The massive falls in world stock markets last week have prompted the US
Securities and Exchange Commission to check the books of leading Wall Street
brokers and banks.
The watchdog is checking up on the financial institutions to ensure that they
are not obscuring their exposure to the sub-prime mortgage market in the US and
that they are all accounting for this exposure in a consistent way.
According to the Sunday Times the SEC will checking the accounts of
the top five Wall Street firms and the securities departments of commercial
Markets went into freefall last week as investors fled from securities
following sudden and unexpected losses incurred by financial institutions
exposed to the sub-prime American mortgage market.
The FTSE 100 lost 3.7% or £63bn, its worst loss in a single day for four
years. Stocks in Asia and Europe also suffered heavy losses.
Central banks in Europe, the US and UK have all injected billions of pounds
into the markets in an effort to stem the crisis and maintain liquidity and ease
the credit crunch caused by bad loans in the sub-prime market.
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