WASHINGTON (Reuters) – The FBI’s investigation of 14corporations in a crackdown on improper subprime lending couldexpand to other companies, but the complex probes may take sometime before any charges are brought, a federal law enforcementofficial said on Wednesday.
"Like any white-collar crime investigation, these are verycomplicated, time-consuming investigations involving theexamination of numerous records and interviews of variouspeople. They don’t happen in a short period of time," the FBIofficial said.
The official said criminal charges were not imminent in anyof the investigations, and was unable to predict how long theinvestigations would take. A Justice Department spokesmandeclined to comment when asked when charges might be announced.
FBI officials told a briefing on Tuesday the investigationscovered corporations across the financial services industry,ranging from mortgage lenders and investment banks todevelopers and subprime lenders.
They said the investigations involved possible accountingfraud, insider trading and other violations of criminal law.
FBI spokesman Bill Carter said on Wednesday that the firstinvestigations began early last year, that two moreinvestigations recently were opened, and that more companiescould be probed.
Carter declined to identify any of the companies underinvestigation. He said the FBI was working closely with theSecurities and Exchange Commission in some of theinvestigations.
FOCUS ON PRICING, INVESTORS
The SEC has opened about three dozen civil investigationsinto the subprime market collapse.
Targets of the SEC probe include Swiss bank UBS AGand U.S investment banks Morgan Stanley,Merrill Lynch, Bear Stearns, as well as bondinsurer MBIA.
The SEC, which has formed an internal subprime mortgagetask force, is looking at how financial firms pricedmortgage-based securities and whether they should have toldinvestors earlier about the declining value of thosesecurities.
Jacob Frenkel, a former SEC enforcement official andcriminal prosecutor who now handles white-collar criminalmatters in private practice, said the investigations would taketime.
"First, the commission is not going to pull the trigger andbring a case until it is satisfied that there is a provableviolation of law," Frenkel said. "The arrival on the scene ofthe Department of Justice could alter the timetable."
The U.S. attorney in Brooklyn, New York, and the FBIearlier launched a criminal investigation into twomortgage-related hedge funds at Bear Stearns that collapsedlast year.
Carter said the FBI around the country has 34 mortgagefraud task forces and working groups that include other federalagencies and state and local law enforcement officials.
"We consider it a significant and growing crime problem,"he said.
(Additional reporting by Randall Mikkelsen, Karey Wutkowskiand Rachelle Younglai)
(Reporting by James Vicini; Editing by Xavier Briand)
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