DOB: Wachovia Auction Rate Securities Consent Order

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IN THE MATTER OF:

WACHOVIA SECURITIES, LLC
n/k/a WELLS FARGO ADVISORS, LLC

(CRD No. 19616)

WACHOVIA CAPITAL MARKETS, LLC
n/k/a WELLS FARGO SECURITES, LLC

(CRD No. 126292)

(Collectively, "Wachovia")


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CONSENT ORDER

DOCKET NO. CO-10-7568-S

I. PRELIMINARY STATEMENT

WHEREAS, the Banking Commissioner (“Commissioner”) is charged with the administration of Chapter 672a of the General Statutes of Connecticut, the Connecticut Uniform Securities Act (“Act”), and Sections 36b-31-2 to 36b-31-33, inclusive, of the Regulations of Connecticut State Agencies promulgated under the Act (“Regulations”);
 
WHEREAS, Wachovia Securities, LLC1  n/k/a Wells Fargo Advisors, LLC (“Wachovia Securities”), is a broker-dealer registered under the Act with its home office at One North Jefferson Avenue, St. Louis, Missouri, and Wachovia Capital Markets, LLC n/k/a Wells Fargo Securities, LLC (“Wachovia Capital Markets”, and collectively with Wachovia Securities, the “Wachovia Entities”2  ), is a broker-dealer registered under the Act with its home office at 301 South College Street, Charlotte, North Carolina.  Wachovia Securities and Wachovia Capital Markets were affiliates under common control;

WHEREAS, the Commissioner, through the Securities and Business Investments Division of the Department of Banking (“Division”), conducted an investigation pursuant to Section 36b-26(a) of the Act into the activities of the Wachovia Entities to determine whether either or both of them had violated, were violating or were about to violate any provisions of the Act or Regulations (“Investigation”);
 
WHEREAS, a multi-state task force (the “Multi-State Task Force”) conducted and coordinated investigations into the Wachovia Entities’ marketing and sale of auction rate securities to investors during the period from January 1, 2006 through February 14, 2008;

WHEREAS, after a books and records inspection by the Multi-State Task Force on July 17, 2008, Wachovia Securities cooperated fully with the regulators conducting the investigations by responding to inquiries, providing documentary evidence and other materials, and providing regulators with access to information relating to the investigations;
 
WHEREAS, the Wachovia Entities have advised regulators of their agreement to resolve the investigations relating to their marketing and sale of auction rate securities to investors;
 
WHEREAS, in connection with the Findings of Fact and Conclusions of Law contained in this Consent Order, the Wachovia Entities agree, inter alia, that they have reimbursed or will reimburse certain purchasers of auction rate securities, and that they would pay a total fine of Fifty Million Dollars ($50,000,000) to all the jurisdictions represented by the Multi-State Task Force;
 
WHEREAS, Section 36b-15(a) of the Act authorizes the Commissioner to revoke any registration if, inter alia, the commissioner finds that (1) the order is in the public interest, and (2) the registrant has engaged in fraudulent, dishonest or unethical practices in the securities business or if the registrant has failed to reasonably supervise its agents;
 
WHEREAS, Section 36b-27(a) of the Act authorizes the Commissioner to order any person who has violated, is violating or is about to violate any provision of the Act or any regulation, rule or order adopted or issued under the Act to cease and desist from such violation;
 
WHEREAS, Section 36b-27(d) of the Act authorizes the Commissioner to impose a fine of up to One Hundred Thousand Dollars ($100,000) per violation against any person who has violated any provision of the Act or any regulation, rule or order adopted or issued under the Act;
 
WHEREAS, Section 36b-31(a) of the Act provides, in relevant part, that “[t]he commissioner may from time to time make . . . such . . . orders as are necessary to carry out the provisions of sections 36b-2 to 36b-33, inclusive”;
 
WHEREAS, the Wachovia Entities have offered to reimburse certain eligible customers in Connecticut approximately Two Hundred Nineteen Million Four Hundred Fifty Five Thousand Six Hundred Forty Six Dollars ($219,455,646);
 
