(Story updated with the announcement that Triaxx was sold to Bank of America.)NEW YORK ( TheStreet Ratings) -- The Securities and Exchange Commission and AIG ( AIG) accuse its manager of fraud, while Bank of America ( BAC) and Bank of New York Mellon ( BK) are fighting it in a multibillion lawsuit. Now Federal Reserve Bank of New York is looking to send it back to Wall Street, where it will likely be broken up and sold to eager investors in spite of its notorious past.
In 2010, the SEC filed a lawsuit against Triaxx's collateral manager, ICP Asset Management, for what it argues were "fraudulent practices and misrepresentations" that caused the CDOs to plummet in value. Among other things, the SEC alleges ICP traded $1 billion of securities with inflated prices and misrepresented investments to investors. A spokesman for the SEC did not return calls for comment or to give an update on the status of the lawsuit or the impact of the Fed sale. Last year AIG also sued ICP, alleging fraud caused losses that pushed the insurer to near bankruptcy, according to Bloomberg. Calls to ICP's president, Thomas Priore, were not returned. An AIG spokesman said its lawsuit is "still pending and is in the early stages of motion practice" and declined to comment further. But the Triaxx saga in the financial markets doesn't end there; the CDO is also currently suing major banks. Trustees for the CDO are one of over 126 "objectors" to an $8.5 billion settlement of Countrywide mortgage "putback" claims that was inked last year. Triaxx is listed in court documents as one of "530 trusts that have claims for damages that approach or exceed $100 billion," according to a letter filed in March before New York Supreme Court Judge Barbara Kapnick. As it happens, another objector against the Countrywide settlement is AIG. So while AIG is suing Triaxx, both are working together in suing the banks. So for those of you keeping score: Triaxx is being sued by Wall Street; Walll Street is suing Triaxx; and the Fed is looking to unload Triaxx on investors. Welcome to high finance.