Daily Archives: June 19, 2014


RBS to pay $99.5 mln to settle some FHFA mortgage claims

RBS to pay $99.5 mln to settle some FHFA mortgage claims

(Reuters) – Royal Bank of Scotland Group Plc agreed on Thursday to pay $99.5 million (£58.66 million) to resolve a U.S. regulator’s claims against the bank over Freddie Mac’s purchase between 2005 and 2007 of mortgage-backed securities that later went sour.

The Federal Housing Finance Agency said the accord related to litigation also naming Ally Financial Inc, which previously settled, as a defendant.

The FHFA said it has now reached 15 settlements, totalling about $16.1 billion, stemming from lawsuits it filed in 2011 to recoup losses on roughly $200 billion of mortgage-backed securities purchased by Freddie Mac and Fannie Mae.

The FHFA oversees both government-controlled mortgage companies as conservator.


UBS : Belgium boss charged in tax fraud investigation

UBS : Belgium boss charged in tax fraud investigation

A Belgian judge charged the head of UBS Belgium on Thursday with involvement in an alleged multi-billion euro tax fraud by the Swiss bank’s Belgian unit.

Belgian police carried out raids on Thursday morning at the bank and at the homes of a client and of UBS Belgium chief executive Marcel Bruehwiler, Brussels prosecutors said.

Bruehwiler was then questioned by a judge for several hours.


UBS : faces criminal probe for Puerto Rico bond fund sales – lawyers (Exclusive)

UBS : faces criminal probe for Puerto Rico bond fund sales – lawyers (Exclusive)

U.S. authorities are probing UBS AG for criminal fraud after a former broker in Puerto Rico allegedly directed clients to improperly borrow money to buy mutual funds that later plunged, according to lawyers representing some of the investors.

At issue is whether UBS executives in Puerto Rico and in the United States knew proceeds from loans made by a Utah unit of the Swiss bank were used in a way that violated its own lending rules. If they knew about the practice and did not stop it, they could be criminally responsible for the alleged fraud.

The investigations are the latest headache for UBS, which has faced myriad lawsuits and probes since the financial crisis. Last week, independent analysts estimated that the bank might have to pay $8 billion in fines and settlements linked to alleged price-manipulation in currency markets.

Puerto Rico-based lawyers Harold Vicente-Gonzalez and his son, Harold Vicente-Colon, said they were representing several dozen people who were clients of UBS Financial Services Inc.

They said the investors lost large portions of their savings through investments in closed-end funds whose sales by UBS have been the subject of several investor lawsuits and regulatory probes. Packed with Puerto Rican government bonds that UBS had underwritten, the funds plunged in value at the end of last summer as concerns grew about the weak state of the U.S. territory’s economy and its ability to repay its debt.


Ex-Goldman Sachs trader, 35, sues because he ‘only’ got an $8.25 million bonus instead of the $13 million he told his mother he’d get

Ex-Goldman Sachs trader, 35, sues because he ‘only’ got an $8.25 million bonus instead of the $13 million he told his mother he’d get

Deeb Salem, a former Goldman Sachs Group Inc. (GS) trader who said he helped the bank earn more than $7 billion, wants to be paid the almost $5 million difference between his 2010 bonus and what he told his mother to expect.

Salem said in an arbitration hearing that he was led to believe that his 2010 bonus would be $13 million, down from a $15 million award for 2009 when he was paid more than Chief Executive Officer Lloyd C. Blankfein. Instead, Salem said his bonus was unfairly docked because of a written warning he received about his 2007 self-evaluation.

Salem, 35, said the $8.25 million bonus for 2010 didn’t reflect his contributions, while Goldman Sachs argued he was aware that the firm could pay him whatever it wished and that the company considered his conduct in determining compensation. Salem said promises from executives kept him around for another year before a $3 million bonus led him to jump to a hedge fund.

“Let’s be very clear: I was one of the most sought-after investment professionals in the mortgage industry,” Salem said during the Feb. 25 hearing. “I had the opportunity throughout the course of my career and throughout — from that day, from almost every month that I was at Goldman, to leave for other opportunities.”


