The Securities and Exchange Commission sued ICP Asset Management and
its founder, Thomas Piore, alleging that they defrauded clients in
pooled mortgages known as the Triaxx series, totaling $11 billion,
including deals that were insured by American International Group,
the Wall Street Journal reported. AIG and Financial Guaranty Insurance provided insurance on the mortgages, known as collateralized debt
obligations, or CDOs, and had to sign off on any new securities
purchases, according to the SEC. The federal government bailed out AIG
in September 2008 in part because of souring CDOs that the firm had
insured. The SEC is also alleging that as
the credit markets were deteriorating in 2007 and 2008, Priore caused
the Triaxx CDO holders to buy bonds at inflated prices to benefit ICP
or another CDO under distress. The lawsuit, which was filed in federal
court in Manhattan, is the SEC’s first allegation since the credit
crisis that an asset manager overseeing CDOs mismanaged the accounts. [WSJ]