WASHINGTON The U.S. Securities and Exchange Commission will make public as early as June several enforcement actions involving subprime mortgage-related investigations, two sources familiar with the probes told Reuters on Wednesday.
The SEC last year formed an internal task force to investigate areas of the subprime mortgage market, including sales practices, accounting, the role of credit rating firms and securitization of packaged mortgages.
Many market participants, including credit rating agencies, Wall Street firms and mortgage brokers and lenders have been criticized for failing to properly disclose certain risks to the public, contributing to the subprime mortgage crisis.
The SEC, which aims to maintain market confidence, is focused on ensuring proper disclosure and preventing fraud.
"I think we'll have a few subprime-related cases relatively soon ... within weeks," one source said.
Another source, who is also familiar with the agency's investigations, said the cases could range from "small to big" players.
The sources declined to identify the companies targeted in the investigations. SEC spokesman John Nester declined to comment on the pending enforcement cases.
He said the agency's examination of credit rating agencies will likely be completed in June and that the findings will be made public soon thereafter.
The collapse of the subprime mortgage market, which made loans to borrowers with spotty credit histories, has sent shock waves through financial markets and resulted in surging levels of foreclosures.
Earlier this year, SEC Chairman Christopher Cox told a Senate committee that the agency had more than three dozen subprime-related investigations under way but had not yet determined if any securities laws were violated.
Separately, an SEC official on Wednesday told a White House financial education panel that regulators are examining whether various players in the mortgage market might have run afoul of the federal laws.
"The SEC is actively investigating a number of cases involving possible securities fraud stemming from inappropriate subprime sales practices in after-markets," SEC Commissioner Paul Atkins told the group.
"Maintaining healthy and active markets for securities that fund mortgage and other credit markets remains a core concern for the commission," Atkins said.
The U.S. markets watchdog has said it is looking into possible computer glitches at credit rating agency Moody's Investors Service (MCO.N), which the Financial Times said led to incorrect ratings of some complex European debt products.
Moody's has hired a law firm to conduct an investigation of the matter.
Moody's is one of three firms being examined in light of their handling of the subprime crisis, including aspects of their methodologies used to rate products and policies and procedures used to detect errors.
The SEC also has said it is tightening its oversight of the top five U.S. investment banks after the collapse of one of them, Bear Stearns Cos Inc BSC.N.
Other regulators at the meeting urged the mortgage industry to simplify loans, improve disclosure and verify a borrower's income.
"We need to get back to basics," said John Dugan, who heads the Office of the Comptroller of the Currency, which regulates large national banks.
The meeting focused on how to increase financial literacy among borrowers, especially those who bought homes without realizing the full complexity of their mortgages.
(Additional reporting by Karey Wutkowski and David Lawder; Editing by Kenneth Barry)