Citigroup : U.S. Plan Settlement Talks — Update
WASHINGTON–The Justice Department and Citigroup Inc. plan to meet next month in the opening salvo of multibillion-dollar settlement talks aimed at ending probes into how the bank handled shoddy mortgage-backed securities, according to people familiar with the matter.
The scheduled meeting will be the first chance for each side to put a number on a potential settlement, but in the past such numbers have been far apart, representing little more than starting negotiating positions.
The Justice Department hasn’t yet floated a number with the bank–which has already settled several other mortgage-related lawsuits–but an agreement could tally in the billions of dollars.
The discussions, which center on the bank’s sale of residential mortgage-backed securities, are part of a continuing push by the Justice Department to bring big banks to heel for activities that regulators and law enforcement believe contributed to the 2008 financial crisis.
Treasury blocks big bonuses at RBS
Royal Bank of Scotland has been told by the government it will not be able to grant bonuses worth more than the salaries of its employees after the Treasury said it had blocked an application by the taxpayer-backed lender to hand out awards of up to 200pc of base pay.
The Treasury, which controls an 81pc holding in the bank, said RBS would be a “back-marker” for banking industry pay and average remuneration at the lender would continue to fall this year.
In a statement, RBS said it had been informed by the UKFI, the body in charge of the taxpayer’s holding in the bank, that any application at its upcoming annual shareholder meeting to award bonuses worth twice an employees fixed pay would be blocked, effectively ending any hope of getting the measure through.
RBS warned the decision to block larger bonuses could lead to a “commercial and prudential risk” largely as a result of senior staff deciding to quit the business to work at banks with the ability to hand out bigger pay packages.
Morgan Stanley Again Targets Suit Over $104M In Bad MBS
Law360, New York (April 24, 2014, 7:37 PM ET) — Morgan Stanley on Thursday sought to undo a lower court’s ruling that found Allstate Insurance Co.’s suit over $104 million in allegedly overrated mortgage-backed securities to be timely, telling a New York appeals court the claims are barred by Illinois’ statute of limitations.
Wells Fargo Plans to Start Webcasting Annual Meetings in 2015 — Update
Wells Fargo & Co. is the latest big bank to announce that it will begin webcasting its annual shareholder meeting.
Starting next year, Wells Fargo expects to provide an audio webcast of its annual meeting “given the recent interest,” a bank spokesman said Friday. He added that the bank is committed to holding “an annual meeting that is open, informative and serves the interests of the shareholders.” Wells Fargo isn’t planning to webcast its annual meeting Tuesday, however.
The topic of webcasting the meetings has gained attention of late as big banks pay billions of dollars in regulatory fines, generating more questions about their business practices. Many big banks also are holding their annual meetings far from the cities where they have headquarters.
As of earlier this week, New-York based Citigroup Inc. and San Francisco-based Wells Fargo were the only U.S. banks of the six largest that didn’t webcast their annual meetings. That rankled some individual investors and analysts who said the banks should do more to build broader lines of communication with investors.
Citigroup said at its annual meeting in St. Louis on Tuesday that it will start webcasting next year. Wells Fargo said Friday that it would follow suit.
Other banks such as Bank of America Corp., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Morgan Stanley already provide audio webcasts of their annual meetings. Most companies still don’t webcast their annual meetings, though more big companies from a variety of industries have adopted the practice, including Alcoa Inc., Google Inc. and Walt Disney Co.
Barclays Must Face Investor Lawsuit Over Libor Manipulation, Says Appeals Court
A federal appeals court ruled Friday that Barclays BARC.LN -1.25% PLC must face a shareholder lawsuit accusing the British bank of misleading investors about its manipulation of the Libor benchmark rate as well as its borrowing costs.
The Second U.S. Circuit Court of Appeals in New York revived the investors’ lawsuit after a federal judge in Manhattan tossed the case last year. The appeals court said shareholders of Barclays’ American depositary receipts had presented a “plausible” claim.
Bank of America : BofA ex-CFO agrees to settle N.Y. lawsuit over Merrill
(Reuters) – Bank of America Corp’s former finance chief, Joe Price, has agreed to pay $7.5 million to settle a New York lawsuit that accused the bank and its former executives of misleading investors during the lender’s acquisition of Merrill Lynch.
Price also agreed to not serve as an officer or director of a public company for 18 months, according to the settlement agreement.
The agreement ends the 2010 case against former Chief Executive Kenneth Lewis, Price and Bank of America linked to the 2008 global financial crisis. The bank and Lewis settled with New York Attorney General Eric Schneiderman last month.
New York accused the bank’s executives of concealing Merrill’s mounting losses from Bank of America shareholders prior to a December 5, 2008 vote on the merger, and misrepresenting the impact the merger would have on the bank’s future earnings.
“This settlement is one more step in our effort to hold top financial executives accountable for their actions,” Schneiderman said in a statement.
The bank paid the $7.5 million for Price, according to his attorney William Jeffress, who added that his client decided to settle to because of the toll it was taking on him and his family.
What Regulators Must Consider Before Punishing Individual Bankers
“Why aren’t we holding the individuals responsible for the financial crisis accountable?” It is a question that has been repeated so many times over the last five years that no one seems to expect an answer. But the question was raised again recently by Benjamin Lawsky, head of the New York State Department of Financial Services, with a public promise to name names and hold individuals accountable in enforcement actions going forward.
In public remarks before the Exchequer Club in Washington, Lawsky stated that in order to deter misconduct and incentivize ethical behavior on Wall Street, regulators must not only hold corporations accountable, but also the individuals who engaged in the misconduct on behalf of the corporation.
First, he stated that regulators “should publicly expose—in great detail—the actual, specific misconduct that individual employees engage in.” Second, he stated that “where appropriate—individuals should face real, serious penalties and sanctions when they break the rules.” To this end, in addition to imprisonment for criminal violations, Lawsky proposed “suspensions, firings, bonus claw-backs, and other types of penalties in the regulatory context.”