Feds describe how JPMorgan Chase allegedly gamed California power market
The Federal Energy Regulatory Commission outlined the basics of its investigation against the big bank, saying it used improper trades in 2010 and 2011 to sell power at above-market prices.
With one strategy, the commission said, JPMorgan duped California electricity officials into paying $999 per megawatt-hour during early-morning hours – when the going rate was just $12. A megawatt-hour is roughly enough electricity to power 750 homes for an hour. FERC wouldn’t say how often that happened.
How Citigroup is hedging against the foreclosure settlements
Citigroup owns the parent company of the firm that is doling out the settlement checks.
Four hundred thousand checks mailed out as part of the government’s foreclosure settlement with 13 banks have been returned to Rust Consulting, the firm that mailed them. Bryan Hubbard, an OCC spokesperson, says efforts are underway to track down better addresses for the recipients of these checks, some of which are worth up to $125,000.
Who’s paying Rust to do this work? The 13 banks that agreed to the government settlement pay Rust, Hubbard told me. These banks include Bank of America (BAC), Citigroup (C), J.P. Morgan (JPM), Goldman Sachs (GS), Morgan Stanley (MS), and Wells Fargo (WFC), among others. Rust would not provide information for this article on how the contracts with the banks were negotiated or information on the terms of those contracts.
Rust’s parent company is SourceHOV. Up until March, Apollo Global Management ownedSourceHOV. Now, Citigroup, one of the 13 banks involved in the settlement, has that privilege. Citi Venture Capital International Private Equity (CVCI) “has an established track record of successful investments in the business services/outsourcing space; Source HOV fit nicely into our parameters,” Citi spokesperson Danielle Romero-Apsilos wrote me in an email.
For Citigroup, the stake in SourceHOV is a hedge of sorts, though perhaps an unintentional one. When Rust gets bank settlement business, including settlements like the one involving Citi, it generates revenues for SourceHOV, the company Citigroup owns.
Morgan Stanley, Citigroup Cooperate With DOJ Derivatives Inquiry
Morgan Stanley (MS:US) and Citigroup Inc. (C:US) said they’re cooperating with the U.S. Justice Department’s four-year-old antitrust probe into the credit-default swaps market.
The two firms were among more than a dozen financial institutions accused by the European Union last month of colluding to curb competition in credit derivatives.
“The company and others have also responded to an ongoing investigation by the antitrust division of the United States Department of Justice related to the CDS market,” Morgan Stanley, owner of the world’s largest brokerage, said yesterday in a quarterly filing (MS:US).
Wells Fargo Agrees To Pay $4M To Settle Wages Suit
Law360, New York (August 05, 2013, 3:29 PM ET) — Wells Fargo Advisors LLC reached a $4 million settlement with thousands of client associates who alleged the company discouraged them from reporting all their work time and had an unwritten policy of only paying them for scheduled hours, according to a motion filed Friday in Missouri federal court.
Exclusive: U.S. directs agents to cover up program used to investigate Americans
(Reuters) – A secretive U.S. Drug Enforcement Administration unit is funneling information from intelligence intercepts, wiretaps, informants and a massive database of telephone records to authorities across the nation to help them launch criminal investigations of Americans.
Although these cases rarely involve national security issues, documents reviewed by Reuters show that law enforcement agents have been directed to conceal how such investigations truly begin – not only from defense lawyers but also sometimes from prosecutors and judges.
The undated documents show that federal agents are trained to “recreate” the investigative trail to effectively cover up where the information originated, a practice that some experts say violates a defendant’s Constitutional right to a fair trial. If defendants don’t know how an investigation began, they cannot know to ask to review potential sources of exculpatory evidence – information that could reveal entrapment, mistakes or biased witnesses.
More Than 7M Student Borrowers in Default: CFPB
WASHINGTON — There are more than 7 million borrowers in default on federal or private student loans, according to the Consumer Financial Protection Bureau.
In a blog posting Monday, the CFPB said it found that among those borrowers, about 6.5 million borrowers had defaulted on two federal loan programs as of June 30. The agency does not have regulatory jurisdiction over federally-backed loans but they make up more than 83% of the roughly $1.2 trillion loan market.
Banks under fire over Massachusetts foreclosures
Massachusetts enacted strict foreclosure laws to mitigate distress within local housing markets, but now attorneys in the state are accusing banks of failing to follow all legal terms when instigating a foreclosure.
Jenifer McKim with the Boston Globe says some attorneys believe “lenders do not always adhere to a 2007 state law, amended in 2010, that provides homeowners 150 days to catch up on missed mortgage payments before a foreclosure can begin.”
HSBC braces for big hit on MBS settlement
Mega European bank HSBC Holdings (HSB) is preparing for the worst by announcing it could take a hit of up to $1.6 billion on toxic mortgage-backed securities sold prior to the housing meltdown.
Reuters says the bank is in the midst of dealing with a legacy MBS case. If estimations prove correct, the European firm is facing a big payout.