SEC probes corporate-debt securities

|By:, SA News Editor

The SEC is investigating whether banks and companies are illegally hiding certain risks using collateralized loan obligations, which are packages of corporate loans and other debts similar to mortgage bonds, the WSJ reports.

The CLOs aren't traded on any exchanges or open platforms, while their prices are negotiated privately.

One suspicion is that firms use the deals to appear to shift unwanted assets off their balance sheets.

Separately, authorities have widened a probe into how Wall Street banks sell the deals.