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Mizuho, Japanese Brokerage Firm, To Pay $127 Million SEC Settlement For Overvalued Mortgages

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TOKYO (AP) — Japanese brokerage Mizuho Securities Co. says its U.S. subsidiary is paying $127.5 million in a settlement with the U.S. Securities and Exchange Commission after an investigation into overvalued mortgage securities it sold in 2007.

Mizuho spokesman Toshimitsu Okano said Thursday that the company is not admitting wrongdoing under the terms of the settlement.

The SEC said in statement that three former employees of the U.S. subsidiary used "dummy assets" to inflate the value of the collateralized debt obligation, or CDO. That meant it got a higher credit rating than it deserved, misleading investors who bought the financial product.

The CDO backed by subprime mortgages defaulted on payments to investors in 2008 and was liquidated in 2010.

Mizuho says it is not under investigation by the SEC for any other transaction.

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