WHEREAS, Section 36b-31(b) of the Act provides, in relevant part, that “[n]o . . . order may be made . . . unless the commissioner finds that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of sections 36b-2 to 36b-33, inclusive”;
 
WHEREAS, an administrative proceeding initiated under Sections 36b-15 and 36b-27 of the Act would constitute a “contested case” within the meaning of Section 4 166(2) of the General Statutes of Connecticut;
 
WHEREAS, Section 4-177(c) of the General Statutes of Connecticut and Section 36a-1-55(a) of the Regulations of Connecticut State Agencies provide that a contested case may be resolved by consent order, unless precluded by law;

II. CONSENT TO WAIVER OF PROCEDURAL RIGHTS

WHEREAS, the Wachovia Entities, through their execution of this Consent Order, each voluntarily waive the following rights:

1.
To be afforded notice and an opportunity for a hearing within the meaning of Sections 36b-15(f), 36b-27(a) and 36b-27(d)(2) of the Act and Section 4-177(a) of the General Statutes of Connecticut;
2.
To present evidence and argument and to otherwise avail themselves of Sections 36b-15(f), 36b-27(a) and 36b-27(d)(2) of the Act and Section 4-177c(a) of the General Statutes of Connecticut;
3. To present their respective positions in a hearing in which each is represented by counsel;
4. To have a written record of the hearing made and a written decision issued by a hearing officer; and
5. To seek judicial review of, or otherwise challenge or contest the matters described herein, including the validity of this Consent Order;

NOW THEREFORE, the Commissioner, as administrator of the Act, hereby enters this Consent Order.

III. JURISDICTION AND CONSENT TO ENTRY OF CONSENT ORDER

The Wachovia Entities each admit the jurisdiction of the Commissioner, neither admit nor deny the Findings of Fact and Conclusions of Law contained in this Consent Order, and consent to the entry of this Consent Order by the Commissioner.

IV. FINDINGS OF FACT

1. Auction rate securities (collectively referred to herein as “ARS”) are long-term debt or equity instruments that include auction preferred shares of closed-end funds, municipal auction rate bonds, and various asset-backed auction rate bonds.  While ARS are all long-term instruments, one significant feature of ARS (which historically provided the potential for short-term liquidity) is the interest/dividend reset through auctions that occur in varying increments of between 7 and 42 days.  If an auction is successful, investors are able to exit the ARS market on a short-term basis.  If, however, an auction “fails,” investors are required to hold all or some of their ARS until the next successful auction in order to liquidate their funds.  Beginning in February 2008, the ARS market experienced widespread failed auctions.
2. In early March 2008, Wachovia Securities’ investors, unable to access their ARS funds, began to submit complaints to the Division.

Marketing and Sales of ARS to Investors

3.

In connection with the sale of ARS, some Connecticut investors stated that they were variously told by Wachovia Securities and its registered agents that ARS were:

a. just like cash
b. same as cash;
c. safe as cash;
d. same as money markets;
e. safe as money markets;
f. cash equivalents;
g. short-term adjustable rate securities;
h. cash alternatives;
i. completely safe;
j. liquid at any time; and/or
k. always liquid at an auction.

Although marketed and sold to investors as safe, liquid, cash-like investments, and although the ARS market had, in fact, functioned for more than twenty years with virtually no auction failures, ARS are actually long-term instruments subject to a complex auction process that, upon failure, can lead to illiquidity and lower interest rates.

4.
Wachovia Securities further fostered the misconception that ARS were cash-like instruments by providing account portfolio summaries to certain of its customers that listed ARS as “cash equivalents.”  In fact, ARS were not “cash equivalents” and full liquidity was only available at an auction if the auction was successful.
5. Although Wachovia Securities sold ARS as conservative, safe, and liquid investments to its investors until February 2008, the Wachovia Entities had information to the effect that several auctions had failed in August 2007 and early 2008, before the mass failures in February 2008.  During this same period of time, the Wachovia Entities failed to inform their customers who purchased ARS after such auctions began to fail that certain auctions would have failed had the Wachovia Entities or another broker-dealer not entered support bids in those auctions.
6. Although the Wachovia Entities knew, or should have known, of the inherent risks and the recent volatility of the ARS market, only minimal information regarding the ARS market was provided to Wachovia Securities’ retail ARS customers.
7.

