SEC Puts JPMorgan In Hot Seat Over CDO Deal

Law360, New York (November 2, 2010, 1:41 PM EDT) -- The U.S. Securities and Exchange Commission is reportedly probing whether JPMorgan Chase & Co. allowed Illinois-based hedge fund Magnetar Capital LLC to improperly select assets for a $1.1 billion deal backed by subprime mortgages.

The agency is investigating whether JPMorgan failed to disclose to investors that Magnetar chose some of the assets underlying a collateralized debt obligation made up of pieces of other CDOs known as Squared while also betting against segments of the deal, ProPublica reported Monday, citing sources familiar with the matter.

JPMorgan, which...
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