TIP OF AN ICEBERG OR...

just an anomaly?

SEC Goes After Fund Manager
Liz Moyer, 08.20.07, 5:10 PM ET
Forbes

Sentinel Management, a Chicago-area money fund manager that filed for bankruptcy protection Friday, is facing civil charges by the U.S. Securities and Exchange Commission, which says it defrauded its clients by improperly commingling, misappropriating and leveraging securities without their knowledge.

The SEC, in a 10-page complaint filed Monday in U.S. District Court in Chicago, says Sentinel transferred $460 million in securities from client investment accounts to its house account and also used securities from client accounts as collateral to get a $321 million line of credit from the Bank of New York (nyse: BK - news - people ).

The firm's conduct has placed its clients "at risk of serious and irreparable loss," the SEC says. Many of those clients are futures trading firms that park short-term cash in money market funds.

The SEC says clients had in fact had undisclosed losses for several months leading up to last week because of the firm's use of leverage and commingling and "misappropriation" of assets. As of last week, "account statements Sentinel provided to clients listed hundreds of millions of dollars in securities that were not held by Sentinel at all, were held by Sentinel and treated as its own assets, or were pledged as collateral for loans extended to Sentinel," the SEC said.


The mortgage folks aren't doing too well:

Capital One to Close Mortgage Unit
Associated Press 08.20.07, 4:47 PM ET
MCLEAN, Va. - Capital One Financial Corp. said Monday it will close its wholesale mortgage unit due to woes in the secondary mortgage markets, resulting in $860 million in charges in 2007.

The company, which said about 1,900 positions will be eliminated due the the closing of the unit, added that it will "cease residential mortgage origination" at the unit, called GreenPoint Mortgage, effective immediately.

Countrywide Cuts 500 Mortgage Jobs
Monday August 20, 9:18 PM EDT
LOS ANGELES (AP) — Countrywide Financial Corp., the nation's largest mortgage lender, said Monday it has eliminated about 500 jobs as it tries to ride out problems from a credit crunch that has rocked the home loan industry.
The company said the cuts came in the subprime lending unit of its Wholesale Lending Division and its Full Spectrum Lending unit, which handles mortgages given to customers with minor credit problems or who can't provide full income documentation required for traditional prime loans.


Thornburg On The Defensive
Andrew Farrell, 08.20.07, 2:50 PM ET
Forbes
Thornburg Mortgage, for example, sold billions of dollars of its mortgages over the past couple weeks, probably at a huge discount, in a move to provide breathing room during a suffocating credit squeeze. The company, which originates mortgages and holds them for investment, announced Monday that it sold sold $20.5 billion in highly rated mortgage-backed securities over the past six business days.

Chief Operating Officer Larry Goldstone said Thornburg needed to sell now or risk being burned further by brutal sector conditions.

KKR Financial Makes Cash King
Joshua Lipton, 08.20.07, 10:45 AM ET
Forbes

KKR Financial Holdings is concentrating on cash. After announcing last week it would dispose of nearly half of its mortgage-backed-securites portfolio, the affiliate of buyout firm KKR on Monday revealed it would raise $500.4 million of equity capital.