The U.S. Securities and Exchange Commission (SEC) is investigating Wall Street investment bank Jefferies (JEF) following the bankruptcy of auto parts maker First Brands Group.
Media reports say that the SEC is looking into the relationship between Jefferies Financial Group and First Brands.
Specifically, the Wall Street regulator is investigating whether Jefferies gave investors enough information on its Point Bonita fund’s exposure to the failed auto parts manufacturer.
The SEC is examining Jefferies internal controls and potential conflicts of interest at the bank. Jefferies has not been charged with any wrongdoing in the matter.
However, the boutique investment bank has come under pressure in recent weeks over its exposure to First Brands Group, which collapsed under a series of complex debt agreements.
The bankruptcy of First Brands has revived fears on Wall Street of other bad loans and private equity financing.
Jefferies has not commented publicly on reports of an SEC investigation.
JEF stock is down 28% this year and trading at $57.23 U.S. per share.
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