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The Honolulu Advertiser
Posted on: Friday, September 21, 2007

SEC investigation into housing mess launched

By Marcy Gordon
Associated Press

WASHINGTON — The government is casting a wide net in its scrutiny of Wall Street banks, investors, credit-rating agencies and others and the role they played in the subprime mortgage crisis.

"We look at all the players" to determine whether there were missteps in accounting and disclosure and possible insider trading, says Walter Ricciardi, deputy enforcement director at the Securities and Exchange Commission.

In a telephone interview Wednesday, Ricciardi said the SEC is asking mutual fund managers, lawyers, company executives and credit-rating analysts for details of their involvement in trading of securities that came from bundled mortgages.

Amid financial market turmoil that has raised the specter of stalling economic growth, federal securities regulators and Congress are probing the $6 trillion market of globally traded securities made from home loans.

As housing market conditions worsen, regulators are realizing how hard it is to track the trail of transactions from home borrower to lender to investor, and that it may be even harder to determine blame and liability on some of the players.

The SEC, as well as Congress and European market regulators, also are reviewing the role that Standard & Poor's, Moody's Investors Service and Fitch Ratings played.