“Goldman Sachs Group Inc. (GS), Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM)are among banks warned by federal regulators that they may face civil claims tied to sales of mortgage-backed securities.
Goldman Sachs and Wells Fargo said yesterday that they received Wells notices from the Securities and Exchange Commission, warning that agency staff may recommend enforcement. The SEC has issued such notices to multiple banks including JPMorgan, the nation’s largest, in probes focusing on mortgage securities, said people with knowledge of the matter who asked not to be identified because the communications weren’t public.
“It’s a big deal given the level of anticipation that has been in the markets about whether there would be further actions,” said Jacob Frenkel, a former SEC lawyer now with Shulman Rogers Gandal Pordy & Ecker PA in Potomac, Maryland. “These cases were complicated and time-consuming and the government has said for a long time that its investigations were continuing. These Wells notices are the manifestation of these investigations coming to their conclusion.”
Almost four years after mounting mortgage defaults prompted unprecedented government bailouts of the financial system, regulators are still examining how banks packaged and sold home loans to investors. The SEC is looking for evidence that firms failed to disclose underlying credit weaknesses in mortgage pools and delinquencies, Jason Anthony, special counsel for the agency’s structured products unit, said last week. He didn’t identify companies under scrutiny….”
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