In third quarter reports filed today with the Securities and Exchange Commission, both MGIC Investment Corp. and Radian Group Inc. said that the securities regulator was investigating a proposed merger and a joint investment made into Credit-Based Asset Servicing and Securitization (C-BASS to the rest of us). From MGIC's filing:
In October 2007, the Division of Enforcement of the SEC requested that the Company voluntarily furnish documents and information primarily relating to Credit-Based Asset Servicing and Securitization, LLC ("C-BASS"), the now-terminated merger with Radian and subprime mortgage assets "in the Company's various lines of business." The Company is in the process of providing responsive documents and information to the SEC.
Here is Radian's 10-K filing. MGIC and Radian had agreed to merge in February, but called off the merger in early September amid quickly deteriorating industry conditions. Both companies had an aggregated $1 billion stake in C-BASS, which each insurer said it would write off as C-BASS hit a wall and was faced with 'unprecedented' margin calls in late July.