This column discusses one of the more subtle issues raised by the Department of Justice’s (DOJ’s) civil fraud action against Bank of America (B of A). The issue was so subtle that of the three articles about the lawsuit that I choose to review the night after the suit was filed, only the NYT article mentioned one of the most important aspects of the suit – the key role that the whistleblower played in making the action possible. The AP and the WSJ articles ignored the fact.
The lawsuit threatens to impose steep fines on the bank. The Justice Department filed the case under the False Claims Act, which could provide for triple the damages suffered by Fannie and Freddie, a penalty that could reach more than $3 billion.
The act also provides an avenue for a Countrywide whistle-blower, Edward J. O’Donnell, to cash in. Under the act, the government can piggyback on accusations he filed in a lawsuit that was kept under seal until now.
Mr. O’Donnell, who lives in Pennsylvania, was an executive vice president for Countrywide before leaving the company in 2009. The government’s case in part hinges on the credibility of his claims.
Barclays plc (LON:BARC) will be forced to disclose the names of staff involved in Libor rigging, following a damning court judgment over claims it mis-sold interest rate swaps to a care home operator. The bank was chastised on Monday at the High Court in London by Lord Justice Flaux, who claimed Barclays was intentionally trying to hide the true scale of the Libor scandal, which has already seen the lender fined £290m.
The criticisms came as Barclays faced a preliminary hearing, ahead of a trial, over allegations it mis-sold to a care home group complex interest rate derivatives that were in turn based on false Libor rates. Issuing a damning judgment, Lord Justice Flaux said Barclays’ objections to the Libor-rigging claims brought against it by Guardian Care Homes were “wholly without merit” and accused the bank of “misleading” customers.
The Metropolitan Milwaukee Fair Housing Council and other fair housing groups from around the country filed a complaint on Oct. 23 against Bank of America, accusing the bank of housing discrimination.
The complaintants observed 45 Bank of America real estate-owned properties. Thirty of the properties were located in predominatly black neighborhoods, nine were in predominatly non-white neighborhoods and six in predominatly white neighborhoods, according to the complaint.
The complaint followed an undercover investigation which found that the bank maintains and markets foreclosed homes in white neighborhoods better than in black and Hispanic neighborhoods in Chicago, Indianapolis and Milwaukee, according the National Fair Housing Alliance’s website.
The MMFHC filed the complaint with the U.S. Department of Housing and Urban Development. It is part of an amended complaint NFHA and seven other agencies filed earlier this month about how Bank of American differently maintains and markets properties of white, black and Hispanic neighborhoods across the country, according to the organization’s website.
UBS and Royal Bank of Scotland have suspended at least three more traders in Singapore as regulators widen the scope of their investigation into alleged Libor-rigging.
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Mortgage technology services provider Lender Processing Services settled another investigation launched by a state Attorney General over accusations of insufficient mortgage and foreclosure document handling practices at its subsidiary DocX.
LPS reached a deal with the Colorado Attorney General Monday, agreeing to pay $1.3 million as a settlement while reimbursing the state through a $500,000 fee.
As part of the deal, the state AG will release LPS and its subsidiaries of all potential liability related to past document execution practices in the state.
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Tagged DOCx, LPS