Prosecutors Increase Interest in Wall Street’s Role in Sub-Prime
According to the "Wall Street Journal", federal criminal prosecutors shoring up interest in Wall Street's mortgage-securities activities. The Justice Department's U.S. attorney's office in Manhattan has notified the Securities and Exchange Commission (SEC) that it wants to see information the agency is gathering in its investigation of Merrill Lynch & Co. The SEC is examining, among other things, whether the securities firm booked inflated prices of mortgage bonds it held despite knowledge that the valuations had dropped, the people say.
The move by the U.S. attorney's office comes as the SEC has upgraded its Merrill probe to a formal investigation, which requires approval of the full commission and gives the agency broad power to require firms and individuals to produce information.
The interest by the federal prosecutors is preliminary; it is unclear whether the SEC has turned over information. But the U.S. attorney's office request could be a precursor to a criminal investigation, these people say.
A spokeswoman for the Manhattan U.S. attorney's office declined to comment. A Merrill spokesman said the firm had no comment, except to say that Merrill cooperates on regulatory matters when asked.
The interest of the Manhattan U.S. attorney's office follows a series of investigations being pursued by state and federal regulators with criminal and civil enforcement powers around the nation into the financial industry in the wake of the mortgage-securities market collapse.
Source: Source: Wall Street Journal | Published on February 8, 2008
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