Seven More Firms Admit Getting Subpoenas in Federal Probes

Seven more firms acknowledged that they received subpoenas in the ongoing federal investigation into bond-related derivatives and reinvestment in the municipal market, Bloomberg Markets reported today.

Citing quarterly filings that the firms submitted to California, Bloomberg said that Bear Stearns Cos., Cain Brothers, George K. Baum & Co., Morgan Keegan & Co., Piper Jaffray Cos., UBS AG, and Wachovia Corp. were among the firms subpoenaed in the parallel investigations being conducted by the Securities and Exchange Commission and the U.S. Justice Department.

JPMorgan, which also was listed in the Bloomberg story, already had confirmed receiving the subpoenas.

The investigation kicked off in mid-November when Federal Bureau of Investigations agents raided the offices of three guaranteed investment contract brokers. Since then, more and more firms have revealed that the regulators contacted them for information on their practices related to swaps and derivatives sold to governments, as well as GICs.

The parallel probes grew out of SEC inquiries and tax-exempt bond audits conducted by the Internal Revenue Service over the past six years that uncovered a wide variety of problems with bond and investment yields.

The Bond Buyer reported last fall that dozens of firms were thought to have received subpoenas. To date, it is thought that the SEC sent subpoenas to at least 21 firms and that the Justice Department sent them to at least 24 firms.

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