Back in January Teri Buhl reported here at The Atlantic that former Bear Stearns executives had been accused of cheating clients out of billions of dollars through a double-dipping scheme involving bad mortgages. The Securities and Exchange Commission is reportedly subpoenaing JPMorgan (where Bear now effectively resides) to obtain records connected to this accusation. It appears that Bear isn't the only one accused of such a scheme. Credit Suisse is also reportedly being investigated for doing something similar.
Here's an explanation of what the SEC is reportedly looking for, via Kerri Panchuk at HousingWire:
The crux of both investigations is a deliberate probe to see if Credit Suisse -- and Bear Stearns, which was acquired by JPMorgan three years ago -- demanded originators reimburse them for selling bad mortgage debt and then, in turn, failed to meet their own contractual obligations to reimburse other parties.
This is exactly the allegation reported here, back in January. If the SEC announces a formal investigation, expect to see other authorities follow. As I wrote, this could be huge if the SEC finds the evidence it's looking for, and unless documentation has been destroyed, then that evidence should be pretty easy to find..
Read the full story at Housing Wire.