J.P. Morgan, Citigroup, Bank Of America, Goldman Sachs & Wells Fargo Subpoenaed In SEC Investigation
As reported by Joshua Gallu in a Bloomberg article, the Securities and Exchange Commission (SEC) has issued subpoenas for JP Morgan Chase, Citigroup, Bank of America, Goldman Sachs and Wells Fargo, seeking information about their role in bundling mortgages for sale to investors. Reuter’s reported last week that the subpoenas had already been sent out.
The SEC has filed suit against firms for their involvement in selling bundled loans in the form of mortgage backed securities (MBS) that resulted in massive losses when the subprime market collapsed and the housing bubble burst. Goldman Sachs settled for $550 million to resolve claims that it misled investors and Countrywide Financial agreed to pay $67.5 million.
Sources have advised Reuters that the SEC is looking into whether the “robo-signing” was a cover up for the missing mortgage documents properly transferring mortgages to the securitization trusts. This could give rise to the possibility that hundreds of billions of dollars of mortgages would have to be bought back by the banks, since the securities would then be mortgage (un)backed securities.
If you have suffered losses from investing in mortgage backed securities (MBS), please contact our securities law firm for a confidential, no obligation consultation at 1-800-259-9010.