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SEC Probes Firms Over Questionable Securities Deals: WSJ

Report: Potentially Illegal Wall Street Practice Under Investigation
Reuters
FILE- This Dec. 17, 2008 file photo shows the exterior of the Securities and Exchange Commission (SEC) headquarters in Washington. An American judge for the U.S. Securities & Exchange Commission has ruled the China arms of global accounting firms should be barred from providing audits for U.S.-traded companies in a dispute that might force major corporate names such as oil giant PetroChina and search engine Baidu to withdraw from American stock exchanges. (AP Photo, File)
FILE- This Dec. 17, 2008 file photo shows the exterior of the Securities and Exchange Commission (SEC) headquarters in Washington. An American judge for the U.S. Securities & Exchange Commission has ruled the China arms of global accounting firms should be barred from providing audits for U.S.-traded companies in a dispute that might force major corporate names such as oil giant PetroChina and search engine Baidu to withdraw from American stock exchanges. (AP Photo, File)

March 24 (Reuters) - The U.S. Securities and Exchange Commission has launched an investigation into the increasing number of complex bond deals on Wall Street that may create new opportunities for fraud, the Wall Street Journal reported on Monday.

Investigators with the SEC are examining if banks and companies are using the bond deals to hide risks illegally, the newspaper reported, citing sources close to the matter.

The securities are packages of corporate loans and debts that are assembled and sold by Wall Street Banks to investors. They have gained in popularity after the financial crisis as investors chase riskier investment products. (WSJ story: http://link.reuters.com/vuj87v)

The SEC is also investigating whether a number of banks including Barclays, Citigroup, Deutsche Bank AG , Goldman Sachs Group, Morgan Stanley, Royal Bank of Scotland and UBS AG have been cheating their clients by mispricing certain bond deals.

The SEC was not immediately available for comment outside of normal business hours. (Reporting by Narottam Medhora in Bangalore; Editing by Lisa Shumaker)

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