America’s Last Prisoner of War

America’s Last Prisoner of War

Interesting that there is so much criticism from lawmakers and media about Bowe Bergdahl, the POW that was captured by the Taliban 5 years and is now released. The late investigative journalist Michael Hastings wrote a great piece about Bergdahl two years ago…

June 7, 2012 8:00 AM ET

In June 2012, fearless Rolling Stone contributing editor Michael Hastings wrote the definitive first account of Bowe Bergdahl — the young American soldier who was captured by the Taliban and became the last American prisoner of war. Hastings, the journalist who brought down the career of General Stanley McChrystal in these pages, died in a car accident one year later. Bergdahl was freed this weekend. Hastings’ incredible story is available in full here:

The mother and father sit at the kitchen table in their Idaho farmhouse, watching their son on YouTube plead for his life. The Taliban captured 26-year-old Bowe Bergdahl almost three years ago, on June 30th, 2009, and since that day, his parents, Jani and Bob, have had no contact with him. Like the rest of the world, their lone glimpses of Bowe – the only American prisoner of war left in either Iraq or Afghanistan – have come through a series of propaganda videos, filmed while he’s been in captivity.

In the video they’re watching now, Bowe doesn’t look good. He’s emaciated, maybe 30 pounds underweight, his face sunken, his eye sockets like caves. He’s wearing a scraggly beard and he’s talking funny, with some kind of foreign accent. Jani presses her left hand across her forehead, as if shielding herself from the images onscreen, her eyes filling with tears. Bob, unable to look away, hits play on the MacBook Pro for perhaps the 30th time. Over and over again, he watches as his only son, dressed in a ragged uniform, begs for someone to rescue him.

“Release me, please!” Bowe screams at the camera. “I’m begging you – bring me home!”

Private First Class Bowe Bergdahl arrived in Afghanistan at the worst possible moment, just as President Barack Obama had ordered the first troop surge in the spring of 2009. Rather than withdraw from a disastrous and increasingly deadly war started by his predecessor, the new commander in chief had decided to escalate the conflict, tripling the number of troops to 100,000 and employing a counterinsurgency strategy that had yet to demonstrate any measurable success. To many on Obama’s staff, who had been studying Lessons in Disaster, a book about America’s failure in Vietnam, the catastrophe to come seemed almost preordained. “My God,” his deputy national security adviser Tom Don­ilon said at the time. “What are we getting this guy into?” Over the next three years, 13,000 Americans would be killed or wounded in Afghanistan – more than during the previous eight years of war under George W. Bush.

Bowe’s own tour of duty in Afghanistan mirrored the larger American experience in the war – marked by tragedy, confusion, misplaced idealism, deluded thinking and, perhaps, a moment of insanity. And it is with Bowe that the war will likely come to an end. On May 1st, in a surprise visit to Bagram Air Force Base in Afghanistan, President Obama announced that the United States will now pursue “a negotiated peace” with the Taliban. That peace is likely to include a prisoner swap – or a “confidence-building measure,” as U.S. officials working on the negotiations call it – that could finally end the longest war in America’s history. Bowe is the one prisoner the Taliban have to trade. “It could be a huge win if Obama could bring him home,” says a senior administration official familiar with the negotiations. “Especially in an election year, if it’s handled properly.”

Bowe Robert Bergdahl was born in Sun Valley, Idaho, on March 28th, 1986 – the same day as Lady Gaga, as his parents like to point out. Bob and Jani had moved to Idaho from California after college, building a small, two-­bedroom home on 40 acres of farmland not far from the small town of Hailey, deep in the mountains of Wood River Valley. His father worked construction, his mother odd jobs, living the life of ski bums, nearly off the grid. In 1983, the year Bowe’s older sister Sky was born, his parents pulled in $7,000 and paid off the hospital bills for her birth with weekly $20 deposits.

Rather than put their kids in the local school system, Jani and Bob home-schooled Bowe and his sister. Devout Calvinists, they taught the children for six hours a day, instructing them in religious thinkers such as Thomas Aquinas and St. Augustine. “Ethics and morality would be constant verbiage in our conversations,” his father recalls. “Bowe was definitely instilled with truth. He was very philosophical about perceiving ethics.”

By the age of five, Bowe had also learned to shoot a .22 rifle and to ride horses. He developed a love for dirt bikes and immersed himself in boy’s adventure tales – anything that had to do with sailing and the ocean – as well as cartoons. His favorite was Beetle Bailey, the comic-strip antihero who shambles through life in the Army as a permanent fuck-up.

By the time he was 16, Bowe had grown restless with his home-schooling – and his parents. He began to explore the wider world, and became obsessed with learning how to fence. At a nearby fencing studio, which also offered ballet classes, he was recruited by a beautiful local girl to be a “lifter” – the guy who holds the girl aloft in a ballet sequence. He soon moved in with the girl, whose family owned a tea shop in Ketchum, and made it his second home. The matriarch of the household, Kim Harrison, introduced him to Buddhism and Tarot cards. Bowe repaid his new family by doing construction work on their home. “To me, it was the normal path teenagers take,” says Bob. “Like going to college – you get into all this stuff.”

