WASHINGTON — The government opened a new front in its probe of financial firms’ dealings in the mortgage market, filing civil fraud charges Monday against an investment adviser and his firm in connection with complex securities during the 2007 housing bust.
The Securities and Exchange Commission accused Thomas Priore and ICP Asset Management of fraudulently managing the securities in a way that cost investors tens of millions of dollars. The SEC also said Priore and the New York firm he owns and heads as president improperly reaped millions in fees and undisclosed profits at the expense of clients.
The SEC is seeking injunctions and unspecified restitution and fines.
Priore and ICP denied the SEC’s charges and said they would contest them in court. In a statement, Priore and the firm said they “at all times acted in the best interests of their clients and intend to vigorously defend themselves against the SEC’s allegations.”
The allegations involve four multibillion-dollar collateralized debt obligations, the type of pooled securities that are the focus of the SEC’s civil fraud charges against Wall Street titan Goldman Sachs Group Inc.
Buyers of CDOs made money from investments if the debt was paid off. But as homeowners started falling behind on mortgages and defaulted in 2007, CDO buyers lost billions.
