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SEC Starts New Mortgage Fraud Probe

valuewalk.com | January 9, 2014

By Clayton Browne

The Securities and Exchange Commission (SEC) and the special inspector general for the Troubled Asset Relief Program (Sigtarp) have begun a new investigation of potential intentional mispricing of mortgage securities by several big banks from 2009 to 2011. According to the Wall Street Journal, the investigators are looking at “significant misrepresentations” about the quality of some mortgage assets made by a number of major financial institutions.

Yet another investigation of potentially criminal activity is a major blow to the tarnished banking industry, which has already coughed up billions of dollars in penalties and fines relating to misconduct before and during the financial crisis of 2008. Furthermore, many banks still hold billions of dollars of dubious, hard-to-value mortgage derivative assets on their books today.

Banks under investigation

According to the Wall Street Journal, the banks under investigation include Barclays PLC (ADR) (NYSE:BCS) (LON:BARC), Citigroup Inc (NYSE:C), Deutsche Bank AG (NYSE:DB) (ETR:DBK), Goldman Sachs Group Inc (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS), Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) and UBS AG (NYSE:UBS). None of the banks have made an official statement regarding the new investigation to date.

SEC’s probe still in early stages

The mortgage security fraud investigation began less than a year ago, and is still at an early stage, according to the Wall Street Journal. The paper also pointed out that it is possible the investigation may not lead to any enforcement action against the banks. However, the WSJ reports that subpoenas have been issued for a variety of documents at several firms as a part of the probe, and that the contents of some of these documents could prove critical in making a civil or criminal case.

Spokespersons for the SEC and Sigtarp declined to comment on the ongoing investigation.


Back to January 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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