The Securities and Exchange Commission is examining the near-collapse of two Bear Stearns hedge funds that made bad bets on the mortgage market, The Associated Press reported Wednesday citing a person familiar with the matter.
The SEC inquiry is "informal" at this point and has not resulted in any subpoenas or formal document requests, the AP reported citing this person, who spoke about the matter on condition of anonymity. The probe was reported by BusinessWeek and CNBC on Monday.
SEC Chairman Christopher Cox disclosed at a House hearing on Tuesday that the agency has started about a dozen investigations related to complex aggregations of debt known as collateralized debt obligations, in which hedge funds have increasingly invested, the AP reported.
The situation took on urgency last week with the near-collapse of two hedge funds managed by Wall Street investment firm Bear Stearns Cos. Bear Stearns said Tuesday it would provide about $1.6 billion in secured financing to its Bear Stearns High-Grade Structured Credit Fund after the fund sold some assets to partially mollify lenders. Bear said it is not providing any financing to the second fund, the AP reported.-New York State Society of Certified Public Accountants
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