SEC Opens Subprime Probe

Cox announces investigations into CDOs in wake of Bear Sterns tremors
By Caroline Zimmerman,  Newser User
Posted Jun 27, 2007 2:17 PM CDT
Securities and Exchange Commission (SEC) Chairman Christopher Cox, center, and his fellow commissioners, from left, Annette Nazareth, Paul Atkins, Roel Campos and Kathleen Casey, listen to opening remarks...   (Associated Press)
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(Newser) – The feds are investigating the controversial bundles of financial services that have recently shaken the market and sparked a spate of leveraged buyouts, the Journal reports. SEC chief Christopher Cox told a congressional panel yesterday that "about 12 investigations" were under way into CDOs, shared debt packages reliant on faltering subprime mortgages.

Cox also said the commission is looking into last week's liquidity crisis at two Bear Stearns hedge funds that were heavily backed by CDOs. Bear Stearns announced yesterday that it will be cheaper than expected to bail out the funds, which still owe billions to backers.