cdos

The Financial Landscape: SEC Fines JPM Over CDOs

The news across the financial world is good for unions, which will find organizing a bit easier; adequate for Greece, which will find getting bailed out a bit easier, and bitter for JPMorgan which had to accept a $153.6 million SEC fine for misleading investors about a mortgage securities transaction.

At Little Signature Bank, Back to Basics Is Paying Off Big

The pint-size Manhattan bank's market cap of $2 billion is dwarfed by JPMorgan's $161.5 billion and BofA's $126.4 billion. Still, Signature has done far better for investors this year. By steering clear of risky derivatives and sticking with basic banking, Signature is thriving.

SEC in Talks to Settle Mortgage-Bond Probe

Regulators in talks with several major banks to settle a number of investigations of their sales of mortgage-bonds, The Wall Street Journal reported. The probe focused on the sale of pools of mortgages and other loans as collateralized debt obligations, or CDOs, to investors, The Wall Street Journal reported without naming its sources. The investigation involved banks including Citigroup Inc. (C), JPMorgan Chase (JPM) and Morgan Stanley (MS).

Derivatives Played "No Role" in Financial Crisis?

At the Financial Services Inquiry Commission hearing, former Wall Street derivatives executive Steven Kohlhagen claimed derivatives generally played "no role" in causing the financial crisis. This puzzling argument doesn't pass the straight-face test.

SEC Sues Triaxx CDO Managers for Fraud

Attention, all owners of Triaxx collateralized debt obligations and clients of New York based investment adviser Thomas Priore: The Securities and Exchange Commission has just sued Priore and his three affliated companies for fraud for their management of the Triaxx CDOs.

Legal Briefing: Facebook Privacy Settings Matter in Court

Lawyers have already exploited Facebook to help win in divorce cases, investigate potential jurors, and market themselves. Now, a California judge has ruled on when parties can subpoena Facebook data in a civil suit, and yes, your privacy settings are the key factor.

What Does Wall Street Owe Its Clients? Not Much

With one small exception, Wall Street doesn't legally owe a duty to its clients to act in their best interests. It's only when clients ask for financial advice that banks owe a fiduciary duty them -- and these activities contribute a tiny portion of banks' revenue.

Legal Briefing: Will Big Banks Pay Over Misleading Ratings?

MBIA has sued Merrill Lynch because the CDOs on which Merrill bought insurance from MBIA were AAA-rated junk. MBIA says Merrill knew the CDOs didn't deserve the top rating at the time it insured them. If this case succeeds, big banks may find dud ratings very expensive.

Behind the $4 Trillion in CDOs: Sneaky Banks and Worthless Ratings

CDOs were a way for investment banks to evade their capital requirements, just as asset-backed securities played a similar role for savings and loan institutions in the 1980s. This time around the banks had plenty of help, especially from fee-hungry credit agencies.

'Naked' Derivatives: Bets With No Higher Purpose

The most striking portrait to emerge from the Goldman Sachs fraud charges may be that of the sheer uselessness of much of Wall Street's activities in recent years. Exhibit A: Synthetic CDOs and their ilk. And no less a capitalist than George Soros is loudly sounding the alarm.

Goldman's 'Unsure' Defense: Is That the Best It Can Do?

Goldman Sachs reportedly plans to claim it was unsure of the mortgage market's direction in 2006 and 2007. How this boosts its legal case against SEC fraud charges is unclear -- but it certainly signals that clients' interests don't come first for the bank.

Goldman Prepares a More Aggressive Defense

Leaked Goldman Sachs documents show that it will come out swinging against SEC fraud charges. Goldman reportedly plans to claim it was unsure about the mortgage market's direction in 2006 and 2007.

Can the SEC Make the Goldman Charge Stick?

CNBC reports the SEC received testimony which undermines a key claim in its fraud case against Goldman Sachs: Specifically, that the investment bank didn't tell other parties involved in the Abacus CDO that Paulson & Co, allegedly a key player in designing the security, was planning to short it.

AIG May Sue Goldman for $2 Billion in CDO Fraud Case

According to The Financial Times, AIG is hoping to piggyback on the SEC's fraud case against Goldman Sachs to recover $2 billion that it paid the investment bank. But what's missing from the article is any evidence that AIG has a case against Goldman.

Deconstructing Goldman's Fraud Defense

The giant bank is defending itself based on four claims it's making to counter the SEC's charges. Our legal reporter thinks the SEC has a stronger -- but not a slam-dunk -- case than Goldman Sachs on the first three points. The fourth is more up in the air.

SEC Charges Goldman Sachs with Securities Fraud

The SEC charged Goldman Sachs with misstating and omitting key facts about securities tied to subprime mortgages as the housing bubble was bursting. It cited the role "a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO."