Daily Archives: December 2, 2014

Swiss Banker Seeks Bail in U.S. Without Going to Court

A Swiss banker accused of helping U.S. clients cheat on their taxes wants a judge to grant him bail without his having to appear first in a New York courtroom.

Stefan Buck, who was Bank Frey & Co.’s head of private banking in Switzerland and an executive board member, was indicted in April 2013 on a charge of conspiring to help clients hide millions of dollars from the Internal Revenue Service in offshore assets.

Buck, who hasn’t appeared in federal court in New York, asked for a bail package without leaving Switzerland, which doesn’t extradite its citizens for tax offenses.

“In a case such as this, where the defendant wishes to leave the ‘safe haven’ of Switzerland to appear in a U.S. court to clear his name, the government, most respectfully, should be open to practical solutions to this laudable result,” according to a Nov. 18 filing by Buck’s attorney Marc Agnifilo.

Read on.

SEC Nears Deal With Ex-Hedge Fund Compliance Chief

Law360, New York (December 02, 2014, 2:49 PM ET) — The ex-chief compliance officer of Sands Brothers Asset Management LLC, an investment adviser to venture capital and hedge funds, is close to settling U.S. Securities and Exchange Commission charges related to the firm’s alleged violations of rules around safeguarding client assets, according to a Monday filing.

The filing gave no indication of what sanction Christopher Kelly agreed to as part of his prospective settlement with the agency, but the administrative law judge overseeing the case agreed to stay the proceeding against him pending the commission’s consideration…

Source: Law360

House Passes Bill to Create New Bankruptcy Process for Big Banks

NoteDec 2, 2001: Enron files bankruptcy

The House of Representatives late Monday voted to approve a bipartisan bill amending thebankruptcy code for large financial institutions as part of an ongoing response to the 2008 collapse of Lehman Brothers.

The House approved the measure by voice vote, which means that the names or numbers of senators voting on either side are not recorded. It follows approval – also by voice vote– of a “substantially similar” measure by the House Judiciary Committee in September.

The bill H.R. 5421, titled the Financial Institution Bankruptcy Act of 2014 or FIBA, seeks to ensure that a failing big bank can employ the traditional bankruptcy process in a way that doesn’t cause collateral damage to the global financial markets.

“FIBA removes potential obstacles to an efficient bankruptcy of a financial institution,” said Rep. Bob Goodlatte, R-Va., the chief of the House Judiciary Committee, in a statement. “This legislation enhances the bankruptcy code and its ability to resolve financial firms for the benefit of stability in the U.S. and global economies and does so with minimal financial burdens or cost.”

The bill, which is supported by Wall Street, is intended to drive failing banks to employ bankruptcy instead of an alternative system set up by the post-crisis Dodd-Frank Act known as the Orderly Liquidation Authority. The OLA allows regulators to infuse a failing bank and its creditors with taxpayer funds initially to stem a panic emerging from a collapsing big bank.

Critics say the OLA is an opaque process that gives regulators and politicians too much discretion to pick winners and losers among junior and senior creditors when a failing institution is dismantled. In addition, they worry that taxpayer funds spent through the OLA process would never be recouped even though there is a provision in the law requiring those costs to later to be covered by a fee assessed on big banks.

Alternatively, the bankruptcy bill seeks to produce an expedited bankruptcy process at the same time that it maintains creditor priority as well as transparency in the process.

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Foreclosure dismissal moves forward $70M jury trial against Bank of America


Good news foreclosure ruling paves way for TJ Fisher’s to bring BofA before six jurors.

