The ongoing fallout from the 2008 financial crisis has generated a host of unprecedented challenges for broker-dealer, investment banking, investment advisory, and other financial services firms. Last year alone, the industry was hit with wave upon wave of criminal prosecutions, regulatory enforcement proceedings, and parallel private civil actions. In fiscal year 2011, U.S. Attorneys’ offices nationwide collected $6.5 billion in criminal and civil actions, and the U.S. Securities and Exchange Commission commenced 735 enforcement actions and obtained over $2.8 billion in penalties and disgorgement. Many of the more high-profile matters also triggered congressional hearings as well as massive adverse press attention and publicity.

The securities and financial services industry has been a key focus of government attention. As announced by President Obama in his January 2012 State of the Union address, the U.S. Department of Justice has formed a new unit within the Financial Fraud Enforcement Task Force—the Residential Mortgage-Backed Securities Working Group. The group will consist of at least 55 DOJ lawyers, analysts, agents, and investigators from across the country and will be chaired by the heads of the DOJ’s civil and criminal divisions, the U.S. Attorney from Colorado, SEC enforcement head Robert Khuzami, and New York Attorney General Eric Schneiderman. It will focus on investigating those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities. The unit has already sent subpoenas to 11 financial institutions.

Officials have also said that this new unit would most likely focus on Wall Street firms, big banks, and other entities that the public believes have avoided scrutiny for their role in the housing crisis.

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