Federal prosecutors are actively pursuing criminal cases against executives from Royal Bank of Scotland Group PLC and JPMorgan Chase & Co. for allegedly selling flawed mortgage securities, the Wall Street Journal reported today. Officials are working to establish that the bankers ignored warnings from associates that they were packaging too many shaky mortgages into investment offerings and are weighing whether they can prove that constituted fraud. At RBS, prosecutors are scrutinizing a $2.2 billion deal that repackaged home mortgages into bonds in 2007. In a 2013 civil settlement with RBS, the Securities and Exchange Commission described the lead banker on that deal, whom it didn’t name, as trying to push it through over concerns of the diligence department. At J.P. Morgan, prosecutors are focusing on two people who worked on a different residential-mortgage deal.