Bank of America(NYSE:BAC) dropped their foreclosure case against author TJ Fisher at a recent bench trial after bank attorneys missed a court deadline and Motion-in-limine hearing and were barred from presenting documents or witnesses. Judge Catherine M. Brunson of the 15th Judicial Circuit ofFlorida signed the foreclosure dismissal order and also presides over Fisher’s long-running $70 million legal battle against the nation’s second-biggest bank as a defendant. The tangled cases play out in the same courtroom, each case jockeying for crucial court-calendar scheduling and rulings. “The foreclosure dismissal is a miracle I’m grateful for,” Fisher says. “Bank of America intended to heave-ho me from my home before a jury hears my main case against the bank. They’re stopped, for now,” Fisher says. Fisher met financial and personal ruin after ex-Baltimore Raven’s football player Michael McCrary sued her for $60 million and obtained a subsequent default judgment. The salacious scandal over convoluted Bank of America 2006 transactions between the bank and Fisher’s husband embroiled the author after the bank opened an unverified limited liability company account and took in deposit monies that permeated Fisher’s marital life. The bank’s account opening triggered a seven-year nightmare and legal-quagmire odyssey through 14 civil courts for Fisher. Her life in shambles with debt and an impossible-to-pay $33.3 million judgment, Fisher fought back but could not get out from behind-the-eight-ball untenable situation she was thrust into. She sued Bank of America in 2011 for negligence and responsibility. The former-NFLer dogged Fisher for years until his parallel suit against Bank of America finally netted him an eight-figure bank settlement, after Fisher sued the bank. Once receiving settlement for the same account opening he sued Fisher over, McCrary refused to extinguish his duplicate claim and legally valid judgment against her. McCrary and his lawyers remain intent on extracting the proverbial pound after pound of flesh and millions of dollars more from Fisher for McCrary’s soured business relationship with her husband that pocketed the ex-gridiron an eight million plus profit. McCrary wants more. The powerful, influential and well-financed bank that consistently ranks as one of American’s most hated banks with a high rate of customer dissatisfaction has dodged and delayed a jury trial for nearly four years in Fisher’s headliner case against the bank while simultaneously pursuing foreclosing her from her home. Fisher’s attorneyPatrick W. Maraist, Esq. filed a 63-page Motion for Continuance in the foreclosure case to stay the foreclosure on the “unclean hands” doctrine and the bank’s ongoing “bad faith” tactics to stonewall discovery and stall justice. Maraist did not have to obtain a court injunction to block foreclosure, this time around. A string of judicial rulings favorable to Fisher rendered his motion unessential.

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Appeals court revives U.S. case against UBS over CDO fraud

A New York state appeals court on Tuesday revived a lawsuit accusing UBS AG of fraudulently causing $331 million (211.75 million pounds) of losses from collateralised debt obligations issued before the financial crisis.

Loreley Financing, a group of special-purposes entities based in Jersey in the Channel Islands, brought the lawsuit in 2012 over four CDOs arranged by UBS. The CDOs were comprised of residential mortgage-backed securities and credit default swaps.

When the housing market crashed, Loreley suffered huge losses and claimed UBS had misrepresented the CDOs, which it bought in 2006 and 2007.

Last year, a New York state judge tossed the lawsuit against the Swiss bank, saying in part that Loreley had not shown the alleged misrepresentations caused the losses.

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Increased Defaults as Interest-Only Loans Recast -Fitch

The ghosts of originations past could still come back to haunt the housing industry according to a new report from Fitch Ratings.  The company says that half of those borrowers who have loans in performing residential mortgage backed securities (RMBS) are facing increases in their mortgage payments over the next five years.

Fitch says the mortgages that will be affected by increases are those with adjustable interest rates (ARMs), loans that have had interest only payment features (IOs), and loans that were modified to save or redeem them from default.  Fitch notes that payment increases have historically led to high rates of default with a correlation between the size of the payment increase and the default rate.

‘Interest-only loans are in store for the largest payment increases,’ said Director Sean Nelson. ‘As a wave of peak vintage 10-year IOs approaches recast, many mortgage borrowers could see their monthly payments more than double.’

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Citimortgage and its agents break in, cleans out wrong house; balks at making homeowner whole

Until this year, Honesdale attorney Jeffrey S. Treat thought he had seen everything in the wild world of home restoration, flipping and landlording.

CitiMortgage and its agents confused his handyman’s special — a small, long-vacant foreclosure he purchased for cash at 1526A Thackery Avenue in Scranton — with a home it foreclosed on two doors down.

In several visits from June through July, the bank cleared Mr. Treat’s building of its contents, including tools, building materials and replacement windows.

The bank changed the locks and crudely padlocked and posted the home.

This came as a great shock to Mr. Treat, who had no mortgage on the home and no relationship with Citi.

Unable to reach an agreement with the bank or the company that did the property clean-out, Safeguard Properties of Valley View, Ohio, Mr. Treat sued them and CitiMortgage Inc. of O’Fallon, Missouri, for the $3,500 estimated worth of what they removed and $5,000 for trespassing and damages.

A spokesman for Citi said Safeguard Properties and Mr. Treat are trying to resolve the issue. But Mr. Treat is past negotiating and is preparing for court.

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Watch Elizabeth Warren Tear Into the New York Fed Chief Over Agency’s ‘Regulatory Capture’