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Home : Investment Banks : UPDATE 2 US SEC s watchdog faults investment bank oversight
UPDATE 2 US SEC s watchdog faults investment bank oversightThe Securities and Exchange Commission failed to adequately supervise investment bank Bear Stearns and limit the amount of risk it took on, according to a report by the agency's internal watchdog issued on Friday.
Bear Stearns, starved of cash as customers and other banks doubted its solvency, was sold to JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) in an emergency sale brokered in March by U.S. officials. The SEC's inspector general found the agency became aware of numerous potential red flags prior to Bear Stearns' sale. These included its concentration of mortgage securities, high leverage, shortcomings of risk management and lack of compliance with international capital standards. But the agency "did not take actions to limit those risk factors," said the audit requested by Republican Sen. Charles Grassley of Iowa. Bear was part of the SEC's Consolidated Supervisory Entity (CSE) program, in which five large investment banks volunteered to be monitored for capital and liquidity levels. http://www.reuters.com/article/etfNews/idUSN2636060020080926 383 times read
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