Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Monday, December 10, 2007

SEC and New York Conducted 2005 Investigations into Bear Stearns Mortgage Pricing

Both the SEC and the New York Attorney General conducted investigations in 2005 into how Bear Stearns priced mortgage securities it sold to institutional investors, but each ultimately decided not to bring enforcement actions.  Bear Stearns' disclosure this summer of mispriced mortgage securities in two hedge funds marked the beginning of the subprime mess.  The article raises the intriguing question of whether an earlier enforcement action would have sent a message to Wall St. to clean up their houses.  Did the SEC's emphasis on bringing enforcement actions on behalf of small investors cause them to miss this opportunity?  The investors in the 2005 matter were institutional investors.  WSJ, Did Authorities Miss a Chance To Ease Crunch?

http://lawprofessors.typepad.com/securities/2007/12/sec-and-new-yor.html

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