Michael Llodra, who was global head of structured-product CDOs when he left JPMorgan Chase, had better "watch his back."  As part of its broad investigation into how Wall Street firms bundled mortgage-linked financial products as the housing crisis worsened, the SEC notified Mr. Llodra that he may be sued for his role in selling the securities.

The Commission delivered a Wells notice to him on 1/4/11, saying investigators planned to pursue civil claims against him related to the sale of a 2007 product.  The SEC also gave a Wells notice on 1/14/11 to  Edward Steffelin, a former executive who helped manage JPMorgan’s 2007 “Squared” CDO. 

Michael  LLlodra, who joined JPMorgan in 2006, began working at Harvard Management Co. in 2008, and then went to Sunrise Securities Corp. through November 2010.  Edward Steffelin, 41, is now director of institutional sales and research at Walton International Group, which acquires and manages land in North America. 
SEC Investigation

The SEC’s investigation has focused on the role of each of the three firms involved in the transaction, a person familiar with the matter said.  Squared was sold in April 2007, with GSC Group serving as the CDO’s manager and JPMorgan underwriting the deal.  Its collateral consisted partly of other CDOs tied to bonds backed by assets such as mortgages, with the initial holdings including credit-default swaps referencing $968 million of those CDOs.  CDOs backed by other CDOs were commonly referred to as “CDOs squared.” Squared went into default the following January.

To continue reading, go to:   [Bloomberg, 4/13, "Former JPMorgan Executive .."]