Serious Fraud Office takes US style look at banking

The Serious Fraud Office has said that they would be examining bank securities that are mortgage backed, but as yet weren’t launching an official probe. This comes in the wake of US officials suing banks over such assets. A spokeswoman for the SFO told the AFP that they were conducting a scoping exercise into those UK banks who have sold securities that were asset backed.

This statement comes after the Financial Times reported that the SFO were looking into whether or not lenders had fraudulently misrepresented deals in the UK.  The spokeswoman added that this was an area that they had been interested in for quite a while but stresses that there was no active investigation taking place at the moment.

The FT had said that securities that had been packaged by Deutsche Bank were among the half a dozen deals that the SFO were examining. The daily newspaper for the business world also said that the SFO had spent two years closely examining the sales of asset backed securities, which it then described as bonds that were backed by repayments on a large pool of loans, like mortgages.

The authorities in the US have sued 17 of the top US and international banks over what they describe as billions of dollars worth of losses on the mortgage backed securities that plummeted in value during the financial crisis in 2008.

In court papers which they filed, the FHFA, Federal Housing Finance Agency, alleged that in some of the cases, the lenders had committed fraud by selling almost $190bn in securities to Freddie Mac and Fannie Mae, the mortgage giants who had needed bailouts from the US Government.