SEC Announces Securities Law Violations by Broker-Dealer Involving MBS

SEC Release 33-9200 / 34-64182

April 5, 2011

The SEC announced a settled civil fraud action against a broker-dealer allegedly engaged in misconduct in the sales of two CDOs tied to the performance of residential mortgages. The release alleges that the firm charged "undisclosed excessive markups" in the sale of certain CDO shares. In addition, the release alleges that the firm misrepresented to investors the price it paid for certain mortgages obtained from an affiliate to form a CDO. The firm settled the charges, which include violations of Securities Act Section 17(a)(2)-(3) (but, notably, not Exchange Act Section 10), for over $11 million.

Cross References

SEC Press Release 2011-83

Securities Act Section 17(a)