Saturday, 26 July 2014
Last updated 21 hours ago
Apr 19 2011 | 1:26am ET
Exhaustively covering Magnetar Capital's collateralized debt obligations certainly earned ProPublica the hedge fund's ire. Now, it has also earned it a Pulitzer Prize.
The investigative journalism non-profit's Jesse Eisinger and Jake Bernstein were honored with the annual award for national reporting for their series on what the Pulitzer Prize board called "questionable practices on Wall Street that contributed to the nation's economic meltdown, using digital tools to help explain the complex subject to lay readers." Magnetar was among the focuses of that series, which used graphics and cartoons to help explain the complexities of CDOs.
The transactions at the heart of the ProPublica stories are now the focus of a Securities and Exchange Commission probe of JPMorgan Chase, which allegedly structured and marketed the CDO on Magnetar's behalf. Magnetar has not been accused of any wrongdoing, and told ProPublica in a letter last year that it "did not at any time require or expect any specific assets to be purchased into the Squared" CDO in question. JPMorgan, by contrast, is reportedly eager to settle and could strike a deal with the regulator soon.
Magnetar both bought up some the riskiest portions of some CDOs, helping make it possible for banks to create them, while at the same time shorting those CDOs, ProPublica reported. The allegations against JPMorgan parallel those made against Goldman Sachs in the SEC's lawsuit against that bank last year, which produced a $550 million settlement. In the Goldman case, the alleged role of Magnetar was allegedly played by Paulson & Co.
"This is the kind of thing that the mainstream media's doing less and less of," Eisinger told the Associated Press. "We're deeply grateful that it's being recognized."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…