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Home > Cases > New York Attorney General Investigating Several Wall Street Firms Over Subprime Mortgage Securities

New York Attorney General Investigating Several Wall Street Firms Over Subprime Mortgage Securities

Three well-known investment banking firms — Merrill Lynch & Co., Bear Stearns Cos., and Deutsche Bank AG — are the target of New York Attorney General Andrew Cuomo who issued subpoenas on December 5, 2007, for information regarding the packaging and selling of debt tied to high-risk mortgages and their relationships with the firms responsible for rating the securities as investment grade.

Included among the credit rating firms are Standard & Poors, Moody's, and Fitch. According to reporter Kara Scannell in a December 5, 2007, article in The Wall Street Journal, federal and state regulators are examining the role of the credit rating firms, as well.

It is believe that Attorney General Cuomo is looking for information that can prove whether the investment banks ignored — or in some instances conspired — with credit rating firms to produce inflated credit ratings as a way to generate fees by packaging and selling the risky securities to investors who thought they were buying safe, investment-grade bonds.

The Wall Street Journal article compared Attorney General Cuomo's latest actions to those of Eliot Spitzer, former New York Attorney General and current Governor of New York. Spitzer is credited with revealing the “buy” ratings issued from several Wall Street investment banking firms that regulators later confirmed as fraudulent. In those cases, the fraudulent “buy” ratings were issued by investment banks, which were looking to generate fees by underwriting initial public offerings of over-rated securities.

In the summer of 2007, our group, who individually and collectively have extensive experience in representing investors against Wall Street, formed an affiliation. Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage related investment losses. Contact us.


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