Daily Archives: August 23, 2014

Argentine Debt Plan ‘Illegal’ Says US Judge

Argentina’s plan to take control of its own debt repayments to US bond-holders after a default has been ruled illegal by a court in New York.

The federal judge in Manhattan stopped short of finding the South American nation in contempt of court, but described Argentina’s actions as “lawless”.

District Judge Thomas Griesa rejected requests by lawyers for US hedge funds to make a contempt finding, saying he wanted everyone to concentrate on an eventual settlement.

Griesa said: “In my judgement, it does not add anything to the scales of settlement to make a finding of contempt.”

But he said that proposed legislation, announced on Tuesday by Argentine president Cristina Fernandez, would violate orders he imposed favouring creditors who refused to accept restructured bonds following the country’s 2002 default on $100bn of debt.

Read on.

BofA To Settle SEC Fraud Suit Over $850M In RMBS

Law360, Los Angeles (August 22, 2014, 9:50 PM ET) — Bank of America Corp. and subsidiary Merrill Lynch will settle a lawsuit brought by the U.S. Securities and Exchange Commission alleging the bank defrauded investors in the sale of $850 million in residential mortgage-backed securities, according to a motion for a stay filed in North Carolina federal court on Friday.

The bank and the SEC asked the court for a stay of proceedings while they finalize the deal, according to court records. Terms of the settlement were not immediately disclosed. The parties set a 60-day deadline to…

 

Source: Law360

HSBC : is sued in U.S. for $250 million over alleged role in ‘death bonds’

HSBC Holdings Plc was sued for $250 million on Friday for allegedly ignoring red flags that a colorful British entrepreneur, the late David Elias, was committing fraud through an investment vehicle he controlled.

The complaint was filed in the U.S. District Court in Manhattan by the liquidator of Luxembourg-based SLS Capital SA, which failed in 2009, the same year Elias died.

According to the complaint, HSBC had been a custodian of life insurance policies used as collateral for bonds that SLS sold to investors, and which were falsely marketed as safe.

An HSBC spokeswoman declined to comment.

Companies in the so-called life settlement business buy life insurance policies on older individuals, and can collect death benefits when the insureds die. Securities backed by such policies are sometimes known as “death bonds.”

One prominent seller of these bonds was Keydata Investment Services, which had business dealings with SLS, and whose sale of the bonds caused big losses for thousands of UK pensioners.

Read on.

HUD-OIG: Richmond, California, fails to uphold housing program requirements

After auditing the city of Richmond, California’s Neighborhood Stabilization Program, the U.S. Department of Housing and Urban Development Office of the Inspector General determined that the city was not following the requirements related to procurement and cost eligibility of NSP1.

The problem revolves around the city awarding contracts to developers that lacked the capacity and financial resources to administer the program.

Then, it failed to monitor the rehabilitation progress or the quality of work performed by three developers.

As a direct result, HUD said, “The rehabilitation of some properties suffered significant delays, while the rehabilitation of other properties had not been completed after more than 3 years.”

Along with that, the city paid $691,005 for rehabilitation work that was not performed and other ineligible and unreasonable costs, and it did not ensure that NSP1 properties were sold to eligible homebuyers.

Read on.