Feds Eye UBS as Subprime Probe Widens

US criminal prosecutors investigating the subprime mortgage mess want to find out if UBS deliberately misled investors, the Wall Street Journal reports. The Swiss banking giant may have put mortgage bonds on its books at high prices despite knowing their valuations had plummeted. There are multiple probes into the mortgage crisis; until now most of them have involved civil authorities.

Insiders say that the SEC, which works closely with criminal prosecutors, has upgraded its probe of UBS and Merrill Lynch into a full-fledged investigation. The FBI is looking at 14 companies in its own subprime probe. But experts say that the hazy nature of securities valuation could make it difficult for any prosecutor to prove that banks deliberately made misleading statements. (More UBS stories.)