December 5, 2007 / 8:43 AM / 10 years ago

Wall St firms subpoenaed by NY prosecutors: WSJ

NEW YORK (Reuters) - New York state prosecutors have sent subpoenas to Wall Street firms seeking information related to the packaging and selling of debt tied to high-risk mortgages, the Wall Street Journal reported, citing people familiar with the matter.

The subpoenas, sent by the New York attorney general Andrew Cuomo’s office, request information from Merrill Lynch & Co., Bear Stearns Cos and Deutsche Bank AG, people familiar with the matter told the Journal.

A spokesman for the attorney general’s office declined to comment on the report.

The investigation is examining how adequately investment banks reviewed the quality of mortgages before packaging them into products that were then sold to investors, the people told the Journal, adding that the subpoenas also requested information about how the debt was pooled into securities, including the banks’ relationship with credit-rating firms.

A Merrill spokesman declined to comment on the subpoena but told the Journal, “We always cooperate with regulators when asked to do so.”

Bear Stearns and Deutsche Bank declined to comment, the Journal said.

The probe appears to be examining the relationships between mortgage companies, third-party due-diligence firms, securities firms and credit-rating firms as they relate to the role securities firms played in the subprime mortgage crisis, the Journal said.

Cuomo last month said he had subpoenaed investment banks related to his ongoing probe into U.S. mortgage loans.

At the time he said he had concerns about mortgage loans that Washington Mutual sold to those banks, which he declined to name.

Reporting by Bill Berkrot and Justin Grant; Editing by Quentin Bryar

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