SEC Official: RMBS Group to Seek Sales Disclosure Concerns

Evidence of insufficient or misleading disclosures during RMBS sales will be a focus of the new Residential Mortgage-Backed Securities Working Group under President Obama’s Financial Fraud Enforcement Task Force, according Robert Khuzami, director of the SEC’s division of enforcement.

“We are looking for evidence that a firm failed to disclose important information when selling these securities–for example, misleading disclosures about the credit quality, conformity with underwriting guidelines, underlying property valuations, and delinquency and defects of mortgages in the RMBS pools,” said Khuzami in remarks prepared for the group’s joint news conference Friday.

“Every failure does not mean that the law was broken, but all of us are committed to identifying the violations that did occur and prosecuting them,” he said.

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