SEC probes banks and companies in loan securities dealings: WSJ

Mon Mar 24, 2014 9:39pm EDT

The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst

The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011.

Credit: Reuters/Jonathan Ernst

(Reuters) - The U.S. Securities and Exchange Commission has launched an investigation into the increasing number of complex bond deals on Wall Street that may create new opportunities for fraud, the Wall Street Journal reported on Monday.

Investigators with the SEC are examining if banks and companies are using the bond deals to hide risks illegally, the newspaper reported, citing sources close to the matter.

The securities are packages of corporate loans and debts that are assembled and sold by Wall Street Banks to investors. They have gained in popularity after the financial crisis as investors chase riskier investment products. (WSJ story: link.reuters.com/vuj87v)

The SEC is also investigating whether a number of banks including Barclays , Citigroup , Deutsche Bank AG, Goldman Sachs Group, Morgan Stanley, Royal Bank of Scotland and UBS AG have been cheating their clients by mispricing certain bond deals.

The SEC was not immediately available for comment outside of normal business hours.

(Reporting by Narottam Medhora in Bangalore; Editing by Lisa Shumaker)

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Comments (1)
birder wrote:
No? I can’t believe the banks would cheat anyone by mispricing packages of debt. Just like they didn’t cheat anyone with their packaged mortgages. Surely, these packages are carrying a AAA rating.

Mar 25, 2014 8:11am EDT  --  Report as abuse
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