As some real estate investment trusts try and go public and regulators push for more disclosures from REITs, some non-traded REITs are proving to have far lower values than anticipated, the Wall Street Journal reported. For instance, Retail Properties of America, a very large retail REIT based in Oak Brook, Ill., saw shares valued at $3.20 at it’s initial public offering last month, the Journal said. A year prior the firm was valued at about $6.95 a share. A number of other REITs are in the same boat, the Journal said. [more]

Nine real estate investment trusts have filed to sell approximately $2.5 billion in shares since the beginning of the year, the most significant volume of deals since 2009, the Wall Street Journal reported, and the sales aren’t over yet. A $600 million offering from Pacific Investment Management and a $500 million deal by a unit of hedge fund Fortress Investment Group are both slated for the coming months.

Once one of the most desirable commodities on the stock market, reviews by the Securities and Exchange Commission could turn the tide for REITS, meaning they’ll be less likely to go public in the future.

The SEC is distinguishing between REITs that manage and operate real estate and those that invest in real estate securities, the Journal said. [more]

Fannie Mae and Freddie Mac could be close to a settlement with the
Securities and Exchange Commission, the New York Times reported, over whether the companies adequately disclosed their exposure to risky subprime loans. Under
the proposed agreement, there would be no monetary penalty or
admission of fraud. But the settlement would represent the most
significant acknowledgement yet by the mortgage companies that they
played a central role in the housing boom and bust, according to the
Times. The negotiations between Fannie and Freddie have been
going on since at least early summer, and a deal may not be realized
until later this year. The investigation, which initially included
civil and criminal elements, started three years ago. [more]

Bank of America lawyers knew seven months beforehand that American International Group was going to sue the bank over $10 billion in bad mortgages, but did not mention the threat of the lawsuit in its quarterly regulatory filing to the Securities and Exchange Commission, Reuters reported. Management also did not discuss it on conference calls about quarterly results and other pending legal claims. Some lawyers say that the SEC’s disclosure rules are not clear and BofA may have been justified in not revealing the lawsuit before it was filed. But others say that banks have an obligation to disclose legal threats that could have major consequences. [more]

JPMorgan Chase has been subpoenaed by the U.S. Securities and Exchange Commission over mortgages issued before the real estate collapse that have since soured, Bloomberg News reported. The move comes amid an SEC probe into the mortgage practices of several U.S. banks, including Credit Suisse, which was subpoenaed last week. The JPMorgan subpoena is seeking information related to Bear Stearns mortgage practices, after bond insurers alleged that the bank, which JPMorgan acquired in 2008, had demanded refunds from originators but then failed to share those refunds with sellers. [more]

Six months after Goldman Sachs paid $550 million to settle government fraud charges related to a mortgage deal, it’s getting hit with a second suit over the same bonds. ACA Financial Guaranty, which had held bond insurance and invested in the Abacus collateralized debt obligation, or CDO, is accusing Goldman of “fraudulent activities” for “unjust enrichment,” and is suing the firm for at least $120 million, the Post reported. The suit alleges that Abacus was “worthless” and that it was “misled by Goldman’s fraudulent activities.” [more]

Citigroup failed yesterday to win a judge’s approval to pay $75 million to settle with the Securities and Exchange Commission over claims the bank misled investors by understating subprime-related mortgage investments, Bloomberg news reported. Citigroup made misstatements on earnings calls and in financial filings about assets tied to subprime loans as the housing crisis unfolded in 2007, the SEC said in a July 29 complaint filed in federal court, with some disclosures omitting more than $40 billion in investments. Since Judge Ellen Huvelle wasn’t satisfied with Citigroup’s written proposal and wanted more information, attorneys are to submit a new round of court filings starting Sept. 8, said Matthew Miller, an attorney for a Citigroup shareholder. SEC spokesperson Kevin Callahan said the agency “will provide the court with additional information requested.” [Bloomberg]

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Goldman Sachs has agreed to pay $550 million to the Securities and Exchange Commission to settle charges of securities fraud linked to mortgage investments, the New York Times reported. Under the settlement — the largest penalty ever paid by a Wall Street firm — Goldman will pay $300 million in fines to the Treasury Department, with the rest serving as restitution to investors in the mortgage-linked security. Goldman will not admit wrongdoing, according to the agreement, though it will concede that its marketing materials for the investment “contained incomplete information,” according to a press release from the SEC. Goldman will also change several business practices, including the way it draws up marketing materials for complex mortgage securities and the way it educates employees. The settlement must still be approved by Judge Barbara Jones of Manhattan’s Federal District Court. [NYT]

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The Manhattan U.S. Attorney’s office has launched a criminal probe into whether Goldman Sachs or its employees committed securities fraud during mortgage trading, sources told the Wall Street Journal. The news comes two weeks after the Securities and Exchange Commission filed a civil securities fraud suit against the Wall Street powerhouse and one of its traders over negative bets against the housing market.
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Goldman Sachs may opt to settle its fraud case with the U.S. Securities and Exchange Commission in order to avoid continued public humiliation after being grilled over whether it defrauded mortgage investors, sources told the New York Post. The investment bank, which is accused of misleading buyers and betting against the mortgage market, has endured derisive senate inquiry, after the SEC’s April 16 announcement that it had filed suit against Goldman. [more]