The Wachovia Entities and their registered securities agents were, or should have been, aware that the ARS market was suffering from increasing failures and liquidity issues, and they should have disclosed those facts to investors who were purchasing ARS after such issues arose.  Based on these facts, the Wachovia Entities engaged in dishonest and unethical practices in the marketing and sale of ARS within the meaning of Sections 36b-4(b) and 36b-15(a)(2)(H) of the Act.  These practices constituted grounds to revoke the Wachovia Entities’ registrations under Section 36b-15 of the Act.  These practices included, among other things, the following:

a.   
The Wachovia Entities told some ARS investors who purchased ARS after the market disruptions began to occur that:
 
i. ARS were cash equivalents;
ii. ARS were completely safe; and/or
iii. ARS were liquid at any time.
b. 
The Wachovia Entities were or should have been aware that the market for ARS was becoming illiquid, yet Wachovia Securities continued to market and sell ARS to investors.

Temporary Maximum Rate Waiver on Certain ARS

8. The interest rates on ARS are reset periodically through the auction process.  In the event that there is insufficient demand for a particular issue and an auction fails, the interest rate resets to a “maximum rate” or “failure rate” as defined in the offering documents for that particular issue.  Typically, this maximum rate would be higher than prevailing market rates in order to compensate ARS holders who are unable to sell their positions and offer an “incentive” to induce buyers to return to the market although in some cases, particularly for student loan auction rates, the maximum rate might be lower than the prevailing rate.
9. In December 2007, with the encouragement of its underwriters, the Missouri Higher Education Loan Authority (“MOHELA”) sought and secured approval to waive its maximum rate for certain issues of ARS.  Absent such waivers, the ARS issued by MOHELA would not have been allowed to reset at interest rates high enough to clear auctions.
10. As a result of the maximum rate waivers, certain MOHELA ARS issues reset to a higher rate for a brief period after the waiver was implemented.  However, due to a feature of those issues that caps the average interest rate over any given one-year period, the interest rates reset to 0% after the expiration of the waiver period.  The ramifications of this maximum rate waiver were not explained to Wachovia Securities’ customers who subsequently purchased MOHELA ARS.

11.

Wachovia Securities engaged in dishonest and unethical practices within the meaning of Sections 36b-4(b) and 36b-15(a)(2)(H) of the Act by not adequately explaining to individual investors who purchased ARS with maximum rate waivers, among other things, the following:

a. that the ARS interest rates could not be reset at a level that would prevent a failed auction absent the maximum rate waiver; and
b. that the high interest rate allowed by the waiver would expire at the end of the waiver period unless extended by the issuer.

Pursuant to Section 36b-15(a) of the Act, these practices constituted grounds to revoke Wachovia Securities’ broker-dealer registration.

Failure to Supervise Agents Who Sold ARS

12. Although ARS are complicated and complex products, Wachovia Securities did not provide its sales or marketing staff with the training and information necessary to adequately explain these products or the mechanics of the auction process to their customers.  During the course of investigations, on-the-record statements taken from Wachovia Securities’ registered agents demonstrated that these agents lacked a basic understanding of the functionality of the ARS products and the auction rate market.
13. Many of Wachovia Securities’ registered agents were not adequately educated in the ARS products they were selling and did not know where to look for information to bolster that knowledge.  Wachovia Securities failed to provide timely and comprehensive sales and marketing literature regarding ARS and the mechanics of the auction process.  In addition, Wachovia Securities failed to review account portfolio statements sent to its customers to ensure that they reflected accurate information regarding ARS.
14. Wachovia Securities’ failure to provide sufficient training and information concerning ARS and the market environment in which they were sold was not limited to one or two agents, and is therefore indicative of Wachovia Securities’ failure to ensure that its registered personnel provided adequate information regarding ARS to its customers.

