Mortgage Backed Securities (MBS) And Collateralized Debt Obligations (CDO) Settlement Possible Between SEC and Banks

The Securities and Exchange Commission (SEC) is probing for conflicts of interest at major Wall Street banks that marketed and sold mortgage backed securities (MBS) and collateralized debt obligations (CDO), which contributed to the worst financial disaster since the Great Depression. According to the Wall Street Journal, the major players such as Citigroup (C), JP Morgan Chase (JPM), Morgan Stanley (MS), UBS (UBS) and Deutsche Bank (DB) received subpoenas and are reportedly in preliminary discussions to settle claims that they knew crucial information that they did not reveal to investors when they marketed and sold these products.

In July 2010, Goldman Sachs (GS) reached a $550 million settlement with the SEC. Goldman allegedly structured and marketed a CDO that hinged on the performance of subprime MBS. Therefore, federal regulators claimed that they failed to disclose that a major hedge fund had participated in the portfolio selection process and then took a short position against the CDO. Simply put the issue in these cases is whether these major financial players made bets against these complex products they were selling to the public, which would indicate they were aware that the investments would result in losses.

If you have suffered investment losses in mortgage backed securities (MBS) or collateralized debt obligations (CDO), please contact our securities law firm at 1-800-259-9010 for a confidential, no obligation consultation.

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