Many of the banks and credit rating agencies subpoenaed by New York Attorney General Andrew Cuomo said Thursday that they would cooperate with his investigation into the propriety of their relationships.
Cuomo has subpoenaed eight banks in a probe into whether misrepresentations were made about some securities backed by mortgages in order to improve their credit ratings, a person familiar with the investigation said.
The companies are Bank of America Corp.'s Merrill Lynch & Co., Morgan Stanley, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., UBS AG, Credit Suisse Group and Credit Agricole.
The three major rating agencies — McGraw-Hill Cos.' Standard & Poor's, Moody's Corp.'s Moody's Investor Service and Fimalac SA's Fitch Inc. — also have received subpoenas in the probe, the person said.
The subpoenas were issued late Wednesday, the person said.
The investigation is in its early stages and it's unclear if it could ultimately result in criminal or civil charges.
Merrill Lynch, Deutsche Bank, UBS, Moody's, Credit Suisse, Citigroup and Fitch said they would comply with the subpoenas and cooperate with the probe. Goldman Sachs, Morgan Stanley and Credit Agricole declined to comment.
S&P did not immediately respond to a request for comment.
The subpoenas, which seek a broad range of documents, are focused on the banks' interactions with the rating agencies regarding a variety of structured-finance products, including collateralized debt obligations and other asset-backed securities.
CDOs are securities which can include pools of mortgage bonds as part of their underlying assets.
The New York Times reported the subpoenas Thursday.
The probe comes as federal prosecutors in Manhattan and the Securities and Exchange Commission are looking into whether several banks made misrepresentations to investors about CDOs.
The Wall Street Journal reported Thursday that the U.S. Attorney's office in Manhattan is conducting a preliminary criminal investigation of JPMorgan Chase & Co., Citigroup, Deutsche Bank and UBS, citing a person familiar with the matter.
The Journal has reported Goldman Sachs and Morgan Stanley are under preliminary criminal scrutiny.
The SEC also has issued civil subpoenas to the banks in a probe of mortgage-backed securities, the Journal reported, citing a person familiar with the matter.