Wells Fargo has announced it will repurchase auction rate securities from eligible investors who bought these hard-hit investments through one of three of its broker-dealer subsidiaries prior to 13 February last year.

Eligible investors will receive additional information regarding the terms of the buyback offer by mail within 90 days, the US bank said in a statement yesterday.

The bank settlement agreements reached by a number of regulatory authorities “resolve all active regulatory investigations and enforcement actions concerning Wells Fargo's participation in the ARS market, without Wells Fargo admitting to the allegations in the various investigations and complaints”.

The company has agreed to pay $1.9 million in fines and expenses.

Auction rate securities are typically instruments with a long-term nominal maturity which is regularly changed at an auction. The market in these instruments froze in February last year and a number of banks which sold ARS have agreed to buy them back from investors.

“We have been working with ARS issuers since the auction rate market froze, and while there has been progress, redemptions by issuers have not occurred as fast as anyone would have hoped or predicted. We are glad to have resolved this for our customers through an actual repurchase of their ARS,” said Charles Daggs, CEO of Wells Fargo Investments, part of the US bank.