The FBI has begun an investigation of 14 companies for possible fraud or insider trading violations in connection with subprime loans, according to an AP article. While the companies have not been identified, they are said to involve businesses across the industry, including lenders and financial firms that bundle loans into securities.
‘On insider trading, we're looking in some cases at whether executives were aware that the value of their holdings would be going down and the executives traded on that information,’ Neil Power, chief of the FBI economic crimes unit, told CNN. ‘On accounting fraud, we're looking at housing developers who may have reported cash reserve accounts to reflect falsely inflated values.’
The CNN article adds that Kenneth Kaiser, FBI assistant director for the Criminal Investigative Division, said the FBI has developed an initiative focused on subprime mortgage loan fraud and is working with investigators from other federal agencies.