15.

Wachovia Securities failed to reasonably supervise its employees, which constitutes grounds for the revocation of Wachovia Securities’ registration under Section 36b-15(a) of the Act and contravenes Section 36b-31-6f(b) of the Regulations.  Wachovia Securities’ failure to exercise reasonable supervision included:

a.   
failing to provide adequate training to its registered agents regarding ARS by, among other things:
 
i.
failing to provide timely and comprehensive sales and marketing literature regarding ARS and the mechanics of the auction process;
ii. failing to provide pertinent information concerning the complexity of the ARS product; and 
iii.
failing to ensure that its agents were selling ARS to individual investors for whom they were suitable;
b. 
failing to review account portfolio statements sent to its customers to ensure that they reflected accurate information regarding ARS;
c. failing to review ARS transactions in accounts of customers who needed liquidity; and
d. failing to ensure that its registered personnel were providing adequate information regarding ARS to its customers.

V. CONCLUSIONS OF LAW

16. The Commissioner has jurisdiction over this matter pursuant to the Act.
17.
The Commissioner finds that Wachovia Securities failed to supervise its employees and engaged in dishonest or unethical practices in the securities business, that this conduct violates Sections 36b-4(b) of the Act and Section 36b-31-6f(b) of the Regulations, and that grounds therefore exist to revoke Wachovia Securities’ registration under Section 36b-15(a) of the Act.
18.
The Commissioner finds that this Consent Order and the following relief are appropriate, in the public interest, and consistent with the purposes fairly intended by the policies and provisions of the Act.

VI. CONDITIONS PRECEDENT

As conditions precedent to the entry of this Consent Order, the Wachovia Entities represent, through their execution of this Consent Order, that they have complied with the following requirements:

Definitions

1.

For purposes of these Conditions Precedent and this Consent Order, the following terms shall have the meanings specified:

a.   
“Eligible ARS” means ARS that were subject to auctions that were not successful and were not subject to current calls or redemptions;
 
b. 
“Individual Investors” includes natural persons, individual retirement accounts and the following entities or accounts:  (i) Accounts with the following owners:  (1) non-profit charitable organizations; and (2) religious corporations; and (ii) Accounts with the following owners and with account values or household values up to Ten Million Dollars ($10,000,000):  (1) trusts; (2) corporate trusts; (3) corporations; (4) employee pension plans/ERISA and Taft Hartley Act plans; (5) educational institutions; (6) incorporated non-profit organizations; (7) limited liability companies; (8) limited partnerships; (9) non-public companies; (10) partnerships; (11) personal holding companies; (12) unincorporated associations; and (13) governmental and quasi-government entities.
 
c. “Relevant Class” means all investors who purchased ARS from either Wachovia Securities or Wachovia Capital Markets, respectively, on or before February 13, 2008, into accounts maintained at Wachovia Securities or Wachovia Capital Markets, respectively;
 
d. “Required Notification” means a notice that includes general statements and information specific to each investor, including:  (i) general notification of all provisions of the buy back described in this Consent Order; (ii) the specific security purchased; (iii) the quantity purchased; (iv) the par value of the holding; (v) a prominent statement disclosing that at the present time, the Relevant Class member’s ARS holdings may not be liquid and that there is a possibility that the offer contemplated by the buy back described herein may be the only opportunity for the investor to liquidate the ARS holdings; and (vi) a statement that the offer to repurchase the ARS holdings, and other relief described in this Consent Order is being made pursuant to a settlement with state securities regulators.

