Financial Firm Fined for Misleading Investors on Magnetar Bets

by Cora Currier
ProPublica, Feb. 28, 2012, 5:57 p.m

State investigators in Massachusetts slapped the investment c

ompany State Street Global Advisors yesterday with a $5 million fine for failing to tell

investors about the role of the hedge fund Magnetar in a risky collateralized debt obligation that collapsed in the housing market crisis.

In 2006, State Street and Deutsche Bank put together a $1.56 billion CDO deal, called Carina CDO Ltd. As we reported with This American Life and NPR, Magnetar was involved in the creation of at least $40 billion of CDOs, including Carina, while simultaneously taking positions that would allow it to profit if the CDOs failed. [Continue reading…]