Recall the recent media eruption over Goldman Sachs' (GS) ABACUS deals. The New York Times weighed in with an article that re-ignited the issue. McClatchy also ran a string of stories probing the firm's activity in this area generally. All of this has apparently attracted the attention of regulators. The Securities and Exchange Commission has sent subpoenas to the likes of Goldman Sachs, Credit Suisse, Citigroup (C), Bank of America/Merrill Lynch (BAC), Deutsche Bank, UBS, Morgan Stanley (MS) and Barclays Capital, reports the Financial Times.

The focus appears to be synthetics CDOs--CDOs that invest CDSs rather than actual bonds. The big issue seems to be whether it's proper for big banks to package and sell these products and then hang on to the other side of the bet. It's been going on for a while. But you do have to wonder whether they products were built with more risk than generally perceived by the buyer, to give the packager a better chance at winning. They paid off for Goldman Sachs.  

For more:
- here's the article 

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