Daily Archives: February 10, 2015

Judge dismisses Prudential mortgage fraud lawsuit against BofA

A federal judge threw out a lawsuit brought by Prudential Financial (PRU), which claimed that Bank of America(BAC) falsely represented the quality of $1.9 billion of pre-crisis residential mortgage-backed securities, leaving Prudential on the hook for “countless” home loans that defaulted.

According to report from Reuters, U.S. District Judge Stanley Chesler ruled that Prudential did not prove that Bank of America lied to ratings agencies about the quality of the loans in question.

From the Reuters report:

He also said Prudential could not rely on “after-the-fact” computer analysis to show the defendants knew when arranging the 54 securitizations at issue from 2004 to 2007 that property appraisals were being systematically inflated.

Chesler, who previously dismissed Prudential’s racketeering claim, threw out most of the Newark-based insurer’s remaining claims with prejudice.

He said Prudential may resubmit one claim involving 21 securitizations where the defendants acted as underwriters, not sponsors or issuers. The judge did not rule on Prudential’s “equitable fraud” claim.

Source: Reuters

Justice Department Is Seeking Felony Pleas by Big Banks in Foreign Currency Inquiry

Please….The banks are not going to volunteer to plea guilty… They will do what they usually do when they commit crimes: Pay a fine and pass the penalities to the shareholders and consumers…

The Justice Department is pushing some of the biggest banks on Wall Street — including, for the first time in decades, American institutions — to plead guilty to criminal charges that they manipulated the prices of foreign currencies.

In the final stages of a long-running investigation into corruption in the world’s largest financial market, federal prosecutors have recently informed Barclays, JPMorgan Chase, the Royal Bank of Scotland andCitigroup that they must enter guilty pleas to settle the cases, according to lawyers briefed on the matter. The pleas would be likely to carry a symbolic stigma, if limited actual fallout, in handing felony convictions to some of the world’s biggest banks.

Read on.

Industry wants regulators to look at big picture of regs

The new risk retention rules and lending standards have served as an impediment to mortgage investors and the housing market.

That was the broad consensus of a panel focused Tuesday morning on regulatory issues at ABS Vegas 2015, theStructured Finance Industry Group/IMN capital markets conference at the Aria Resort & Casino in Las Vegas. This is the second ABS Vegas conference since the split of SFIG from the American Securitization Forum.

More than 6,000 traders, investors and structured finance/securitization professionals turned out for the three-and-a-half day program, developed by leaders representing the full spectrum of industry participants including investors, issuers, financial intermediaries, regulators, law firms, accounting firms, technology firms, rating agencies, servicers and trustees.

Moderator Jason H. P. Kravitt, a partner with Mayer Brown led the panel that included Calvin Wong, chief credit officer at Morningstar Credit Ratings; Sairah Burki, director, for the Structured Finance Industry Group; Katherine Hsu, chief of the Office of Structured Finance in the corporation finance division at theSecurities & Exchange Commission, and Deborah Toennies, managing director at JP Morgan Securities.

“A lot of regulations have gone into securitizations, so there’s been an enormous amount of change, and there’s just as much, if not more, to come,” Toennies said. “Some of them will have as large if not a larger impact to the overall markets.

Read on.

Lawyer moved Halliburton subsidiary bribes through secret Swiss HSBC accounts

A network of secretive banks and offshore tax havens was used to funnel $182 million in bribes to Nigerian officials in exchange for $6 billion in engineering and construction work for an international consortium of companies that included a then Halliburton subsidiary.

In 2010 Nigeria indicted former U.S. Vice President Dick Cheney, who was CEO of Halliburton before he was elected, only to later clear him when Halliburton worked out a $35 million settlement.

Leaked records from HSBC, a huge global bank based in London, reveal new details about the bank’s role as a conduit for the bribes — and new details about how British lawyer Jeffrey Tesler operated. The files, obtained by the French newspaper Le Mondeand the International Consortium of Investigative Journalists, a project of the Center for Public Integrity, show ties between Tesler and high-ranking Nigerians not previously named publicly in connection with the scandal, raising the possibility of renewed questions about Nigeria’s handling of the affair.

Tesler pleaded guilty to U.S. corruption charges for his role in what became known as the Halliburton Bribery Scandal. The cash was destined for Nigeria’s ruling party via the state-owned oil and gas company, the Nigerian National Petroleum Corporation (NNPC), according to an official Nigerian report.

Read on.

Woman Must Face Bank Claims Over Judgment

(CN) – A woman who owes a judgment more than $62 million to Wells Fargo and Regions Bank must answer claims she fraudulently transferred funds to avoid payment, a federal judge ruled.
Wells Fargo and Regions Bank sued Sabrina Barber and her company, Blaker Enterprises LLC, for making fraudulent transfers in order to avoid paying a judgment owed to the banks.
The deficiency comes from a 2010 foreclosure judgment.
After the judgment was entered, Barber allegedly transferred substantial amounts to at least three different accounts.
The banks also allege Barber received $1 million in a divorce settlement that should have been put toward paying the outstanding judgment, but instead she withdrew sums of more than $200,000 at a time.
The banks filed a complaint seeking injunctive relief, for Barber’s interest in Blaker Enterprises to be foreclosed, and to have Barber ordered to stop making withdrawals on the basis of their being fraud and constructive fraud.
Barber asked the court to dismiss the case due to lack of subject matter jurisdiction and failure to state a claim.
The judge declined to give the banks injunctive relief, but upheld all other claims.
In doing so, U.S. District Judge Paul Bryon said injunctive relief would be inappropriate because liability in the case has yet to be proven. He also held that because Barber and Blaker Enterprises reside in Florida, subject matter jurisdiction is proper.

Read on.

Goldman head Blankfein to banks: Stop whining about regulations

Lloyd Blankfein’s not the type to whine.

The Goldman Sachs head honcho said investors hold more sway over regulators than big banks — and no amount of “whinging” will change it.

“When the users of the market make themselves understood, then the regulatory pendulum will swing to whatever place is more appropriate,” Blankfein said at an industry conference on Tuesday. “But right now, in the aftermath of the trauma of the financial crisis, it’s not a shock that the pendulum would go very far.”

“Whinging about it is not going to accomplish it,” he added.

Read on.

Attorney Fees: Following Local Law Can Mean the Difference Between Collecting or Not


Southside, LLC v SunTrust Bank (In re Southside, LLC), 520 B.R. 914 (Bankr. N.D. Ga. 2014) –

A debtor objected to attorney fees included in the proof of claim filed by a mortgagee, and the mortgagee moved for relief from the automatic stay to exercise its rights under a security deed securing the debtor’s guaranty based in part on the debtor’s lack of equity in the property.

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