TORONTO — Asset-backed commercial paper will return to the spolight on Monday when financial regulators meet to consider settlements with financial institutions alleged to have mishandled the troubled investments.
A number of major institutions have worked out settlements with authorities over the collapse of the ABCP market in 2007, but they have not yet been officially accepted by regulators.
The $32-billion ABCP market ground to a halt in August 2007 amid fears that the assets behind the notes included U.S. subprime mortgages and other high-risk loans.
The Ontario Securities Commission, Quebec’s Autorite des marches financiers and the Investment Industry Regulatory Organization of Canada have conducted a joint investigation into improper handling of the investments.
Among those seeking to settle allegations of improper conduct are Scotia Capital Inc. (TSX:BNS), Canaccord Financial Ltd., Credential Securities Inc., CIBC World Markets Inc. (TSX:CM) and HSBC Bank Canada.
A restructuring of Canadian ABCP was completed earlier this year, but many institutional and corporate investors saw the value of their investments virtually wiped out during the crisis.