Conditions Precedent and Representations by Wachovia Securities and Wachovia Capital Markets

2. Wachovia Securities and Wachovia Capital Markets, respectively, as agents for one or more affiliated companies and not as principal, have offered to purchase Eligible ARS, at par, from all investors in the Relevant Class.
3. Wachovia Securities and Wachovia Capital Markets, as agents for one or more affiliated companies and not as principal, have offered to buy the Eligible ARS from Individual Investors who are in the Relevant Class.  This buy back commenced no later than November 10, 2008, and concluded November 28, 2008.  Wachovia Securities and Wachovia Capital Markets, as agent for one or more affiliated companies and not as principal, commenced a buy back of the Eligible ARS from all other investors in the Relevant Class no later than June 10, 2009, and concluded such buy back no later than June 30, 2009.
4. On or before November 28, 2008, the Wachovia Entities paid any investor in the Relevant Class who sold ARS below par between February 13, 2008, and August 15, 2008, and whom the Wachovia Entities identified, the difference between par and the price at which the investor sold the ARS.
5. The Wachovia Entities have notified all investors in the Relevant Class of the buy back described in this Consent Order as provided in paragraphs 6 and 7 below.
6. As part of the Wachovia Entities’ general obligation to notify all investors in the Relevant Class pursuant to paragraph 5, above, the Wachovia Entities have mailed the Required Notification, on or before November 10, 2008, to all investors in the Relevant Class that held ARS positions in a Wachovia account as of August 31, 2008.
7. On or before November 10, 2008, the Wachovia Entities mailed the Required Notification to all investors in the Relevant Class that transferred ARS positions to a firm other than Wachovia, prior to the date of this Consent Order, if the initial purchase of the Eligible ARS was on or after January 1, 2003 unless the ARS had been redeemed in full by the issuer.
8. The Wachovia Entities are able to demonstrate, through the following means, that all investors in the Relevant Class received the Required Notification:  1) proof that the Wachovia Entities mailed the Required Notification via First Class mail to the customer’s last known address and did not receive a return notice, or 2) proof that the Wachovia Entities repurchased ARS from the investor.
9. Wachovia Securities has established and maintained a dedicated telephone assistance line, with appropriate staff, to respond to questions from investors concerning the terms of the multistate settlement and the Wachovia Entities’ no net cost loan (nonrecourse, no release) program.  Wachovia Securities represents that it has maintained this dedicated telephone assistance line through June 30, 2009.

10.

With respect to any claim for consequential damages, to the extent such claims are not resolved informally by the Wachovia Entities, the Wachovia Entities shall arbitrate the claim of any Relevant Class member who elects to arbitrate, pursuant to the following provisions:

a.   
The arbitrations would be conducted by a public arbitrator (as defined by section 12100(u) of the NASD Code of Arbitration Procedures for Customer Disputes, eff. April 16, 2007), under the auspices of FINRA;
b.
The above-referenced public arbitrator would be available for the exclusive purpose of arbitrating any Relevant Class member’s consequential damages claim;
c. The Wachovia Entities would and shall pay all applicable forum and filing fees;
d. Any Relevant Class member who chooses to pursue such a claim shall bear the burden of proving that the Relevant Class member suffered consequential damages and that such damages were caused by investors’ inability to access funds consisting of investors’ ARS purchases through the Wachovia Entities; and
e. Either of the Wachovia Entities shall be able to defend itself against such claims; provided, however, that the Wachovia Entities shall not contest liability related to the sale of ARS; and provided further that the Wachovia Entities shall not be able to use as part of their defense an investor’s decision not to borrow money from Wachovia.

11.
On or before November 28, 2008, Wachovia Securities and Wachovia Capital Markets, respectively and separately, have refunded refinancing fees received by either of them to municipal auction rate issuers that issued such securities in the initial primary market between August 1, 2007 and February 13, 2008, and refinanced those securities through the Wachovia Entities after February 13, 2008.

