The Financial Industry Regulatory Authority (FINRA) has fined Credit Suisse $4.5 million and Merrill Lynch $3 million for misrepresenting delinquency data and inadequate supervision with regards to their RMBS issuance.

According to a FINRA release, subprime RMBS issuers are required to disclose historical performance information for past securitizations containing mortgage loans similar to those in the RMBS being offered to buysiders. The historical delinquency rates play a key role for investors when they assess RMBS values and when they determine whether future returns might be disrupted by borrowers' failures to make loan payments. Since there exists various standards for calculating delinquencies, issuers need to disclose the specific method they utilized in calculating delinquencies, the FINRA said.

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