Daily Archives: September 23, 2014

Troubleshooters Uncover Secret Foreclosure Rentals

Jan and Marie Ouelette are laying down roots in Connecticut. They searched Craigslist for a rental home and found a list in in Andover with an 860 phone number and were sold at first sight.

“We like it here. It’s a beautiful piece of property,” Marie Ouelette said.

In early June, they say a man named Jimmy from New Haven Investments presented them with a hand-written lease without doing a credit check. Marie Ouelette said that was the first red flag.

“I asked him who to make the check out to and he said, ‘We prefer cash,'” the young mother explained.

The cashiers’ check shows the Ouelettes paid $1,875 for the first month’s rent and a half month’s security deposit. The Ouelettes moved in, but four weeks later, another red flag appeared at the front door.

“In the beginning of July, I get a knock on the door, and it’s Henry saying, ‘Who are you, and why are you here?'” Marie Oulette said.

Henry McDonald, who owns the house, moved across the state several months ago and received a letter in April from Realty Partners Group expressing interest in buying the property, which is going through foreclosure.

In May, a man named Bill met him at the home to propose a deal, according to McDonald.

“He told me it wouldn’t be a quick sale. They’d buy the house and my name would be cleared, and I’d be able to get financed on another house,” said McDonald.

McDonald signed three one-page documents: a management agreement that makes reference to renting the property, a third-party authorization letter and an indemnification agreement. In return, he says Bill agreed to pay him $2,000.

“He paid me $1,000 and said the other thousand would come once all the other paperwork was signed,” McDonald said.

Longtime Connecticut real estate attorney Chuck Shimkus reviewed the documents and said they’re so vague, he questions their legitimacy, but said they would undoubtedly be attractive to certain homeowners and entice them to sign.

“As a homeowner that in a difficult situation with a foreclosure in financial dire straits, it’s awfully tempting to enter into this arrangement, to basically put this worry aside move on in your life,” said Shimkus.

Read on.

Greensboro blogger sues Wells Fargo

GREENSBORO — A  Greensboro blogger and former mayoral candidate who has been critical of city government on Monday sued Wells Fargo. In court documents, George Hartzman claimed, among other things, that the bank hid charges on investments from hundreds of thousands of clients.

Hartzman also alleged the bank outed him as a whistle blower who three times reported ethics violations against Wachovia Corp. He worked at Wachovia securities before Wells Fargo bought the company. He then worked at Wells Fargo advisors.

“I got fired and my income got screwed,” Hartzman said on Tuesday. “I’m looking for accountability.”

Read on.

Pundits are trying to bring subprime mortgages back. Don’t let them

Mortgages are hard to get, with demands for high credit scores and a perfect lending history, so some say it’s time to bring back subprime mortgage lending.

This is, obviously, a bad idea. The financial industry has plenty of reasons to offer the same high-risk, high-return loans that made so many bankers rich during the housing bubble before everything crashed. But it’s less clear why any sensible commentator wants to cheer the industry on.

Story after story lately follows the same flawed logic: the shoddy lending that caused the financial crisis has now swung too far in the other direction, preventing deserving people from getting mortgages. The poor or middle class can’t access credit, which is the fault of “over-regulation” of banks.

This strange thinking is becoming more prevalent and commanding larger platforms. For example, Binyamin Appelbaum, in a New York Times magazine story this weekend, wondered if subprime mortgages should make a comeback. “The lending freeze is not just preventing people … from chasing their dreams. It’s bad for the overall economy too.”

Read on.

Barclays Pays $15M To Settle SEC Claim Over Lehman Business

Law360, New York (September 23, 2014, 2:25 PM ET) — Barclays Capital Inc. on Tuesday agreed to pay $15 million to settle U.S. Securities and Exchange Commission claims that it had widespread compliance failures in the investment advisory business it acquired at the collapse of Lehman Brothers Holdings Inc.

Among other shortcomings, Barclays engaged in more than 1,500 improper principal trades with advisory clients, enforcement staffers said in a settlement order filed in the SEC’s administrative court. Such transactions generally are prohibited unless the adviser has disclosed the trade with its client and obtained consent on…

Source: Law360

Deutsche Bank Execs Charged In Germany

But not in the U.S.

Law360, New York (September 23, 2014, 12:13 PM ET) — German prosecutors charged a top Deutsche Bank executive and two former CEOs on Tuesday with attempted fraud over testimony concerning a television interview that allegedly helped push a former client, media company Kirch Group, into bankruptcy.

The Munich prosecutor’s office said it had indicted current co-CEO Jürgen Fitschen, former CEOs Rolf Breuer and Josef Ackermann, and former executive Clemens Borsig in connection with an alleged cover-up around statements Breuer made on television in 2002. Leo Kirch, founder of Kirch Group, sued Deutsche after the comments, allegedly…

Source: Law360

New U.S. tax rules chill ‘inversion’ deal-making; shares dive

Tough new U.S. rules on corporate “inversions” on Tuesday sent a chill through the market for the tax-avoidance deals, both pending and potential, with share prices falling sharply in nearly a dozen companies on both sides of the Atlantic.

