The company is accused of packaging mortgage bonds they thought were likely to fail into a single portfolio, selling it to investors, and then betting against the portfolio. When the housing market collapsed, the investors lost money, but the company did very very well.
This is fraud.
More from the Huffington Post. They end their story by wondering whether the SEC will in fact punish the company. The agency looked the other way while it was going on, might it still? Has the SEC been captured by the financial industry?
For more info: Financial Regulatory Reform.
