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State Joins Investigation into Securities
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Connecticut has joined New York in an investigation into securities sold on Wall Street that contained hidden high risk loans.

According to Attorney General Richard Blumenthal, investors in Connecticut may have been burned by putting cash into the securities which were bundled with high risk home loans.  The loans he’s concerned about are so called no-doc or exception loans that do not require the home buyer to prove their income, and which he says carry a very high default risk.  It’s claimed subprime lenders sold these to Wall Street firms which then bundled them with more conventional securities, hiding the true risk before investors put in their cash.  

Blumenthal says one of his main concerns was the language used in disclaimers to investors which he says failed to disclose the true risk.  The Attorney General says his office has issued as many as 30 subpoenas as part of the investigation, which he’s undertaking in cooperation with New York Attorney General Andrew Cuomo.  No charges have yet been filed.