May 13, 2010SEC Bank Investigation: JPMorgan, Citi, Deutsche Bank, UBS Get Subpoenas Over Mortgage Deals
U.S. federal prosecutors and the Securities and Exchange Commission are cooperating in a preliminary criminal probe into whether banks misled investors about their participation in mortgage-bond deals, the Wall Street Journal said, citing a person familiar with the matter.
JPMorgan Chase & Co., Deutsche Bank AG, UBS AG and Citigroup Inc. have received civil subpoenas from the SEC, the newspaper said today. Goldman Sachs Group Inc. and Morgan Stanley are already being investigated under similar preliminary criminal scrutiny, the Journal said.
Wall Street firms are facing scrutiny from prosecutors and lawmakers over whether they improperly sold collateralized debt obligations linked to the subprime mortgages that caused the credit crisis. Goldman Sachs is contesting a lawsuit from the SEC, which alleges the firm misled investors about a mortgage- linked security in 2007.
Prosecutors so far are gathering evidence and haven’t issued criminal subpoenas, or determined the outlines of any potential case, according to the Journal. To win a criminal case, the prosecutors would have to prove beyond a reasonable doubt that a firm or its employees intentionally misled investors, it reported.
Banks Respond
Chris Cockerill, a Hong Kong-based spokesman for UBS, and James Griffiths, a spokesman for Citigroup, declined to comment on the Journal article when contacted by Bloomberg News. Fiona Laffan, a spokeswoman for Goldman Sachs in London, and Michael Golden, a London-based spokesman at Deutsche Bank, also declined to comment.
Morgan Stanley told the newspaper it hasn’t been contacted by prosecutors and has done nothing wrong. Spokesman Wesley McDade in London declined to comment today. A spokesman for JPMorgan said the bank “hasn’t been contacted” by federal prosecutors and isn’t aware of any criminal investigation, the Journal said. David Wells, a London-based spokesman for JPMorgan didn’t have an immediate comment.
SEC spokesman John Heine and Justice Department spokeswoman Laura Sweeney didn’t immediately return calls after regular business hours. Spokespeople for the Manhattan U.S. Attorney’s office declined to comment, the Journal said.
Allegations Denied
Morgan Stanley Chief Executive Officer James Gorman, speaking in Tokyo yesterday, denied allegations the U.S. bank misled investors about mortgage derivatives. The executive responded to a Journal article saying the firm is being probed by U.S. prosecutors over whether it misled clients when it sold them CDOs as its own traders bet that the value of the securities would drop. The New York-based firm hasn’t been contacted by the Justice Department, Gorman said.
The probe stemmed from an civil-fraud investigation of more than a dozen Wall Street firms’ mortgage bond businesses by the SEC that began in 2009, the Journal said yesterday. The Manhattan U.S. Attorney’s office is conducting a criminal probe into some of those firms’ activities, it said.
Cuomo is investigating whether Goldman, Morgan Stanley, UBS, Citigroup, Credit Suisse, Credit Agricole SA, Deutsche Bank and Bank of America Corp.’s Merrill Lynch misled rating companies to obtain higher ratings, the New York Times said. Cuomo issued subpoenas on Wednesday, the newspaper reported.
Cuomo’s spokesman Richard Bamberger didn’t return a call after business hours. Officials for Citigroup and Bank of America didn’t have an immediate comment. Spokesmen for Morgan Stanley, Goldman, UBS, Credit Suisse Group AG, Credit Agricole SA and Deutsche Bank declined to comment.
Government officials in the U.S. are seeking to assuage public anger over bank bailouts by tightening regulations after the worst financial crisis since the Great Depression. The changes are intended to prevent a repeat of the crisis that led to $1.78 trillion in writedowns and losses by financial firms.
U.S. federal prosecutors and the Securities and Exchange Commission are cooperating in a preliminary criminal probe into whether banks misled investors about their participation in mortgage-bond deals, the Wall Street Journal said, citing a person familiar with the matter.
JPMorgan Chase & Co., Deutsche Bank AG, UBS AG and Citigroup Inc. have received civil subpoenas from the SEC, the newspaper said today. Goldman Sachs Group Inc. and Morgan Stanley are already being investigated under similar preliminary criminal scrutiny, the Journal said.
Wall Street firms are facing scrutiny from prosecutors and lawmakers over whether they improperly sold collateralized debt obligations linked to the subprime mortgages that caused the credit crisis. Goldman Sachs is contesting a lawsuit from the SEC, which alleges the firm misled investors about a mortgage- linked security in 2007.
Prosecutors so far are gathering evidence and haven’t issued criminal subpoenas, or determined the outlines of any potential case, according to the Journal. To win a criminal case, the prosecutors would have to prove beyond a reasonable doubt that a firm or its employees intentionally misled investors, it reported.
Banks Respond
Chris Cockerill, a Hong Kong-based spokesman for UBS, and James Griffiths, a spokesman for Citigroup, declined to comment on the Journal article when contacted by Bloomberg News. Fiona Laffan, a spokeswoman for Goldman Sachs in London, and Michael Golden, a London-based spokesman at Deutsche Bank, also declined to comment.
Morgan Stanley told the newspaper it hasn’t been contacted by prosecutors and has done nothing wrong. Spokesman Wesley McDade in London declined to comment today. A spokesman for JPMorgan said the bank “hasn’t been contacted” by federal prosecutors and isn’t aware of any criminal investigation, the Journal said. David Wells, a London-based spokesman for JPMorgan didn’t have an immediate comment.
SEC spokesman John Heine and Justice Department spokeswoman Laura Sweeney didn’t immediately return calls after regular business hours. Spokespeople for the Manhattan U.S. Attorney’s office declined to comment, the Journal said.
Allegations Denied
Morgan Stanley Chief Executive Officer James Gorman, speaking in Tokyo yesterday, denied allegations the U.S. bank misled investors about mortgage derivatives. The executive responded to a Journal article saying the firm is being probed by U.S. prosecutors over whether it misled clients when it sold them CDOs as its own traders bet that the value of the securities would drop. The New York-based firm hasn’t been contacted by the Justice Department, Gorman said.
The probe stemmed from an civil-fraud investigation of more than a dozen Wall Street firms’ mortgage bond businesses by the SEC that began in 2009, the Journal said yesterday. The Manhattan U.S. Attorney’s office is conducting a criminal probe into some of those firms’ activities, it said.
Cuomo is investigating whether Goldman, Morgan Stanley, UBS, Citigroup, Credit Suisse, Credit Agricole SA, Deutsche Bank and Bank of America Corp.’s Merrill Lynch misled rating companies to obtain higher ratings, the New York Times said. Cuomo issued subpoenas on Wednesday, the newspaper reported.
Cuomo’s spokesman Richard Bamberger didn’t return a call after business hours. Officials for Citigroup and Bank of America didn’t have an immediate comment. Spokesmen for Morgan Stanley, Goldman, UBS, Credit Suisse Group AG, Credit Agricole SA and Deutsche Bank declined to comment.
Government officials in the U.S. are seeking to assuage public anger over bank bailouts by tightening regulations after the worst financial crisis since the Great Depression. The changes are intended to prevent a repeat of the crisis that led to $1.78 trillion in writedowns and losses by financial firms.
