SEC Official Anticipates More Subprime Fraud

The U.S. Securities and Exchange Commission’s enforcement official believes that it’s too early to determine whether or not the current economy problems solely involve securities fraud .

Reports claim that aside from securities violations, bad business decisions could also be playing a part in the current turmoil of the market.

Reasoning Behind Market’s Problems

Linda Thomsen, the SEC enforcement director, says that more fraudulent activity has been linked to the current mortgage crisis. This issue is expected to be further revealed as financial investors try to get a better grasp on the tough business environment they’re being faced with.

“Once things start going south, people start behaving badly,” explained Thomsen at a recent event regarding the competitive nature of the capital markets. “People try to cover up what they’re finding and justifying things in their own minds.”

SEC Investigates

According to Thomsen, the SEC is working on three dozen subprime-related investigations that are open. The investigations reportedly involve a wide spectrum of financial players throughout the U.S. The SEC is supposedly probing subprime mortgage lenders, credit raters and home builders and insurers, among others, in their investigation.

(Source: Reuters)

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