Merrill Lynch is being probed by the Securities and Exchange Commission (SEC) over its sale of a mortgage-related security created for hedge fund firm Magnetar, Financial Times reports. The regulator is investigating whether Merrill mispriced assets in the $1.5 billion collateralized debt obligation (CDO), called Norma.
The watchdog is also looking into whether the bank told buyers that Magnetar helped select assets. New York-based NIR Capital Management served as the manager for the CDO.
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