18th Nov 2015 06:18
NEW YORK CITY (Alliance News) - Federal prosecutors are actively pursuing criminal cases against executives from Royal Bank of Scotland Group PLC and JPMorgan Chase & Co for allegedly selling flawed mortgage securities, the Wall Street Journal reported citing people familiar with the probes.
Officials are working to establish that the bankers ignored warnings from associates that they were packaging too many shaky mortgages into investment offerings and are weighing whether they can prove that constituted fraud, the Journal said.
At RBS, prosecutors are scrutinizing a USD2.2 billion deal that repackaged home mortgages into bonds in 2007. In a 2013 civil settlement with RBS, the Securities and Exchange Commission described the lead banker on that deal, whom it didn't name, as trying to push it through over concerns of the diligence department.
J.P. Morgan noted the existence of a criminal probe in a November2 quarterly securities filing.
In a July securities filing, RBS said the civil and criminal divisions of the Justice Department were investigating the bank's mortgage securitizations.
Some Justice Department officials said they believe they have a viable criminal case in the RBS probe, although a decision on whether to bring charges isn't expected until early next year. The J.P. Morgan probe has long been stalled because officials have been divided over whether they have sufficient evidence to charge anyone with a crime but it has recently picked up steam, the report said.
If filed, the charges would be among the first pursued against specific employees of the largest Wall Street firms over the housing collapse.
UBS said in a securities filing this month that the Brooklyn US attorney's office had "identified a number of transactions.related to the bank's mortgage-securities business from 2005 to 2007" that are "currently the focus of their inquiry."
Copyright RTT News/dpa-AFX
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