As investors sold stocks involved in inversions, in which U.S. companies escape high taxes at home by redomiciling abroad, analysts and tax lawyers were surveying the damage to deals currently in the works and the outlook for future transactions.

Despite new rules that will make some inversions costlier and others more difficult to do, Burger King Worldwide Inc (>> Burger King Worldwide Inc) said it will proceed with its $11.5 billion deal with Canada’s Tim Hortons Inc (>> Tim Hortons Inc.), stressing that the transaction was not about tax benefits.

In announcing their intention to proceed, the two companies said in a statement: “This deal has always been driven by long-term growth and not by tax benefits.”

Read on.

SEC Gives Wells Fargo Advisors Cease-And-Desist

CHARLOTTE — The Securities and Exchange Commission is coming down on Wells Fargo’s investment branch.

The agency gave Wells Fargo Advisors a cease and desist order and a $5 million dollar fine Monday, saying the company failed to set up safeguards against insider trading.

The charges stem from dozens of trades in Burger King in 2010 the government says should have been red-flagged.

The SEC is also asking Wells Fargo Advisors to set up an independent consultant to monitor future trades.

– See more at: http://centralnc.twcnews.com/content/news/charlotte/712131/sec-gives-wells-fargo-advisors-cease-and-desist/#sthash.RNqw2lsl.dpuf

Wells Fargo admits to control problems from insider-trading case

WASHINGTON (Reuters) – A unit of Wells Fargo will admit to wrongdoing and pay a $5 million penalty to settle charges that it failed to have adequate controls in place to prevent an employee from illegal insider trading, U.S. regulators said on Monday.

The Securities and Exchange Commission said Wells Fargo Advisors LLC did not have proper controls, unreasonably delayed producing documents during the SEC’s probe, and provided an “altered document” related to a compliance review of the broker’s trading.
Tony Mattera, a spokesman for Wells Fargo Advisors, declined to comment.

The SEC said on Monday that this marked the first time it had ever filed charges against a brokerage for failing to protect a customer’s material, non-public information.

The SEC’s case against Wells Fargo related to alleged activity by Waldyr Da Silva Prado Neto, a former Brazil-based broker who has been charged in criminal and civil proceedings with insider trading in Burger King securities before a 2010 buyout.

Read on.

Senator Brown discusses plans for Bank of America foreclosure settlement

LOGAN – Senior United States Senator for Ohio, Sherrod Brown (D) hosted a conference call on Wednesday to discuss a record setting $16 billion settlement from Bank of America.

“It’s been some six years since the financial crises wreaked terrible damage on homeowners and investors in our state and across the country,” said Brown. “We made progress, we know though that the economy can’t fully recover until the housing industry does.”

The Thriving Communities Institute, an organization dedicated to eliminating vacant housing, estimates that 50,000 abandoned properties across the state have fallen into disrepair. According to their website:

“Vacant properties act like infectious and deadly agents in our communities. One vacant house on a block destroys the value of nearby homes. Soon, due to loss of value, foreclosures and bank walk-aways, the nearby homes become vacant as the disease spreads. Soon the entire neighborhood is dead and diseased, having been destroyed by this contagious and toxic process. Then the adjacent areas are infected and the disease spreads further … predictably, relentlessly, and with devastating consequences.”

“In too many cases big banks disregarded the law, they foreclosed on homeowners who were trying to pay their bills on time, and through this practice the banks generated billions in profits,” said Brown. “It’s time for them to start paying some of that back to the communities who suffered.”

To this effect, Brown joined forces with many of his colleagues in congress to investigate and discover which institutions were the main culprits of the foreclosure fraud, resulting in the largest lenders agreed to pay more than $16 billion in retribution. The three larges U.S. banks must dedicate $13 billion of that total to various consumer relief programs.

“These funds won’t erase the housing crisis, but they’ll help reverse its course,” said Brown. “That’s why I’ve teamed up with Senator Rob Portman to ensure that Ohio receives its fair share.”

Read on.

Barclays Hit By £38m Fine Over Client Assets

Barclays will be hit by the latest in a string of financial penalties this week when the City regulator hands out a £38m fine for failing to ensure adequate protection for clients’ funds.

Sky News has learnt that the Financial Conduct Authority (FCA) is to announce as soon as Tuesday that Barclays is to pay the fine – a record for this type of misconduct.

The punishment relates to the bank’s failure to segregate clients’ asset properly and maintain adequate records, the second occasion on which Barclays has been fined for such an offence after a £1.1m penalty three years ago.

The FCA is understood to have concluded that a much more severe penalty is necessary in order to serve as a deterrent to other firms which continue to demonstrate inadequate controls over clients’ assets.

Insiders said on Monday that the regulator’s announcement would make clear that losses for Barclays’ clients were theoretical rather than actual.

Read on.