Arlington Asset Investment said the Securities and Exchange Commission is investigating the firm for a mortgage-backed securities offering made in 2007 by a former nonbroker dealer subsidiary of the company.
In an SEC filing the firm, formerly known as Friedman, Billings, Ramsey Group, said the SEC is investigating to see if the subsidiary included “material misstatements and/or omitted material information regarding the collateral for the securities issued.”
Furthermore, the firm said that its chief investment officer and portfolio manager received a similar notice about the offering being under investigation.
“The company disagrees with the staff and intends to provide a written submission setting forth reasons why a formal proceeding should not be authorized by the SEC,” Arlington Asset Investment said in its filing. “The company cannot predict whether or not any proceedings might be initiated, the amount of any claims that might be asserted or remedies that might be sought by the SEC, or the ultimate outcome of any proceedings that might be initiated.”
In addition, Arlington Asset Investment says Hildene Capital Management filed a complaint against the firm in a separate piece of litigation in New York, claiming unlawful acts by the company in relation to the purchase of preferred securities issued by FBR Capital Trust VI and FBR Capital Trust X.
Arlington Asset Investment said, “On January 20, 2012, the company filed a motion to dismiss the amended complaint on behalf of the company and the FBR Trusts. Briefing on that motion has not yet been completed, and the motion remains pending. The likely outcome or impact of this action on the company or its results of operations cannot be predicted at this time.”
Arlington Asset Investment declined to comment on the SEC suit or the pending litigation.