华尔街投行被纽约州检查官传唤

henry

Wall Street Firms Are Subpoenaed
New York Examines Treatment
Of Debt Tied to Risky Mortgages
By KARA SCANNELL
December 5, 2007

New York state prosecutors have sent subpoenas to several Wall Street firms seeking information related to the packaging and selling of debt tied to high-risk mortgages, people familiar with the matter say, the latest legal woe to hit the stressed industry.

The subpoenas, sent by the office of New York state's attorney general, Andrew Cuomo, are broadly written and request information from firms including Merrill Lynch & Co., Bear Stearns Cos. and Deutsche Bank AG, people familiar with the matter say.


The review, part of a broader investigation into the mortgage industry, is examining how adequately the investment banks reviewed the quality of mortgages before packaging them into products that were then sold to investors, these people say. The subpoenas also requested information about how the debt was pooled into securities, including the banks' relationship with credit-rating firms.

A spokesman for Mr. Cuomo couldn't be reached. A Merrill spokesman declined to comment on the subpoena, saying: "We always cooperate with regulators when asked to do so." Bear Stearns and Deutsche Bank declined to comment.

The state-prosecutor inquiry is the latest twist in the fallout stemming from residential subprime mortgages. A rise in defaults and foreclosures, particularly among low-end borrowers, has whipsawed global stock and bond markets, led to the dismissal of two Wall Street chief executives, and resulted in losses by banks, hedge funds and securities firms. The Securities and Exchange Commission has opened about two-dozen investigations stemming from the collapse of residential subprime mortgages, a person with knowledge of the situation said. In addition, the role of credit-rating firms is being examined by federal and state regulators.

The role being played by Mr. Cuomo's office is reminiscent of the path taken by his predecessor, Eliot Spitzer, who as New York attorney general shined a spotlight on conflicts of interest on Wall Street, trading abuses at mutual funds and bid-rigging at insurance companies.

The inquiry into what role securities firms played in the current crisis is likely to look at Wall Street's underwriting standards. In particular, the probe appears to be examining the relationships between mortgage companies, third-party due-diligence firms, securities firms and credit-rating firms.

The inquiry raises questions about the extent to which securities firms are obligated to dig into the mortgages before slicing them up to sell to investors. Many securities firms rely on third-party vendors to do this work; among the questions is whether this effort was adequate, or if securities firms had a duty to do further due diligence. Securities firms that underwrite securities have an obligation to make sure that statements included in offering documents are accurate.

In a news conference last month announcing subpoenas to mortgage giants Fannie Mae and Freddie Mae, Mr. Cuomo said "investment banks wanted the mortgages." That suggests he is raising questions about whether banks turned a blind eye to what Mr. Cuomo says were inflated appraisals in order to package and sell the products to make fees. "The follow-the-money expression is, 'follow the mortgage'" into the secondary market, Mr. Cuomo said.

henry

开始政治清算。会有人去坐牢。

[ 本帖最后由 henry 于 2007-12-5 12:29 编辑 ]