At 20, Bowe went even farther afield in search of the kind of boy’s adventure that had mesmerized him for years: He decided to join the French Foreign Legion, the infantry force made up of foreigners who want “to start a new life,” as the legion’s recruiting website puts it. He traveled to Paris and started to learn French, but his application was rejected. “He was absolutely devastated when the French Foreign Legion didn’t take him,” Bob says. “They just didn’t want an American home-schooled in Idaho. They just said no way.” Bowe pored over a survival and combat handbook written by a former member of the British special forces, and he gravitated toward the TV show Man vs. Wild, hosted by another legendary British soldier. “This became his role model,” his father says. “He is Bear Grylls in his own mind.”

Returning home from Europe, Bowe drifted for the next few years, working mainly as a barista at Zaney’s, a local coffee shop in Hailey. But he kept dreaming of ways to pursue something bigger. In 2008, he spoke to a family friend who was working as a missionary in Uganda about going over to Africa to teach “self-defense techniques” to villagers being targeted by brutal militias like the Lord’s Resistance Army. He and his father even fantasized about the creation of a special ­operations unit to “kill these fucks” in Africa, imagining that “someone needed to run an op with some military people dressed up like U.N. people” to take out warlords in Darfur and Sudan. Before a spot in the friend’s missionary program could open up, though, Bowe had decided on a different adventure.

One day that spring, Bowe called his mother. “Mom, I need to talk to you and Dad about something,” he said. He stopped by the house that Saturday, when his father was home from work.

“I’m thinking about joining the Army,” Bowe told his parents.

“You’re thinking about joining?” his father asked. “Or you already signed on the dotted line?”

“Well, yeah,” Bowe admitted.

Bowe’s mother wished he had enlisted in a different branch, like the Navy, that wouldn’t have put him on the ground in Iraq or Afghanistan. His father did what he always did with his son’s dreams. “I just tried to be supportive,” Bob says.

But what Bowe found in the Army, according to his parents, was a “deception” – one that started from the moment he was recruited. Bowe had been enticed to join the Army, they say, with the promise that he would be going overseas to help Afghan villagers rebuild their lives and learn to defend themselves – “the whole COIN thing,” says Bob, citing the shorthand for America’s strategy of counterinsurgency. “We were given a fictitious picture, an artificially created picture of what we were doing in Afghanistan.”

After 16 weeks of training, Bowe graduated from infantry school in Fort Benning, Georgia, in the fall of 2008. While others in his training unit – A Company 2-58 – used their weekend passes to hit up strip clubs, Bowe hung out at Barnes & Noble and read books. He was already an expert shot from his days firing his .22 in the mountains of Idaho. When his parents attended the graduation, the drill sergeant told them, “Bowe was good to go when he got here.” After completing the course, Bowe was assigned to the 25th Infantry Division in Fort Richardson, Alaska, not far from Anchorage. He arrived in October 2008.

At first, according to soldiers in his unit, Bowe seemed to embrace Army life. “He showed up, looked like a normal Joe,” says former Specialist Jason Fry, who is now studying for a master’s in theology. “When he first got to the unit, he was the leadership’s pet. He read the Ranger Handbook like no other. Some people resented him for it.” Bowe kept to himself, doing physical training on his own. “He never hung out with anyone, always in the background, never wanted to be in front of anything,” says Fry. He surrounded himself with piles of books, including Three Cups of Tea, about a humanitarian crusade to educate girls in Pakistan and Afghanistan, as well as instructions on Zen meditation and an introductory ethics handbook with writings from Aristotle, Augustine, Kant and Hume.


Hong Kong Probes Financial Firms for Money Laundering

Hong Kong Probes Financial Firms for Money Laundering

Hong Kong’s banking regulator is investigating several financial institutions including at least one bank for possible breaches of the city’s anti-money laundering regulation, the South China Morning Post reported.

One bank has been questioned about its money laundering controls, the newspaper reported, citing an unidentified person.

The Hong Kong Monetary Authority isn’t conducting investigations into money laundering, which is under the ambit of law enforcement agencies, it said in an e-mail response to questions fromBloomberg News. The checks on financial institutions, which follows on the implementation of an anti-money laundering law in 2012, are to identify possible breaches concerning customer due diligence and record keeping, it said.

“This is an important distinction,” the regulator said.

