NEW YORK - The Federal Bureau of Investigation is probing one or more asset-backed transactions offered by Merrill Lynch & Co. more than two years ago, according to an individual interviewed in the investigation.
Mobile-Home-Backed Securities
The individual said the investigation concerns at least one transaction offered by Western Savings and Loan Association. a now insolvent Arizona thrift.
Western Savings issued several securities backed by mobile home loans in the late 1980s.
The FBI has inquired about the role in the Western Savings deals played by two bankers at Merrill. Lynch's asset-backed group, according to the person interviewed.
He identified one of them as Thomas Capasse, the former co-head of Merrill Lynch's asset-backed group.
Reason for Probe Unclear
An employee who answered the telephone in the FBI's securities fraud unit said Ed Stroz, a special agent, had been assigned to the investigation of Mr. Capasse and Merrill Lynch. The employee said Stroz was on vacation and could not be reached.
Contacted on Thursday, Mr. Capasse said he could not comment "on any of this," and referred questions to a Merrill Lynch source.
The reason for the investigation and why the FBI is involved is unclear. Sources familiar with the agency's inquiries say several individuals - including past employees of Merrill Lynch - have been interviewed by the FBI
Mr. Capasse's status at Merrill Lynch was diminished in early August when the firm unexpectedly hired Michael Normile, the former head of securitization at Salomon Brothers Inc.. to head the firm's asset-backed group.
Associates Taken Aback
The change officially meant that coheads Mr. Capasse and Jack Ross would report to Mr. Normile, a move that surprised rivals, investors, and officials at companies who worked with the pair.
Mr. Capasse and Mr. Ross had headed the asset-backed group since the departure of Craig Goldberg in 1991.
The announcement particularly surprised members of Merrill's asset-backed unit who had been told by Mr. Capasse on Aug. 9, the day before Mr. Normile's arrival, that Mr. Normile would co-head the group with him.
Mr. Ross had been expected to move to a role as a senior producer, sources within the firm said.
