Updated from Sunday, April 18
The SEC is now is investigating whether mortgage deals set up by other big Wall Street firms may have misled investors, The Wall Street Journal reported Sunday on its Web site.
In the case of Goldman, the SEC alleges that the firm set up a deal with hedge fund Paulson & Co. that allegedly allowed the hedge fund to take short positions against mortgage securities. Goldman then allegedly marketed a collateralized debt obligation, or CDO, that included those securities to its clients without telling them Paulson & Co. had helped to choose the securities and was taking a short position against the CDO.But Goldman's wasn't the only big financial firm that structured deals to allow key clients to make bets against housing, the Journal report noted. Among other firms that created other mortgage deals that went sour as the housing bubble began to burst were Deutsche Bank (DB), the report said, UBS (UBS) and Merrill Lynch , now owned by Bank of America (BAC). It isn't known what deals the SEC is investigating. Further cases could hinge on whether the SEC sees what it considers misrepresentation, and not just questions such as whether a deal favored one client over another, the Journal says. Follow TheStreet.com on Twitter and become a fan on Facebook.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV