Regulators to consider settlements in asset-backed commercial paper collapse

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.

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.

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