Daily Archives: March 30, 2015

Ex-Wells Fargo Analyst To Settle SEC In-House Trading Case

Law360, New York (March 27, 2015, 5:50 PM ET) — Just days before his scheduled administrative court hearing, a former Wells Fargo analyst has agreed in principle to settle the U.S. Securities and Exchange Commission’s administrative charges he engaged in insider trading by giving one of the firm’s traders early access to his research, according to documents filed Friday.

In a short order, SEC Administrative Law Judge Jason S. Patil agreed to stay the case against Gregory T. Bolan Jr., saying he had received a motion from both parties that they had “reached an agreement in…

Source: Law360

President Obama Vows To Veto Any Republican Bill That Unravels Wall Street Reform

The President said while speaking in Birmingham, AL:

This is just one more way that Wall Street reform, what we passed five years ago, is protecting working families and taxpayers, and that strengthens the economy, and that’s one more why it makes no sense that the Republican budget would make it harder for the CFPB to do its job. And would allow Wall Street to go back to the kind of recklessness that led to the crisis in the first place, and would allow these kinds of lenders who are not doing the right thing to keep at it.

I have to be clear. If Republicans in Congress send me a bill that unravels the reforms we put in place, if they send me a bill that unravels Wall Street reform, I will veto it.

This is not about politics. It’s is about basic values of honesty and fair play. It’s about the basic bargain that says here in America hard work should pay off and responsibility should be rewarded.

New York Regulator Lawsky Proposes SOX-Style Personal Accountability for Anti-Money Laundering, Foreign Asset Compliance

It is, by now, common practice for financial institutions (and other businesses as well) to adopt and maintain comprehensive and costly Anti-Money Laundering (AML) and Office of Foreign Assets Control (OFAC) compliance programs, to train their employees on AML/OFAC compliance generally and those in-house programs in particular, and periodically to update all of these. In recent remarksdelivered at Columbia Law School, New York Superintendent of Financial Services Benjamin Lawsky decried what he considers to be pervasive compliance shortcomings in this area. Mr. Lawsky proposed that senior executives attest to the adequacy of their institutions’ compliance systems in a manner analogous to Sarbanes-Oxley verifications about the correctness of a public company’s financial statements and the effectiveness of its internal controls. Mr. Lawsky’s proposal, if instituted, would hold individual bank executives personally responsible for their employers’ AML/OFAC compliance system shortcomings.

One can see where Mr. Lawsky is coming from. Recent years have witnessed federal and state fines and civil penalties in the hundreds of millions – and even in some cases billions – for widespread violations of AML and OFAC requirements by financial institutions, predominantly foreign banks. Many of those fines and penalties, as we have previously noted here and here, have been levied by Mr. Lawsky’s own agency, the New York Department of Financial Services (DFS).

Mr. Lawsky does not regard these enormous penalties levied solely against institutions as adequate deterrence, telling the audience at Columbia, “A whack-a-mole approach – simply bringing enforcement actions when we find problems – is not, by itself, enough. Particularly because we believe there are likely widespread problems with transaction monitoring and filtering systems throughout the [financial services] industry.”

As evidence of these “problems,” he pointed to an independent monitor’s finding that a bank had failed to flag literally millions of suspicious transactions. “We basically ran the company’s transactions through our own filtering system and compared the results. This was a new approach. In the past, regulators have largely relied on self-reporting by firms that discover… that banned transactions occurred for some reason. What regulators have not done is actively tested the effectiveness of the filtering systems banks are using. That needs to change.” Thus DFS may also initiate random audits of companies’ AML systems to test whether they are successfully flagging suspicious transactions.

Read on.

Foreclosure to Home Free, as 5-Year Clock Expires

MIAMI — In September, Susan Rodolfi celebrated an unusual anniversary: five years of missed mortgage payments.

She is like a ghost of the housing market’s painful past, one of thousands of Americans who have skipped years of mortgage payments and are still living in their homes.

Now a legal quirk could bring a surreal ending to her foreclosure case and many others around the country: They may get to keep their homes without ever having to pay another dime.

The reason, lawyers for homeowners argue, is that the cases have dragged on too long.

There are tens of thousands of homeowners who have missed more than five years of mortgage payments, many of them clustered in states like Florida, New Jersey and New York, where lenders must get judges to sign off on foreclosures.

However, in a growing number of foreclosure cases filed when home prices collapsed during the financial crisis, lenders may never be able to seize the homes because the state statutes of limitations have been exceeded, according to interviews with housing lawyers and a review of state and federal court decisions.

Read on.

Australia To Start Taxing Bank Deposits


According to Australia’s ABC News, the “Federal Government looks set to introduce a tax on bank deposits in the May budget.”

Ironically, the idea of a bank deposit tax was raised by Labor in 2013 and was criticized by Tony Abbott at the time. Much has changed in two years, and as ABC reports, assistant Treasurer Josh Frydenberg has indicated an announcement on the new tax could be made before the budget.

Mr Frydenberg is a member of the Government’s Expenditure Review Committee but has refused to provide any details.

“Any announcements or decisions around this proposed policy which we discussed at the last election will be made in the lead up or on budget night,” he said.

Speaking at the Victorian Liberal State Council meeting Mr Abbott has repeated his budget message, focusing on families and small businesses.

“There will be tough decisions in this year’s budget as there must be, but there will also be good news.”

For the banks and creditors, yes. For anyone who is still naive enough to save money in the hopes of deferring purchases for the future, not so much.

The banking industry has raised concerns about a deposit tax, saying it will have to pass the cost back onto customers.

Steven Munchenberg from the Australian Bankers’ Association said it would be a damaging move for the Government.

“It’s going to make it harder for banks to raise deposits which are an important way of funding banks. And therefore for us to fund the economy,” he said. “And we also oppose it because particularly at this point in time with low interest rates a lot of people who are relying on their savings for their incomes are already seeing very low returns and this will actually mean they get even less money.”