Stifel Financial is reportedly the latest target in a regulatory probe into sales of collateralized debt obligations.
The Wall Street Journal reports that the Securities and Exchange Commission has broadened its probe of mortgage bonds sold by the company to include whether the securities were suitable for five Wisconsin school districts.
The Journal reports the districts suffered steep losses on the products, and the SEC is trying to determine if Stifel should even have sold the schools the three different CDOs. Trusts set up by the schools invested a total of about $200 million into the products.
The Journal noted that, amid a broad investigation, this is the SECs first foray into whether such products were suitable for investors.
Nearly every major Wall Street firm has been asked for information in the SECs probe, and most recently the credit rating agencies, such as McGraw-Hill's Standard & Poors and Moodys , were brought into the investigation.
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