Investment bank hid info on sub-prime mortgage products from investors, lawsuit says
The one Wall Street investment bank to emerge from the mortgage meltdown relatively unscathed is now facing accusations of fraud, drawing new calls for tighter regulation of the U.S. financial industry. A civil suit filed by Securities and Exchange Commission in New York alleges that the bank marketed a sub-prime mortgage product without revealing vital information—specifically, that a major hedge fund had bet against the securities. Investors are said to have lost roughly $1 billion on the product, known as Abacus.