VII. CONSENT ORDER

On the basis of the Findings of Fact, Conclusions of Law, and the Wachovia Entities’ consent to the entry of this Consent Order,

IT IS HEREBY ORDERED THAT:

1.
This Consent Order concludes the investigation by the Division and any other action that the Division could commence under the Act on behalf of Connecticut as it relates to the Wachovia Entities and their marketing and sale of auction rate securities to investors.
2.
This Consent Order is entered into solely for the purpose of resolving the referenced multi-state investigation, and is not intended to be used for any other purpose.
3.
Wachovia Securities, LLC  n/k/a Wells Fargo Advisors, LLC and Wachovia Capital Markets, LLC n/k/a Wells Fargo Securities, LLC Wachovia shall CEASE AND DESIST from violating the Act or any regulation or order under the Act, and shall comply with the Act, its regulations and any order under the Act.
4.
Within ten (10) days after the entry of this Consent Order by the Commissioner, the Wachovia Entities shall remit by certified bank check made payable to “Treasurer, State of Connecticut” the sum of Eight Hundred Sixty-three Thousand Three Hundred Forty-one and 30/100 Dollars ($863,341.30) as a fine.
5.
In the event another state securities regulator determines not to accept the Wachovia Entities’ state settlement offer in connection with the multi-state investigation referenced herein, the total amount of the Connecticut payment shall not be affected, and shall remain at Eight Hundred Sixty-three Thousand Three Hundred Forty-one and 30/100 Dollars ($863,341.30).
6.
To the extent that the Wachovia Entities agree to any subsequent settlement with any NASAA jurisdiction arising out of the above-referenced coordinated investigations pertaining to the Wachovia Entities’ marketing and sale of Eligible ARS to retail ARS investors as described herein, which includes a term or terms analogous to the terms herein which are more favorable to retail ARS investors in such NASAA jurisdiction than those terms identified herein, the subsequent more favorable settlement term or terms shall, upon the Commissioner’s request, be incorporated by reference into this Consent Order and become equally applicable to Connecticut retail ARS investors;
7. If either of the Wachovia Entities defaults in its respective obligations set forth in this Consent Order, or fails to abide by its respective representations set forth herein, the Commissioner may vacate this Consent Order, at his sole discretion, upon ten (10) days notice to the affected Wachovia Entity, and without opportunity for administrative hearing, or may pursue such enforcement measures as are appropriate under the circumstances.
8. This Consent Order is not intended to indicate that the Wachovia Entities or any of their affiliates or current or former employees shall be subject to any disqualifications contained in the federal securities laws, the rules and regulations thereunder, the rules and regulations of self regulatory organizations or various states’ securities laws, including any disqualifications from relying upon the registration exemptions or safe harbor provisions.  In addition, this Consent Order is not intended to form the basis for any such disqualifications.
9. Nothing contained in this Consent Order shall be deemed to be an admission of any liability, fault or wrongdoing by the Wachovia Entities, their affiliates or their current or former employees.  This Consent Order shall not be admissible in any hearing, action, or proceeding except to prove the existence of this Consent Order or to enforce the terms of this Consent Order.
10. For any person or entity not a party to this Consent Order, this Consent Order does not limit or create any private rights or remedies against either of the Wachovia Entities including, without limitation, the use of any e-mails or other documents of the Wachovia Entities or of others for the marketing and sale of auction rate securities to investors, nor does it limit or create liability of the Wachovia Entities, or limit or create defenses of the Wachovia Entities to any claims.
11. This Consent Order shall not disqualify the Wachovia Entities or any of their affiliates or current or former employees from any business that they otherwise are qualified or licensed to perform under applicable state law, and this Consent Order is not intended to form the basis for any disqualification.
12. Nothing herein shall preclude Connecticut, its departments, agencies, boards, commissions, authorities, political subdivisions and corporations, other than the Commissioner and only to the extent set forth in paragraph 1 above, (collectively, “State Entities”) and the officers, agents or employees of State Entities from asserting any claims, causes of action, or applications for compensatory, nominal and/or punitive damages, administrative, civil, criminal, or injunctive relief against either of the Wachovia Entities in connection with the marketing and sale of auction rate securities at either of the Wachovia Entities.
13. Each of the Wachovia Entities shall pay its own costs and attorneys’ fees with respect to this matter.