Regulators from Hong Kong to the U.S. are stepping up efforts to catch risk-management failures at banks. The U.S. Office of the Comptroller of the Currency in January proposed a policy shift that will remove hurdles to targeting lenders with certain enforcement actions.


This One Fund Owns Nearly 75% Of Nationstar Mortgage Holdings

This One Fund Owns Nearly 75% Of Nationstar Mortgage Holdings

When a fund holds a small amount of a given stock, it can much more easily change course if new developments challenge the original investment thesis, i.e. the fund can quickly sell that small holding. Selling a few thousand shares of AAPL for instance will do very little to disrupt the day’s share price. But if a fund owns an enormous percentage of a company’s outstanding shares and suddenly decides it wants to sell out, that isn’t always so easy a feat to accomplish unless there are willing buyers ready to soak up the extra shares.

Funds are keenly aware of this fact, so the decision to accumulate a very high percentage of the outstanding shares of a given company is not something done lightly. In fact, logic would dictate that a fund would only do such a thing if they have a very high level of confidence in their investment thesis.

Click here to find out 10 S&P 500 Components Hedge Funds Are Buying »

With this in mind, we at Holdings Channel, have reviewed 3,692 13-F filings for the 03/31/2014 reporting period, and screened out those stocks where a very high percentage of the shares outstanding are reported to be held by a single fund.

One such stock is Nationstar Mortgage Holdings NSM +1.04% (NYSE: NSM), where Fortress Investment Group LLC FIG +0.52% reported ownership of 67,762,251 shares for the 03/31/2014 period, which we calculate to be 74.65% of the 90,776,000 shares outstanding.

It needs to be pointed out that 13-F filings do not tell the whole story, because these funds are only required to disclose their longpositions with the SEC, but are not required to disclose their short positions. Funds are often known to be long one stock, while simultanously short a very similar stock. Funds may also be short call options for the same stock they are long, but this would not be reported because that component of the overall position is a short.


Bank of America fined $8 million over Merrill Lynch bills

Charlotte Business Journal:

Bank of America Corp. (NYSE:BAC) has agreed to pay an $8 million fine over claims that Merrill Lynch, which the Charlotte-based bank bought in 2009, improperly charged fees over a six-year period, Bloomberg reports.
And that’s on top of nearly $90 million being returned to those Merrill Lynch clients, according to the report.



A partial win for homeowners suing MERS for robosigning and foreclosure fraud

A partial win for homeowners suing MERS for robosigning and foreclosure fraud

Many homeowners across the nation are still battling mortgage servicers in court over various legal issues involved with the foreclosure process. A process that many lawyers and homeowners believe they have been wrongfully foreclosed upon because they claim that servicers are committing fraud.

According to court documents, the plaintiffs were borrowers who resided in Arizona, California, Nevada, Oregon, and South Carolina, and whose notes and deeds of trust were processed through the MERS System. The defendants were various financial institutions that had interests in the notes and deeds of trust or had otherwise been involved in the operation of the MERS System.

One of the claims of the plaintiff homeowners, is that they alleged that their foreclosure documents were notarized in blank and “robosigned” with forged signatures.

In a great win for homeowners across the country, the 9th Circuit Federal Appeals Court agreed with some of the claims made by the plaintiffs who have partially succeeded in what could be called a court victory over a fraudulent process by voiding the robosigned documents.

The panel reversed the district court’s dismissal of Count I, seeking relief based on violations of Arizona’s false documents statute when the defendants allegedly filed false notices of trustee sale, notices of substitution of trustee, and assignments of deed of trust. The plaintiffs alleged that these documents were notarized in blank and “robosigned” with forged signatures.


BlackRock & Pimco Sue Deutsche Bank & US Bank For Trustee Failings

From Al Yoon at The Wall Street Journal via Morningstar:

Investors led by BlackRock Inc. and Pacific Investment Management Co. are zeroing in on a new target in their bid to recoup losses tied to the U.S. housing bust: the so-called trust banks that oversee payments and enforce terms on more than $2 trillion in residential mortgage securities.

A group led by the giant investment firms on Wednesday sued units of Deutsche Bank AG and U.S. Bancorp in New York Supreme Court for their roles as trustees overseeing the bonds on behalf of investors who bought the securities.

The group also filed lawsuits against trustee units of Wells Fargo & Co., Citigroup Inc., HSBC and Bank of New York Mellon over their roles overseeing more than 2,000 bonds issued between 2004 and 2008. The investors are seeking damages for losses on the bonds that have surpassed $250 billion, according to a person familiar with the litigation.