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Home > Cases > Concern Over the Pricing and Valuation of Subprime Securities Escalates

Concern Over the Pricing and Valuation of Subprime Securities Escalates

Over recent weeks there have been growing concerns over the pricing and valuation of subprime securities by the major investment banks. Such pricings and valuations have serious implications for investors in both the investment banks and the subprime securities market. What is the realistic value of these complex securities? Is action required to mitigate investment losses? Did investors get overcharged for such securities?

In early February, the Wall Street Journal reported that both federal criminal prosecutors and the Securities and Exchange Commission were investigating whether UBS and Merrill Lynch had used inflated prices for mortgage bonds despite knowledge that the valuation of these bonds had decreased. At issue is whether the firms misvalued or mismarked subprime securities for their own benefit. The SEC is reportedly also investigating what the investment banks told their clients and investors about the prices of such mortgage securities and their declining values.

Investors' concerns were further heightened when Credit Suisse recently announced a $2.85 billion writedown attributable to a “mismarking” of asset-backed securities by a group of traders and other recent market developments. Credit Suisse also announced that it was investigating whether there were any “mismarkings” that affected its 2007 earnings.

Investors owning subprime securities are encouraged to closely monitor continuing developments on these “pricing” and “valuation” issues. In addition, proactive inquiries about the values of subprime holdings and the basis for determining such values are suggested.

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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