SEC not to move against hedge fund Magnetar over mortgages: WSJ
The U.S. securities regulator has decided not to file civil charges against hedge fund firm Magnetar Capital LLC over its role in helping create mortgage securities that lost value during the financial crisis, the Wall Street Journal reported.
For more than a year, enforcement officials of the Securities and Exchange Commission (SEC) have been investigating whether Magnetar violated federal law over the selection of assets bundled in a collateralized debt obligation (CDO) called Norma CDO I that was created by Merrill Lynch & Co, now a unit of Bank of America Corp , the paper said.
Senior SEC officials have concluded there isn't enough evidence to file civil enforcement charges against Magnetar, the Journal said, citing people familiar with the situation. (http://link.reuters.com/zab32v))
However, the SEC has not officially closed its investigation into Magnetar and could still decide to take enforcement action if new information surfaces, one of the people told the paper.
The U.S. government on Tuesday filed two civil lawsuits against Bank of America that accuse the bank of investor fraud in its sale of $850 million of residential mortgage-backed securities.
Bank of America warned in a securities filing last week about possible new civil charges linked to the sale of one or two mortgage bonds.
(Reporting by Sakthi Prasad in Bangalore; Editing by Richard Pullin)