| US Mizuho arm to settle fraud suit for $127m |
NEW YORK A US subsidiary of Japan’s Mizuho Bank and three former employees have agreed to settle a suit brought by the US financial markets authority for fraud upon the payment of $127.5 million, the authority announced on Wednesday.
In a case dating back to 2007, Mizuho Securities USA Inc. was accused of misleading investors with “dummy assets” to inflate the credit ratings in a collateralized debt obligation (CDO) the company sold.
“The firm made approximately $10 million in structuring and marketing in fees in the deal,” read a release from The US Securities and Exchange Commission (SEC). The CDOs were assembled in a financial vehicle called Delphinus that found itself in default in 2008, before liquidation in 2010, sustaining “substantial losses.”
“This case demonstrates once again that bankers and market participants who embrace a ‘get the deal done at all costs’ strategy will be identified, charged, and punished,” said director of the SEC’s enforcement divisions, Robert Khuzami.
Mizuho indicated, in its own release, that the settlement would not affect its results, and that it had fully cooperated with the SEC.
Agence France-Presse
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