JPMorgan Chase and UBS are among banks that received federal requests for information about trades in mortgage-backed securities after the financial crisis, two people briefed on the matter said.
The investigation is in early stages, said the people, who asked not to be named because the inquiries were confidential. JPMorgan, the biggest U.S. lender by assets, disclosed the probe in an August filing, saying it received subpoenas and requests for information from the Securities and Exchange Commission, the special inspector general for the Troubled Asset Relief Program and the U.S. Attorney's office in Connecticut.
The largest global banks lost billions of dollars on mortgage-backed debt during the financial crisis as U.S. home prices plunged and the market for such assets dried up. While the securities rebounded after the crisis, markets remained illiquid with wide spreads between bids from buyers and sellers.
Barclays, Citigroup, Deutsche Bank, Goldman Sachs, Morgan Stanley and Royal Bank of Scotland are also under scrutiny in the probe, the Wall Street Journal reported.
Spokesmen for New York-based JPMorgan and Zurich-based UBS, as well as the banks named by the Journal, said their firms had no comment. The SEC's John Nester and Troy Gravitt at the special inspector general for TARP in Washington declined to comment.
The inquiries came after ex-Jefferies & Co. managing director Jesse C. Litvak was arrested in January 2013 and faced charges that he defrauded customers of more than $2 million on trades of residential mortgage-backed securities from 2009 to 2011. Alleged victims include investment funds, among them six established by the U.S. Treasury Department as part of its response to the financial crisis. Litvak pleaded not guilty.
Litvak lost a bid to dismiss the charges in October. He's accused of misrepresenting the asking price from sellers of residential mortgage-backed securities to buyers and vice versa, keeping the difference for Jefferies, Connecticut U.S. Attorney David Fein said at the time of Litvak's arrest.
Tom Carson, a spokesman for the U.S. Attorney, declined to comment on the Journal's story or any possible probe and didn't make the prosecutors in the Litvak case available for interviews. Patrick Smith, Litvak's lawyer, didn't immediately return a telephone message.