Australia ends interbank rate-setting panel after Libor scandal
SYDNEY (Reuters) – Australia is scrapping the panel that sets interbank lending rates after the proposal of new international guidelines and an exodus of the banks that set the rate in the wake of the Libor rate-rigging scandal.
The Australian Financial Markets Association (AFMA), which administers Australia’s bank bill swap (BBSW) reference rate, said it would bypass the panel and derive the rates directly from brokers and electronic markets.
Judge rules JPMorgan must face lawsuit over investments in Lehman
(Reuters) – A federal judge on Wednesday said JPMorgan Chase & Co (JPM.N) must face a lawsuit by a pension plan that accused it of mismanaging its money by investing in Lehman Brothers Holdings Inc notes before that bank filed for bankruptcy in 2008.
U.S. District Judge Katherine Forrest in Manhattan denied JPMorgan’s bid to dismiss the 2009 lawsuit by the Operating Engineers Pension Trust of Pasadena, California.
JPMorgan risk disclosures fell short for regulators: documents
Reuters) – For months after JPMorgan Chase & Co executives first admitted that they had wrongly brushed off questions about the “London Whale” derivatives losses, officials at the U.S. Securities and Exchange Commission pressed the company to disclose more to investors about risks it was taking.
The SEC’s Division of Corporation Finance, which is charged with making sure companies provide investors with enough information to make good decisions, pushed the bank from at least July to February to revise disclosures about changes it had made in models used to calculate value it put at risk in its derivatives portfolio.
Correspondence between the SEC and the bank released on Wednesday shows the bank made incremental changes to increase its disclosures at the SEC’s urging. The highly technical exchanges were conducted even as JPMorgan vowed to be more transparent with investors.
CHICAGO (CN) – The FDIC sued six directors of the failed New Century Bank for $33 million, claiming they were grossly negligent and ignored repeated warnings before the bank collapsed in 2010.
The Federal Deposit Insurance Corporation sued the six former officers in Federal Court, as receiver for New Century Bank.
It’s part of a recent trend in which the FDIC is trying to recover money from officers of banks that failed during the economic crisis. Generally, as in this case, the FDIC claims the directors ignored the bank’s own lending policies before the housing collapse.
The Illinois Department of Financial and Professional Regulation closed the bank on April 23, 2010, and the FDIC was named receiver.
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Deutsche Bank Must Face Mortgage Lawsuit, Judge Rules
Most of a class-action lawsuit that charges Deutsche Bank and four of its former executives with misleading investors may proceed, a federal judge in Manhattan has ruled.
The decision means the company must prepare to defend itself against allegations by the International Brotherhood of Electrical Workers and other investors of wrongdoing in the sale securities backed by residential mortgages.
U.S. District Judge Katherine Forrest of the southern district of New York made the ruling, which was first reported by Reuters, on Wednesday.
The union, which filed the lawsuit in in 2011 on behalf of investors who purchased stock in Deutsche Bank over a two-year period starting in January 2007, charges the bank and four of its former executives misled investors by combining mortgages of substandard quality into securities that were sold to investors as part of a scheme to boost the company’s stock price.
The plaintiffs allege that a former subsidiary of Deutsche Bank originated mortgages while disregarding borrowers’ ability to repay the loans. The plaintiffs also charge Deutsche Bank with being sufficiently certain the securities would lose value that the bank authorized one of its traders to bet millions of dollars against them, a calculation that made sense only if the bank expected the value of the shares to decline, according to the plaintiffs.
Deutsche Bank’s shares plunged 87% between May 2007 and January 2009, and plaintiffs attribute the drop to the billions of dollars the bank lost on mortgage-backed securities.