Justice seeks info on Merrill scandal
The U.S. attorney's office wants SEC data related to its investigation of subprime fraud by Merrill Lynch - report.
NEW YORK (CNNMoney.com) -- In a possible antecedent to a criminal investigation, the Justice Department has asked the Securities and Exchange Commission for information about its investigation of Merrill Lynch & Co., according to a Friday Wall Street Journal report.
The report says that it is unclear whether the SEC has yet agreed to turn over any information; however, the Commission often cooperates with the U.S. attorney's office on such matters.
Merrill Lynch (MER, Fortune 500) allegedly booked inflated prices of mortgage bonds it held, though the investment bank knew that their values had sunk. In the last few months, the brokerage has announced $22.4 billion write-downs of mortgage-backed securities, which led the SEC to begin its investigation.
The news of the possible joint-investigation comes after last week's report that the Massachusetts secretary of state accused Merrill of fraud and misrepresentation when it sold subprime-related debt to the city of Springfield. The secretary said that the brokerage failed to properly disclose to the city the risks of the investments.