Merrill and Credit Suisse Fined for Subprime Deals

Merrill Lynch and Credit Suisse have agreed to pay fines to settle complaints about the subprime mortgage securities that they sold in the lead-up to the financial crisis, Wall Street’s self regulator announced on Thursday.

The Financial Industry Regulatory Authority fined Credit Suisse Securities $4.5 million and Merrill Lynch $3 million, saying the firms misled investors about the number of bad loans they placed in dozens of securities.

After Merrill Lynch realized it had reported bogus information, the firm quickly corrected the error in 2007. Credit Suisse, however, had still not notified investors or fixed its mistake as of earlier this month, according to Finra.

During the mortgage boom, Wall Street packaged and sold billions of dollars of risky mortgage-backed securities to pension funds, local governments and other large institutional investors. When the housing market collapsed, so did many of the securities, as homeowners fell behind on their mortgages.

http://dealbook.nytimes.com/2011/05/26/merrill-and-credit-suisse-fined-for-subprime-deals/