The Black Series is not over. After announcing a net profit at half of the British bank RBS, saved and partly nationalized during the crisis, a new risk weighs on its books since the revelation late June manipulation scandal interbank rates between 2005 and 2009.
The case known as the Libor (London Interbank Offered Rate), which won the Barclays paid already 360 million UK and U.S. regulators, leads to other institutions in its wake.
After Deutsche Bank, which acknowledged this week have referred two people in this framework , RBS confirmed Friday, August 3 have returned a “number of employees for misconduct” and said working with the investigations launched in the world. She also continued as part of several class actions in the United States.
But she spent no provision because “it is not possible to quantify realistically the consequences of these investigations “ . All these cases “have taken the reputation of the sector to the lowest” , lamented Stephen Hester , CEO of the bank, whereas the industry is going through a “humiliating period” .
American Express Co., the biggest credit-card issuer by purchases, said it may be forced to refund customers as bank regulators weigh enforcement actions based on consumer-protection laws.
The lender “currently believes” the Consumer Financial Protection Bureau will take enforcement action against at least one of the company’s units and possibly a second, similar to measures the Federal Deposit Insurance Corp. had said previously it intends to pursue, New York-based Amex said yesterday in a quarterly filing.
The bank and its subsidiaries “continue to make changes to certain of their card practices and products and established accruals for, among other costs, expected refunds to cardmembers,” American Express said in the filing.
Posted in Uncategorized
Courthouse News Service.
MANHATTAN (CN) – A risk officer claims in court that Morgan Stanley fired him for blowing the whistle on an investment adviser who churned accounts “to bilk investors,” making Morgan Stanley tens of thousands of dollars at customers’ expense.
Click here to read Courthouse News’ Securities Law Review.
Clifford Jagodzinski sued Morgan Stanley Smith Barney (MSSB), Morgan Stanley & Co. and Citigroup, in Federal Court. They are the only defendants.
Jagodzinski says he worked for Morgan Stanley as a complex risk officer, identifying and reporting compliance risk issues and securities law violations.
He always received exemplary reviews for his job performance in his 6 years with Morgan Stanley, Jagodzinski claims.
“However, in late 2011, Mr. Jagodzinski discovered that one of MSSB’s newest wealth managers, Harvey Kadden, was flipping preferred securities in a manner that was generating tens of thousands of dollars in commissions but causing losses or minimal gains for his clients and exposing his clients to unnecessary risks,” the complaint states. “These trades were obviously designed to bilk investors.”
Jagodzinski says he suspected Kadden of churning accounts to maximize commissions, in violation of FINRA and SEC rules, and reported the activities to his supervisors, but was told not to investigate them.
“In December 2011, Mr. Jagodzinski reported these trades to his supervisors, David Turetzky and Ben Firestein,” the complaint states. “At first, the supervisors were very pleased with Mr. Jagodzinski’s work. Indeed, Mr. Firestein said, ‘Great job for catching this scam.’ Mr. Turetzky said in sum and substance, ‘I don’t want to be on a beach in Bermuda, fishing with my son, and get a subpoena for what Harvey Kadden is doing – flipping these preferreds.’
“However, upon information and belief, MSSB had given Mr. Kadden a $25,000,000 guarantee. Consequently, MSSB had very significant earnings expectations for Mr. Kadden and did not want to take any steps to jeopardize Mr. Kadden’s book of business.
This is what happens when the government is capable of picking winners and losers in “private” business and when it has power to dole out sweetheart deals to “private” entities.
BB&T v. Kraz LLC, Case No. 10-CA-000304-K (FL Hillsborough Cir. May 18, 2012):
“Plaintiff [BB&T] stood to profit by declaring a fraudulent default under the subject loan, collecting from the FDIC under the [Purchase and Assumption Agreement with FDIC] for such default, and then enforcing the subject loan against [borrowers], and retaining the property until such time as a real estate turnaround occurred.”
Of course, this is not the first time FDIC has doled out a “sweetheart deal.” One can only shudder at the thought of how many such sweetheart deals go unnoticed and uncovered.
The court’s order can be accessed here
Bank of America Corp.’s surging claims for refunds on faulty mortgages in the second quarter stemmed mostly from loans made by the bank and its Merrill Lynch unit, rather than the company’s Countrywide subsidiary, said two people with direct knowledge of the matter.
The backlog of new claims from private investors probably will increase in the months ahead, according to the people, who asked for anonymity because mortgage disputes are private. The firm regards grounds for the demands as weaker than those triggered by Countrywide loans, the people said.
Bank of America said last month that total demands for buybacks from mortgage-bond investors and insurers surged more than 40 percent in three months to $22.7 billion. TheCharlotte, North Carolina-based company, ranked second by assets among U.S. lenders, has already committed more than $40 billion to resolve disputes on faulty loans and foreclosures, and shareholders are pressing the bank to stem the bleeding.