Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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New Tranche to Enhance Trading Opportunities on Manufactured Mortgage Defaults

CDS IndexCo and Markit Announce Roll of the CMBX Indices
October 25th, 2007

CDS IndexCo LLC ("CDS IndexCo"), a consortium of 16 investment banks, and Markit Group Limited ("Markit"), the leading provider of independent data, portfolio valuations and OTC derivatives trade processing, announced today that the CMBX indices will roll tomorrow, October 25, 2007.

The CMBX is a synthetic family of indices based on U.S. commercial mortgage-backed securities (CMBS) which provides investors with liquid, transparent exposure to CMBS of a unique vintage profile. A new series of CMBX is issued every six months.

The CMBX Series 4 includes a new AJ tranche. The AJ tranche, which is the most subordinate of the AAA rated tranches, has been added to CMBX in order to provide enhanced trading opportunities to institutional investors seeking exposure to an additional credit class.

CMBX Series 4 references a basket of 25 of the most recently issued CMBS deals from the previous six month period. The seven index tranches contain bonds rated AAA, AJ, AA, A, BBB, BBB- and BB respectively. Ratings are required from at least two of the following rating agencies: Moody's, Fitch and Standard & Poor's.

The CMBS reference obligations are selected through an algorithm that identifies the most recently issued deals over a minimum size of $700 million, and which satisfy additional diversity requirements. In order to qualify for index selection, the following rules apply: Deals must be secured by at least 50 separate mortgages that are obligations of at least 10 unaffiliated borrowers; no more than 40% of the underlying mortgages can be secured by properties in the same state; and no more than 60% of the properties can be of the same property type.

Markit is the administration, calculation, and marketing agent for CMBX, and is the central source of information about the index. Responsible for the index's rules, operations and analytics, Markit publishes daily spreads on its website, provides monthly fixed and floating payment amounts, and supplies a calculator for the settlement of trades. Additional details such as a complete list of reference obligations, coupons and Index RED codes can be viewed at: CMBX is based on the standard ISDA Pay-As-You-Go template.

The CMBX Licensed Dealer Group includes the following: Bank of America; Barclays; Bear Stearns; Citi; Credit Suisse; Deutsche Bank; Goldman Sachs; JPMorgan; Lehman Brothers; Merrill Lynch; Morgan Stanley; Nomura International; RBS Greenwich Capital; UBS; and Wachovia. 
For further information on CMBX see or contact:
Markit - Teresa Chick Tel: +44 20 7260 2094 Email: CDS IndexCo - Michael Mandelbaum Tel: +1 310 785-0810 Email:

About CDS IndexCo

CDS IndexCo is a consortium of 16 investment banks which are licensed as market makers in the ABX, CMBX and CDX Indices. The market makers include: ABN AMRO, Bank of America, Barclays Capital, Bear Stearns, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, UBS, and Wachovia.

About Markit

Markit Group Limited is the leading provider of independent data, portfolio valuations and OTC derivatives trade processing to the global financial markets. The company receives daily data contributions from 90 dealing firms, and its services are used by almost 1,000 institutions to enhance trading operations, reduce risk and manage compliance. 

This sort of financial engineering is at the very root of MSF.  More of a CARTEL than a Consortium.  
CDS IndexCo -- anybody heard of this LLC ?  Looks like they've been at it for a couple years.  
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Didn't realise it wasn't spelled out in the article:
CDS IndexCo LLC = Credit Default Swaps Business

Seriously, how many of these cartel members have effective Chinese Walls between trading desks and mortgage servicing companies?  Easy to see how the game was rigged so well for so long.

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There is a good article in FORBE'S about this very point, that just came out.

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Can't help but wonder if the "Cartel" configured CDS IndexCo LLC as elaborate coverup for activities between their traders and servicing companies.

Corruption! Everywhere You Look
Friday, October 26, 2007

A senior Securities and Exchange Commission official said on Thursday insider trading appeared to be "rampant" among Wall Street professionals and the agency has formed a working group to focus on it.

"I believe we're going to see more insider trading cases," Linda Chatman Thomsen, the SEC's enforcement director, told reporters on the sidelines of a securities fraud conference.

"I am disappointed in the number of cases we are seeing by people who make an abundant livelihood in the market that they are sort of abusing by insider trading," Thomsen said, referring to cases already brought against professionals this year.

Insider trading "appears to be rampant" among Wall Street securities professionals, she added.

Alice Fisher, assistant attorney general with the Justice Department's criminal division, echoed Thomsen's sentiment and said: "The number of insider trading cases don't seem to be going away."

In the past year, SEC enforcement lawyers have brought increasing numbers of insider trading lawsuits and settlements. Recent high-profile cases include charges against a husband and wife in Hong Kong for trades in Dow Jones & Co Inc shares ahead of News Corp's $5 billion takeover bid, and guilty pleas from three former Countrywide Financial Corp (CFC.N: Quote, Profile, Research) executives for trading company shares ahead of a disappointing profit report.

Also, in March U.S. prosecutors charged 13 people, including employees at top Wall Street banks UBS (UBSN.VX: Quote, Profile, Research), Morgan Stanley (MS.N: Quote, Profile, Research) and Bear Stearns Cos Inc (BSC.N: Quote, Profile, Research) in what they called one of the most pervasive trading rings since the 1980s. The SEC also brought civil charges against 11 people, as well as against three hedge funds.

Insider trading involving hedge funds is the focus of one of the four internal working groups the SEC has set up to tap expertise and coordinate efforts throughout the agency. The $1.8 trillion hedge fund industry guards its secrecy and complex trading strategies.

The SEC also has a working group looking at municipal securities, one focused on subprime mortgage lending issues, and a group examining stock options backdating by executives.

Thomsen expected more enforcement actions related to options backdating, but would not provide a time frame.

"There will be more to come," she told the securities law conference.

More than 180 companies have been investigated by the SEC or have conducted their own internal inquiries into possible manipulation of stock option grant dates.

The SEC has brought civil charges against former executives at several companies, including Apple Inc's (AAPL.O: Quote, Profile, Research) former general counsel.

In the subprime lending area, Thomsen said there was a wide variety of potential violations, including disclosure issues and the packaging of subprime loans.

At the same conference, Peter Bresnan, the SEC's deputy director of enforcement, highlighted 10b5-1 trading plans and said the agency had several under investigation.

The plans allow corporate executives to file a trading plan with the agency for future sales of their stock. The SEC has been looking at the general issue of whether executives are illegally trading on insider information and using the preset trading plan to avoid suspicion.

Bresnan would not comment on reports the SEC has opened an informal probe into stock sales by Countrywide Chief Executive Angelo Mozilo. The agency has not confirmed or commented on the reports.

Separately, Bresnan said the agency was seeing a trend in larger rings involving more people, international cases, as well as those involving securities professionals and hedge funds.

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