SEC Investigating JPMorgan Over ‘Squared’ CDO


The SEC is investigating whether JPMorgan, like Goldman Sachs, might have allowed a hedge fund to improperly select assets for a $1.1 billion collateralized-debt obligation it called “Squared.” According to ProPublica, the bank may have knowingly allowed Magnetar to fill Squared with bonds it knew were shit so that the hedge fund could short it, then marketed the CDO to investors as though it were, in fact, Shinola.

When the subprime market tanked, Magnetar made $290 million on the deal, while JPMorgan made $20 million. Shares of JPMorgan are only down by like 30 cents on reports of its alleged skulduggery, thanks to Goldman Sachs’s precedent-setting $550 million, slap-on-the-wrist settlement earlier this year over its similar Abacus deal.

SEC Investigating Deal Between JPMorgan and Hedge Fund Magnetar [ProPublica]