NOW THEREFORE, the Commissioner enters the following:

1. The Findings of Fact, Conclusions of Law and Consent Order set forth above, be and are hereby entered;
2. Entry of this Consent Order by the Commissioner is without prejudice to the right of the Commissioner to take enforcement action against either of the Wachovia Entities based upon a violation of this Consent Order or the matters underlying its entry, if the Commissioner determines that compliance with the terms herein is not being observed or if any representations made by the Wachovia Entities and reflected herein are subsequently discovered to be untrue; and
3. This Consent Order shall become final when entered.

 
So ordered at Hartford, Connecticut      _______/s/_________
this 15th day of July 2010.      Howard F. Pitkin 
    Banking Commissioner 


CONSENT TO ENTRY OF ORDER

I, Doug Kelly, state on behalf of Wells Fargo Advisors, LLC f/k/a Wachovia Securities, LLC, that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Wells Fargo Advisors, LLC; that Wells Fargo Advisors, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Wells Fargo Advisors, LLC voluntarily consents to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.  Wells Fargo Advisors, LLC further agrees that it shall not claim, assert, or apply for a tax deduction or tax credit with regard to any state, federal or local tax for any administrative monetary penalty that Wells Fargo Advisors, LLC shall pay pursuant to the foregoing Consent Order.     

 
  Wells Fargo Advisors, LLC
f/k/a Wachovia Securities, LLC
  
           
By: ______/s/__________________
Name: Doug Kelly
Title: EVP

 
State of: Missouri

City [sic] of: St. Louis

On this the 12 day of July, 2010, before me, Doug Kelly [sic], the undersigned officer, personally appeared Doug Kelly, who acknowledged himself to be the EVP of Wells Fargo Advisors, LLC f/k/a Wachovia Securities, LLC, a limited liability company, and that he, as such EVP, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself as EVP.
 
In witness whereof I hereunto set my hand.
 

_________/s/______________________
Notary Public
Date Commission Expires: Mar. 14, 2013


CONSENT TO ENTRY OF ORDER

I, Barbara H. Wright, state on behalf of Wells Fargo Securities, LLC f/k/a Wachovia Capital Markets, LLC, that I have read the foregoing Consent Order; that I know and fully understand its contents; that I am authorized to execute this Consent Order on behalf of Wells Fargo Securities, LLC; that Wells Fargo Securities, LLC agrees freely and without threat or coercion of any kind to comply with the terms and conditions stated herein; and that Wells Fargo Securities, LLC voluntarily consents to the entry of this Consent Order, expressly waiving any right to a hearing on the matters described herein.  Wells Fargo Securities, LLC f/k/a Wachovia Capital Markets, LLC further agrees that it shall not claim, assert, or apply for a tax deduction or tax credit with regard to any state, federal or local tax for any administrative monetary penalty that Wachovia shall pay pursuant to the foregoing Consent Order.     

 
  Wells Fargo Securities, LLC
  f/k/a Wachovia Capital Markets, LLC
  
           
By: ______/s/__________________
Name: Barbara H. Wright
Title: SVP

 
State of: North Carolina

County of: Mecklenburg

On this the 12th day of July, 2010, before me, Mary B. Cook, the undersigned officer, personally appeared Barbara H. Wright, who acknowledged himself/herself to be the SVP of Wells Fargo Securities, LLC f/k/a Wachovia Capital Markets, LLC, a limited liability company, and that he/she, as such SVP, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited liability company by himself/herself as SVP.
 
In witness whereof I hereunto set my hand.
 

_________/s/____________________
Notary Public
Date Commission Expires: July 5, 2014


___________________________________________________________________________
1. In October 2007, Wachovia Corporation acquired the Missouri-based broker-dealer A.G. Edwards & Sons, Inc. ("AG Edwards") which was subsequently combined with Wachovia Securities, LLC.

2. Factual allegations in this Consent Order may apply to Wachovia Securities and/or Wachovia Capital Markets, but do not necessarily refer to both entities.

  

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