It appears the Securtities and Exchange Commission has been reading my reporting on Bear Stearns mortgage traders cheating their clients out of bilions and double dipping on profits. Today, Jody Shenn at Bloomberg reports he’s heard J.P. Morgan received subpoenas asking for information on how Bear Stearns mortgage team sold back failed loans to mortgage originators and didn’t pass the monies back to the investors in their mortgage bonds.
J.P. Morgan won’t confirm the SEC subpoena for Bloomberg but I can confirm the regulator has been investigating the actions of the bank since I first broke news on the problems at TheAtlantic on Jan 25th. I even reported the SEC’s actions to Max Keiser the day my news broke after I received calls from people familar with the case saying the SEC office in Colorado had reached out to them because they wanted to know what kind of documents and whistleblowers they had accumlated to prove their accusations.
No charges have been filed against JP Morgan or the Bear Traders, now making millions at other banks, but let’s not forget they also have the Manhattan D.A. on their tail.
TheAtlantic’s Dan Indiviglio, a terrifc editor who worked on my Bear Stearns coverage, said it best :
As I stated before, these fraud allegations should actually be fairly easy to prove or disprove — unless evidence has been destroyed. If a double-dipping scheme took place or if securities provided were different than indicated, the process either did or did not violate deal covenants. There’s not a great deal of gray area allowed when actual money changes hands. We aren’t merely talking about insurers claiming they didn’t have all the information they needed; we’re talking about insurers claiming that deal documents specified that funds should have been provided to them that these Bear execs kept for their bank, or that the securities sold did not adhere to the criteria deal documents specified.
Unfortunately, I don’t see the Bear traders, led by Tom Marano, sweating these investigations until a federal regulator actually shows the strength to charge them for what most of you who write me think is very clear criminal fraud.