Daily Archives: November 9, 2014

Bank of America, Other Major Banks, Facing Increasing Losses From Legal Expenses

Bank of America, one of the world’s largest banks, is bemoaning that it will suffer a loss of US$232 million for the third quarter.


The amount said to be related to legal costs surrounding a global investigation into the foreign exchange trading practices of a number of major banks, Bank of America included. The foreign exchange market is a US$5.3 trillion a day market but is also one of the least regulated of all markets.

This might seem like a lot of money for “legal costs” but the fact is that this bank was forced to add US$400 million to its legal reserves due to the settlements they were expected to pay out. BoA representatives did however mention that they were “in advanced discussions with U.S. regulators to resolve [these] matters[.]”

But the United States may be the least of the huge banks problems, as there are concurrent investigations ongoing in both Europe and Asia concerning similar issues. According to the New York Times, there was no mention of which regulators will be contacted in these regions, if any. Investigations have been ongoing since the middle of 2013 and regulators have been going over evidence that traders working for these banks manipulated rates for 160 different currencies.

Read on.

This Is What Happens When Trying To Get To The Bottom Of The UBS Gold-Rigging Scandal


So as part of our diligence, because apparently no other media will touch the topic of gold rigging until and unless it is shoved in their face on a, ahem, silver platter, because after all the subject matter is just too “conspiratorial”, we decided to ask Mr. Flotron some on the record questions, and sent him the following email:

Andre, we are following up on the FT’s gold rigging story and were wondering if we could ask you a few follow up questions on the record?

This is the response we got:

From: <andre.flotron@ubs.com>

Date: 9 November 2014 17:47:12 WET

Subject: Out of Office AutoReply:

Dear sender,

I am no longer responsible for your inquiry. Please refer to Roger Böhler (roger.boehler@ubs.com)

Best regards,

André Flotron

Based on the present E-Mail exchange, and/or on the agreement reached with you, respectively, UBS is entitled to contact you via insecure E-Mail:(a) E-Mails contain substantial risks such as lack of confidentiality, manipulation of content and sender, misdirection, viruses etc. UBS does not accept any liability for damages arising from use of E-mail. Accordingly, UBS recommends to abstain from sending any sensitive information via E-Mail, from forwarding the text received  when submitting reply E-Mails and recommends to manually capture the  E-Mail address in every instance. If you should wish to verify the content of this message, please request a hard-copy version. (b) In principle, UBS does not accept any (purchase) orders,  cancellation of orders or authorizations etc. via E-mail. If UBS  receives such E-Mails, UBS is not obliged to expressly decline them. If you have received this E-Mail by mistake or do not wish to be contacted by E-Mail in the future, you are kindly asked to inform UBS accordingly. Any E-Mail received by mistake (including all its annexes) needs to be destroyed and the content may not be forwarded nor disclosed to any further persons. c) This message is provided for informational purposes and should not be construed as a solicitation or offer to buy or sell any securities or  related financial instruments.

UBS reserves the right to retain all messages. Messages are protected and accessed only in legally justified cases.

To be expected. After all, we know that having been the first person busted for gold rigging in Switzerland, Andre is gone but “keen to return in due time.

So we did as he requested, and sent an identical email to person he named as responsible “for our inquiry”, Roger Böhler.

To our surprise, Roger also appears to no longer be at the company. To wit:

This is the mail system at host dmz-smtpgate1.stm.ibb.ubs.com.

I’m sorry to have to inform you that your message could not be delivered to one or more recipients. It’s attached below.

For further assistance, please send mail to postmaster.

If you do so, please include this problem report. You can delete your own text from the attached returned message.

The mail system <roger.boehler@ubs.com>: host sstm8336pmh.stm.swissbank.com[] said: 550 5.1.1 <roger.boehler@ubs.com>: Recipient address rejected: User unknown in local recipient table (in reply to RCPT TO command)

Wal-Mart Accused Of Selling Bogus Cellphone Insurance

Law360, San Diego (November 07, 2014, 9:50 PM ET) — Wal-Mart Stores Inc. was hit with a false advertising putative class action Friday in Los Angeles Superior Court, alleging the retail giant sold cellphone insurance plans for phones it knew were too expensive to be covered under the insurance.

