Brokers Probed by Finra on Mortgage Security Sales, Person Says

"Jan. 4 (Bloomberg) -- U.S. regulators, concerned brokerages
may have sold clients money-losing securities tied to subprime
mortgages, are seeking information about how the investments were
marketed, a person familiar with the situation said.

The Financial Industry Regulatory Authority, which polices
about 5,100 brokerages, sent letters Dec. 14 to more than a dozen
firms that sell collateralized mortgage obligations, a type of
security linked to home-loan payments, said the person, who
declined to be identified because the inquiry isn't public. One
letter obtained by Bloomberg seeks sales spreadsheets, marketing
materials, and procedures and methods for matching products to
clients' investment needs.

Mounting losses from securities tied to home loans are
prompting regulators to examine how Wall Street firms valued and
promoted the products. Finra Chief Executive Officer Mary
Schapiro said in September the agency was scrutinizing sales of
mortgage-backed products to retirees, and had sent a round of
letters seeking information on the transactions."


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