Continuing Impact From Prize-Winning Reporting
In April 2010, ProPublica began publishing the fruits of its investigation into financial activities that likely forestalled the economic crisis of 2008, but then exacerbated its effects. This reporting, published under the series title “The Wall Street Money Machine,” received the Pulitzer Prize for national reporting in 2011, the first Pulitzer Prize for stories not published in print. ProPublica partnered on some of these stories with public radio’s This American Life and Planet Money.
Much of the reporting, including the first story in the series, concerned a hedge fund called Magnetar which helped create complex securities called collateralized debt obligations (CDOs) and then placed bets that paid off handsomely when those securities failed. Since our reporting began, investigations of Magnetar deals and other similar arrangements have resulted in the following:
- In April 2011, a staff report of the Senate Permanent Subcommittee on Investigations repeatedly cited ProPublica’s reporting, and developed new evidence to support it.
- In June 2011, J.P. Morgan Chase settled claims brought by the Securities and Exchange Commission (SEC) for $514 million.
- In October 2011, Citi settled similar SEC claims for $285 million. A federal judge rejected that settlement as inadequate in November 2011.
- In February 2012, the SEC warned a leading banker that it had reached a preliminary determination to bring civil charges against him in connection with a Magnetar CDO deal.
- Later that same month, State Street Global Advisors agreed to pay a $5 million fine to the Commonwealth of Massachusetts for failing to disclose Magnetar’s role in one of its CDO deals.
- In May 2012, the Wall Street Journal reported that Magnetar itself is under investigation by the SEC.
- In July 2012, the Commission settled charges that Japanese bank Mizhuo had misled investors in a Magnetar collateralized debt obligation called Delphinius; Mizhuo agreed to pay the government $127.5 million.
- In March 2013, a Massachusetts regulator fined Deutsche Bank $17.5 million.
- In October 2013, the SEC sued Harding Advisory and its head, Wing Chau, for failing to disclose Magnetar’s role in some of the deals.
- In December 2013, the SEC settled Magnetar-related charges with Merrill Lynch, with the firm agreeing to pay a fine of more than $131 million, bringing the total of fines in Magnetar deals to more than $435 million.
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