Posts belonging to Category Mortgage Securities & Collateralized Debt Obligation Problems

Securities Regulator Alerts the Public About Dangerous Investments and Investment Strategies


The Financial Industry Regulatory Authority (FINRA) recently issued a report outlining is its regulatory and examination priorities for 2012. The securities industry regulator is focusing on conduct and products meant to beat the market that are unsuitable investments for many investors.

Credit Suisse Traders Face Criminal Charges for Mortgage Investment Fraud


Federal prosecutors plan to file criminal actions against four former traders who allegedly overvalued collateralized debt obligations (CDOs) sold by Credit Suisse in order to increase their commissions. The events occurred in 2008 and resulted in a $2.85 billion write down by Credit Suisse. Credit Suisse fired the traders and cooperated with authorities in their […]

Judge Rejects Citi’s Efforts to Buy Justice


Judge Jed S. Rakoff stunned the SEC and Citigroup by rejecting their proposed $285 million settlement of a case involving Citigroup’s sale to investors of a CDO that Citigroup allegedly “built to fail” and bet against. The judge’s decision made a dent in the SEC’s longstanding policy (“hallowed by history, but not by reason”) of […]

Expert Contends that Brokerage Firms are Failing to Satisfy their Due Diligence Obligations.


Broker-dealers that sold billions of dollars in fraudulent private placements, such as Medical Capital and Provident Royalties notes, “failed massively in their due diligence responsibilities to investors” according to Gordon Yale, a CPA and expert witness in securities fraud cases. (See “Private-placement due diligence ‘sloppy,’” Investment News). They grossly misrepresented investigations into the investments and […]

Morgan Stanley Bitten by ‘Built to Fail’ Structured Products


Morgan Stanley’s motion to dismiss a class action involving “built to fail” structured products has been denied as to the fraud claims against it, and the case will go forward. The plaintiffs ? a group of Singapore retail investors ? allege that Morgan Stanley committed fraud in selling them sold them $154.7 million of Pinnacle […]

Citigroup and Deutsche Bank Pay $165 Million to Settle Mortgage Securities Claims


The National Credit Union Administration (NCUA) announced that it has reached settlements with Citigroup and Deutsche Bank regarding potential claims relating to the sale of residential mortgage-backed securities to five failed wholesale credit unions. NCUA said that it is the first regulatory agency to recover losses on behalf of failed financial institutions that resulted from […]

Securities Violations Increase


The Securities and Exchange Commission says it has stepped up its enforcement activities during the 2011 fiscal year ended September 30, filing a record 735 enforcement actions resulting in disgorgements and penalties totaling $2.806 billion, according to InvestmentNews (“SEC sets record in crackdown on advisers, B-Ds”). It reportedly filed 146 enforcement actions against investment advisers […]

High Correlations Among Asset Classes Means There’s No Place To Hide


When world markets move significantly in apparent response to major macroeconomic news, even supposedly “uncorrelated assets” move in unison with them, according to Jason Zweig’s Wall Street Journal article, “Caging Raging Contagion.” Such a significant move occurred last week when the Italian government and bonds collapsed over its fiscal problems, and everything else fell, too.

Institutional Investors Challenge Secrecy of Bank of America Settlement Negotiations


AIG and other institutional bond investors, which were not part of a proposed $8.5 billion settlement of Bank of America Corp’s mortgage-backed securities liability, complained that the proposed settlement was struck in a “shroud of secrecy.” They have objected to the settlement, want to intervene, and want to review negotiations and documents that led to […]

Hedge Fund Heroes Getting Battered


Unfortunately, many investors are experiencing first hand the truism that hedge fund managers rarely outperform the market on consistent basis. John Paulson, the hedge fund manager who made a killing when Goldman Sachs let him select bad CDO assets, which he turned around and bet against, is having a tough time in 2011. His hedge […]