Three Major U.S. Financials to Be Sued by SEC Over Subprime MBS Disclosures

At least three of the largest U.S. banks are slated to be sued by the U.S. Securities and Exchange Commission in regards to a lack of disclosure about risks surrounding subprime mortgage bonds (a.k.a. - mortgage-backed securities (MBSs)) linked to the financial meltdown of 2008 - 09.

Wells Fargo (NYSE: WFC), Goldman Sachs (NYSE: GS), and JPMorgan (NYSE: JPM) will also be subject of the hearing, according to recent data. On Tuesday, both Wells Fargo and Goldman Sachs disclosed receipts of a Wells notice from the SEC, indicating the agency's plans to file suits against the duo. JPMorgan is expected to disclose a similar notice on Wednesday.

The MBSs in question were issued from 2006 - 08, and the SEC is questioning whether or not the institutions misrepresented the loan pool quality which were sold to investors.

For Goldman, the notice is tied to $1.3 billion of subprime MBSs sold in 2006.

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