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Toxic mortgage bond sales to be probed

The Serious Fraud Office is investigating potentially fraudulent sales of mortgage-backed securities in the UK in the run-up to the financial crisis.

The probe comes after it emerged that US regulator Federal Housing Finance Agency is filing lawsuits against 17 banks for their role in the sale of toxic mortgage bonds to Fannie Mae and Freddie Mac between 2005 and 2007.

The Royal Bank of Scotland, HSBC and Barclays are among the banks involved.

A spokeswoman for the SFO says: “The scoping exercise is a development of earlier work over the last two or three years looking at Citybased fraud risks. One aspect of this is asset-backed securities.”

It has been reported that securities packaged by Deutsche Bank are among the deals being examined by the SFO.

It is also believed to be looking into Goldman Sachs, including the Timberwolf deal, a mortgage security that was underwritten by the bank in 2007.

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  • Peter L. Griffiths 31st October 2011 at 2:52 pm

    Mortgage backed securities originating from Fannie Mae make up most of the toxic assets held by the world’s banks. This situation arises either from the world’s banks misunderstanding the terms of the issue or from a deliberate fraud approved by the United States Government, and overlooked by other Governments.