RMBS Working Group Launches Website to Report Fraud

With the hope that whistleblowers will sound their horn, the Residential Mortgage-Backed Securities (RMBS) Working Group launched a website for insiders to report fraud, the Justice Department announced in a statement. “The RMBS website is a new call to those insiders who know about fraud that occurred in the RMBS market, who know it’s time to expose that fraud, and who want to help us hold accountable those individuals and institutions who broke the law in pursuit of bigger paydays,” said Acting Associate Attorney General Tony West. “Although the working group and its members have done a tremendous amount of investigative work already – including having issued more than 25 civil subpoenas – we know that hearing from insiders is particularly valuable. The RMBS Working Group was created in late January 2012 to investigate abuses and fraud in the RMBS market that only exacerbated the financial crises. While still a fairly new group, the unit has been criticized for its slow progress. In a Huffington Post article, Tracy Van Slyke wrote “there has been little to no significant progress to date. President Obama must put the full resources to hold Wall Street accountable. He must demonstrate to the American people that an aggressive, vigorous investigation into the banks is a priority for this administration.” According to the Justice Department, while group’s efforts are sensitive and must remain confidential, in general, the group continues to identify specific RMBS offerings for priority investigation through the use of forensic tools; analyze pending private RMBS lawsuits for connections to existing law enforcement investigations; and organize meetings among investigators, attorneys, analysts, and RMBS market experts and insiders. The department also announced the group’s appointment of a coordinating team, which includes Matthew Stegman, a career white-collar prosecutor, as the group’s coordinator. A collaborative effort, the group is led led by five co-chairs: Assistant AG for the Criminal Division Lanny Breuer, Acting Assistant AG for the Civil Division Stuart Delery, U.S. Attorney for the District of Colorado John Walsh, Director of Enforcement for the SEC Robert Khuzami, and New York AG Eric Schneiderman. The RMBS Working Group is meeting for two days from May 31 to June 1, 2012 so representatives from involved agencies can discuss investigations, identify new targets, and coordinate strategies. By: Esther Cho