Brokers Probed by Regulators on Mortgage Security Sales
U.S. regulators, concerned that brokerages may have sold clients money-losing securities tied to subprime mortgages, are seeking information about how the investments were marketed, Bloomberg News reported today. The Financial Industry Regulatory Authority (FINRA), which polices about 5,100 brokerages, sent letters Dec. 14 to more than a dozen firms that sell collateralized mortgage obligations. Mounting losses from securities tied to home loans are prompting regulators to examine how Wall Street firms valued and promoted the products. FINRA CEO Mary Schapiro said in September that the agency was scrutinizing sales of mortgage-backed products to retirees, and had sent a round of letters seeking information on the transactions.

