Daily Archives: October 1, 2013

JPMorgan Chase To Pay Penalties For Oversight Deficiencies

On September 19, JPMorgan Chase entered into a consent Order of Assessment of a Civil Money Penalty with the Fed, the OCC, the SEC and the Financial Conduct Authority of the United Kingdom. The penalties issued by the agencies total approximately $920 million. The fine resulted from the deficiencies identified by the regulators in JPMorgan Chase’s risk management oversight, model validation, internal financial reporting and internal audit, and failure to elevate certain issues to the attention of the board of directors. In a separate action, the OCC and CFPB ordered JPMorgan Chase to refund $309 million for illegal credit card practices and to pay $80 million in civil penalties.

Fed Release:

Press Release

Release Date: September 19, 2013

For immediate release

The Federal Reserve Board on Thursday announced that JPMorgan Chase & Co., New York, New York (JPMC), a registered bank holding company, will pay a $200 million penalty for deficiencies in the bank holding company’s oversight, management, and controls governing its Chief Investment Office (CIO).

The consent Order of Assessment of a Civil Money Penalty against JPMC cites the failure by JPMC to appropriately inform its board of directors and the Federal Reserve of deficiencies in risk-management systems identified by management. On January 14, 2013, the Board issued a consent Cease and Desist Order requiring JPMC to take prompt action to correct these deficiencies, which represented unsafe or unsound practices at JPMC. The Board’s Cease and Desist Order followed the disclosure of significant losses in a large synthetic credit portfolio that was managed by the CIO.

Fed Consent Order

OCC Consent Order


JP Morgan Chase to Refund $309 Million for Bogus Billing Practices

JP Morgan Chase to Refund $309 Million for Bogus Billing Practices

The Consumer Financial Protection Bureau has announced that JPMorgan Chase must refund $309 million to credit card customers who were improperly billed for add-on products.

The CFPB and the Office of the Comptroller of the Currency concluded that 2.1 million cardholders were billed for services they never received. These add-on products included identity theft protection and fraud monitoring.


Wells Fargo Nets Minor Victories in Class Action

Wells Fargo Nets Minor Victories in Class Action

MINNEAPOLIS (CN) – Several class members in a pension fund mismanagement lawsuit against Wells Fargo were tossed out by a federal judge, who also refused to dismiss trial testimony from the bank’s expert witnesses.
     U.S. District Court Judge Donovan W. Frank granted the bank’s motion to dismiss sixteen plaintiffs who brought ERISA claims, after agreeing with Wells Fargo that the suit by the lead plaintiff – the City of Farmington Hills Employees Retirement System – alleges only common and state law claims.
     The case revolves around the plaintiffs’ investments with Wells Fargo in a securities lending program (“SLP”) that invested a majority of its funds with now insolvent companies, including Lehman Brothers and Cheyne Finance.
     The plaintiffs sought damages for breach of fiduciary duty, breach of contract, violations of the Minnesota Prevention of Consumer Fraud Act, unlawful trade practices, deceptive trade practices and civil theft, which prompted Wells Fargo to seek dismissal of class members bringing claims under ERISA.


Homeowners Defend $300M JPMorgan Force-Placed Deal

Homeowners Defend $300M JPMorgan Force-Placed Deal

Law360, New York (September 30, 2013, 5:06 PM ET) — A class of homeowners who scored a $300 million settlement with JPMorgan Chase Bank NA and Assurant Inc. over their force-placed insurance business urged a Florida federal judge Monday to keep plaintiffs in a rival California case from interfering with the deal, saying they had forfeited that right.


NJ Foreclosure System Violates Civil Rights, Suit Says

NJ Foreclosure System Violates Civil Rights, Suit Says

Law360, New York (September 30, 2013, 3:45 PM ET) — A lawsuit filed Thursday in New Jersey federal court accuses the state of violating civil rights by issuing default judgments in residential mortgage foreclosures without providing homeowners with due process, claiming the system works in favor of banks.


Federal judge criticizes Wells Fargo’s duplicity with troubled borrower

Federal judge criticizes Wells Fargo’s duplicity with troubled borrower

Federal Judge William Young in Massachusetts is making an unusual request of Wells Fargo in a Sept. 17 ruling in which he’s requiring the bank’s president and a majority of its board to approve a corporate resolution stating they stand behind their lawyers’ legal tactics in the case.

The ruling underscores the huge disconnect between the bank’s public comments about its efforts to keep more Americans in their homes and what troubled borrowers say is happening to them. The judge’s comments were directed to Wells, but the perceived disconnect is an industrywide issue.


Bank of America in record settlement over ‘robocall’ complaints

Bank of America in record settlement over ‘robocall’ complaints

NEW YORK, Sept 30 (Reuters) – Bank of America has agreed to pay $32 million to settle charges that it made harassing debt collection calls to customers’ cell phones, in what is believed to be the largest cash payout ever under a 1991 law meant to protect consumers from unwanted calls.

The settlement will resolve multiple proposed class action lawsuits filed on behalf of 7.7 million of the bank’s credit card and mortgage loan customers, according to court documents.

“We’re pleased to resolve this matter,” Bank of America Corpspokeswoman Betty Riess said in an emailed statement on Monday. “Bank of America denies the allegations, but agreed to settle the claims to avoid further legal costs.”

From Whale To Rat: DOJ Has Cooperating Witness In JPMorgan Case

The WSJ has more:


Among the offices that received leads was Sacramento, Calif., which got documents related to billions of dollars of mortgage-backed securities issued by J.P. Morgan between 2005 and 2007, according to people with knowledge of the investigation. Among them, according to two people familiar with the investigation, was an email from a bank employee, warning her superiors they were vastly overstating the quality of the mortgages being bundled into securities. The bank went ahead and securitized them anyway, according to these people.


The woman who wrote that email has been cooperating with federal authorities and is expected to be available as a witness if the government ever brings a case to court, these people said. Her cooperation, along with documents, has fueled confidence among some lawyers within the Justice Department that they have built a solid, prosecutable case built on hard evidence. Among the documents the government has are ones suggesting J.P. Morgan knew the underlying mortgages it sold were of poor quality but told investors otherwise, according to people familiar with the investigation.


Wells Fargo to pay Freddie Mac $780 million to settle mortgage claims

Wells Fargo to pay Freddie Mac $780 million to settle mortgage claims

(Reuters) – Wells Fargo & Co said on Monday it will pay $780 million in cash to Freddie Mac to resolve substantially all repurchase liabilities on home loans sold to the government-controlled mortgage company prior to 2009.

The largest U.S. mortgage lender said the settlement was reached on September 27 and totaled $869 million before adjusting for credits related to prior loan repurchases.

Wells Fargo announced the settlement five days after Citigroup Inc agreed to pay Freddie Mac$395 million to settle similar claims over roughly 3.7 million mortgages sold from 2000 to 2012.

Citigroup is the third-largest U.S. bank by assets, while Wells Fargo ranks fourth.


Exclusive: JPMorgan settlement complicated by Washington Mutual – sources

Exclusive: JPMorgan settlement complicated by Washington Mutual – sources

(Reuters) – JPMorgan Chase & Co’s possible $11 billion settlement of government mortgage probes has been complicated by a dispute with the Federal Deposit Insurance Corp over responsibility for losses at the former Washington Mutual Inc, said people familiar with the matter.

The dispute, between the largest U.S. bank and the FDIC, could leave the federal agency on the hook for billions the bank is expected to pay as part of the settlement and substantially reduce the amount of the penalty JPMorgan actually pays to the government, some analysts said.