Plaintiff Charles Balzer alleges he bought two cellphones at a Wal-Mart in Santa Clarita, California, for $299 each last April, and agreed to buy accidental damage insurance after an employee told him it would protect his phones for two years. But after calling the insurance company in…

Source: Law360

DOJ’s 11-page “Statement of Facts” letter of JP Morgan’s civil settlement; No mention of Greenpoint toxic loans

JP Morgan Building of Bonds

Here is  the DOJ’s 11-page “Statement of Facts” that accompanied the November 2013 JP Morgan Chase civil settlement. The statement never used former JPMorgan Chase lawyer and whistleblower’s  Alayne Fleischmann name, however, the statement cited the letter she’d written to a bank official. Which is interesting  that statement stated “None of this was disclosed to investors.” From the DOJ statement:

Prior to JPMorgan purchasing the loans, a JPMorgan employee who was involved in this particular loan pool acquisition told an Executive Director in charge of due diligence and a Managing Director in trading that due to their poor quality, the loans should not be purchased and should not be securitized. After the purchase of the loan pools, she submitted a letter memorializing her concerns to another Managing Director, which was distributed to other Managing Directors. JPMorgan nonetheless securitized many of the loans. None of this was disclosed to investors.

On a side note of the DOJ statement: Greenpoint toxic loans were not mentioned. Ms. Fleischmann from the Rolling Stone article as well as current stated that she warned about the Greenpoint toxic loans specifically. More from the statement:

There were loans in each of the RMBS reviewed by the Justice Department that did not comply with underwriting guidelines. The following securitizations were reviewed by the Justice Department: JPALT2007-A1, JPMAC 2006-WMC1, JPMAC 2006- WMC2, JPMAC 2006-CW1, JPMAC 2006- ACC1, JPMAC 2006-CW2, JPMAC 2006-WMC3, JPMAC 2006-RM1, JPMAC 2006-HE3, JPMAC 2006- WMC4. The securitizations in question were issued between
2006 and 2007 and had an original unpaid balance of $ 10.28 billion .

Greenpoint Mortgage shut down in 2007 by parent Capital One Financial Corp. Greenpoint Funding and Capital One were subpoenaed this year by Residential Mortgage-Backed Securities Working Group for alleged mortgage-bond fraud. And here is an 2011 article by Center of Public Integrity of a Greenpoint underwriter uncovered three frauds in one loan.

Finally, here is  a video of Attorney General Eric Holder’s statement that no company that breaks the law should be considered too large or too profitable to be immune from criminal prosecution:

Click here to watch the video.

Lenders can now disable your car when you’re driving on the freeway

Imagine this scenario: You’re on an important trip miles from home and stopped in traffic, but before you can continue on your way, your car shuts down. You’ve got enough gas in the tank and no mechanical problems. But you’re stranded far from home because you’re a few days late on your car payment and the lender won’t let you drive until the debt is paid.

If this sounds like part of a dystopian future in which repo men are now cyborgs, it’s not. It’s happening today and becoming a big part of the new automotive landscape. Car dealers and automotive lenders are targeting those with poor credit by installing GPS-based kill switches, or starter-interrupt devices, on the cars that they sell.

The New York Times recently reported that about 2 million cars are now outfitted with such kill switches in the U.S., which is about one-quarter of subprime car loans, and creditors are not shy when it comes to remotely disabling cars whose owners are behind on their payments:

“Some borrowers say their cars were disabled when they were only a few days behind on their payments, leaving them stranded in dangerous neighborhoods. Others said their cars were shut down while idling at stoplights. Some described how they could not take their children to school or to doctor’s appointments. One woman in Nevada said her car was shut down while she was driving on the freeway.

“Beyond the ability to disable a vehicle, the devices have tracking capabilities that allow lenders and others to know the movements of borrowers, a major concern for privacy advocates. And the warnings the devices emit — beeps that become more persistent as the due date for the loan payment approaches — are seen by some borrowers as more degrading than helpful.”

Read on.

JPMorgan Attains Potential Deal To End $681M Oil Rights Suit

Law360, New York (November 07, 2014, 8:24 PM ET) — JPMorgan Chase & Co. announced Friday it reached a tentative deal with a group of owners of mineral rights in Texas who claim the lender mismanaged their trust by leasing rights at unfavorable terms to drill in the oil and gas rich Eagle Ford Formation in South Texas.

The possible settlement came as trial was set to begin in San Antonio, where beneficiaries of the South Texas Syndicate Trust are seeking $681 million in damages for the lender’s allegedly harmful deals during the region’s shale boom….

Source: Law360