Monday, January 28, 2008

Clayton Holdings Dropping Dimes like Huggy Bear



Jan. 27 (Bloomberg) -- Clayton Holdings Inc., the Connecticut company that conducts due diligence for banks on pools of loans, is cooperating with a New York probe of whether Wall Street firms failed to sufficiently disclose risks tied to subprime lending.

Clayton will receive immunity from civil and criminal prosecution in New York, Jeffrey Lerner, a spokesman for New York Attorney General Andrew Cuomo, confirmed today in an e-mail. In exchange, Clayton will provide documents and testimony from officers, directors and other employees.

``We have complied with a subpoena to produce due diligence reports on various pools of loans that we had reviewed for issuers of mortgage-backed securities,'' Clayton Chief Executive Officer Frank Filipps said in an e-mailed statement.

Clayton, based in Shelton, was subpoenaed in June, Filipps said. New York is among a handful of states, along with the U.S. Securities and Exchange Commission, probing the mortgage industry as foreclosures have risen nationwide. Banks including Citigroup Inc. and Merrill Lynch & Co. that packaged subprime loans as investments have written down the value of the securities by billions of dollars.

The agreement between New York and Clayton was first reported today in The New York Times. Clayton is the largest provider of mortgage-related due diligence to Wall Street firms, the company said in its statement.

1 comment:

Morty said...

Wow! I can't wait to see the "due diligence" that occurred. Gotta be some real what-were-you -thinking type stuff.