint.
Over 80 percent of the improper assets defaulted and are
worth almost nothing, the complaint says.
Oscar Suris, a spokesman for Wells Fargo, declined to
comment. A Collineo spokesperson could not immediately be
reached after hours.
The case is House of Europe Funding I Ltd. v Wells Fargo
Bank, N.A., U.S. District Court, Southern DIstrict of New York,
13-cv-519.
For the plaintiffs: Jonathan Pickhardt of Quinn Emanuel
Urquhart and Sullivan.
For the defendants: Michael Johnson of Alston and Bird and
Andrew Hammond of White and Case.
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