SEC: Giving Up on Financial Crisis Prosecutions?

Commission passes on prosecuting major hedge fund
By Kevin Spak,  Newser Staff
Posted Aug 7, 2013 4:40 PM CDT
SEC: Giving Up on Financial Crisis Prosecutions?
Securities and Exchange Commission (SEC) Chair Mary Jo White, left, and Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler testify on Capitol Hill in this file photo.   (AP Photo/J. Scott Applewhite)

You might want to stop holding your breath waiting for the SEC to bring the hammer down on more financial crisis ne'er do wells, because the commission appears to be winding down crisis-related investigations. That's what the Wall Street Journal has concluded after getting word from sources that the commission has decided not to recommend charges against Magnetar Capital, a hedge fund that made billions betting against the housing market by creating doomed mortgage-backed securities and CDOs.

The SEC has long been investigating whether Magnetar had a duty to investors who bought its CDOs, but has now concluded that there isn't enough evidence to file charges—which means all the other hedge funds are almost certainly off the hook, too. But not all of Wall Street is getting off so easily; the government yesterday filed two civil suits against Bank of America, accusing it of fraud in the sale of $850 million worth of mortgage-backed securities, Reuters reports. (Read more SEC stories.)

We use cookies. By Clicking "OK" or any content on this site, you agree to allow cookies to be placed. Read more in our privacy policy.
Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.