UPDATE 1-Mortgage probe could grow "as appropriate" -U.S.

(Adds quotes, details)

By Randall Mikkelsen

ARLINGTON, Va., Oct 2 (Reuters) - The United States will bring more charges as warranted in its probe of corporate fraud in the collapse of the mortgage industry, Deputy U.S. Attorney General Mark Filip said on Thursday.

He also said the complexity of financial instruments such as auction rate securities would not present a barrier to prosecution, but he declined to confirm such instruments were involved in investigations under way.

"It's a very complicated area, it involves complex accounting, at least often times," Filip said at an American Bar Association securities fraud conference outside Washington. "But there have already been indictments of two managers of Bear Stearns BSR.P in the Eastern District of New York and as appropriate those charges will continue to come."

Filip and other officials have said 26 corporations are under investigation over allegations related to the mortgage industry collapse.

The Wall Street Journal reported on Thursday U.S. prosecutors are stepping up criminal investigations into possible wrongdoing in the failed auction-rate securities market.

One probe is examining whether Lehman Brothers Holdings Inc (LEHMQ.PK) defrauded clients, and another is looking into possible insider trading by a former executive at Swiss bank UBS AG (UBSN.VX), the newspaper said.

Reuters asked Filip after the speech whether the complexity of instruments such as auction rate securities and credit default swaps presented an increasing barrier to investigators.

"I don't know that it's infinitely more complicated than a typical securities fraud case, at least some flavors of potential charges," Filip said. "We don't think it's an insurmountable issue by any means ... when there's complexity you need to be able to show that to a jury and meet the applicable burden."

He said he could not confirm whether such instruments were involved in current investigations, citing a department policy of not commenting on specific probes.

Asked if he thought the investigations were coming too late to protect the public from further financial harm, he said prosecutions of white-collar crimes often have a stronger deterrent effect than with more violent crimes.

"We don't think that it's a futile endeavor, but obviously the goal of everybody is to prevent harm from occurring in the first place," Filip said.

(editing by David Wiessler)