Daily Archives: July 6, 2015

Revolving door: Meet JPMorgan’s newest vice chairman—a former SEC director who investigated Enron and WorldCom

Cutler joined JPMorgan in 2007 from the law firm of WilmerHale in DC where he was a partner and head of the securities department. Prior to that, he was the director the Securities and Exchange Commission’s enforcement division from 2001 until 2005. During his tenure at the SEC, he oversaw the investigations of Enron and WorldCom. Before joining the SEC in 1999, he spent 11 years at Wilmer, Cutler & Pickering in D.C.

He graduated from Yale Law where he was the editor of the Yale Law Journal. He also finished his undergraduate bachelor’s degree (summa cum laude) at Yale.

Here’s JPMorgan’s press release:

JPMorgan Chase (NYSE: JPM) announced today that Stacey Friedman, General Counsel of the company’s Corporate & Investment Bank, will succeed Steve Cutler as General Counsel of the firm early next year, when Mr. Cutler will be appointed Vice Chairman of the firm. Ms. Friedman will report to Mr. Cutler and act as his deputy for the rest of this year, and she will join the company’s firm-wide Operating Committee next year when her new role becomes effective.  Both Mr. Cutler and Ms. Friedman will report to Chairman and CEO Jamie Dimon next year in their new roles.

Jamie Dimon said:  “We are fortunate to have two such superb executives in Steve and Stacey.  Steve has done a simply outstanding job for nearly nine years heading our Legal function during some of the most challenging times in our history.  In the face of enormous pressures and challenges, he has been the consummate lawyer and General Counsel — handling all that has come before him with great judgment, integrity and professionalism, and all with a relentless focus on doing what’s best for the firm.  I tried to convince Steve to stay on as our General Counsel for even longer, but he said next year is the right time for him to try something different.”

“Fortunately, we are blessed with another extraordinary talent, Stacey Friedman, to succeed Steve as General Counsel,” Mr. Dimon continued.  “Stacey joined our company three years ago from Sullivan & Cromwell, where she spent more than a year working full-time with our company on matters ranging from mortgage-backed securities to our purchase of Washington Mutual.  She is recognized throughout the legal and finance communities and across our company as an outstanding legal mind and a first-rate executive.  Steve recruited Stacey to our firm and highly recommended her to me and our Board as a great successor. We couldn’t agree more.”

Mr. Cutler, in his role next year as Vice Chairman of the Company, will act as a senior advisor to Jamie Dimon and other executives across the firm, as well as to the company’s Board of Directors.  He will continue to assist on complex legal issues, including key matters that are already in progress.  Cutler is expected to advise on important corporate governance and shareholder matters, as well as regulatory issues and culture initiatives.

Read more: http://www.businessinsider.com/steve-cutler-named-jpmorgan-vice-chairman-2015-7#ixzz3f8rX83Zq

Eric Holder says bank fines better than ‘making examples of people’

Ugh!! You know I disagree with Holder’s statement. Total BS!!!

Marketwatch:

Former U.S. Attorney General Eric Holder plans to return to private law practice at Covington & Burling, telling the Financial Times on Monday that record fines imposed on banks were a better solution to chronic fraud cases than “trying to make examples of people.” The U.S. Department of Justice levied record fines against banks during his tenure, including multiple multibillion-dollar sanctions against a significant Covington & Burling client, J.P. Morgan Chase JPM, -0.62%  . During Holder’s tenure, the U.S. did not indict any chief executive over the financial crisis. Holder separately told the National Law Journal that some of the firms may not want to work with him.

The law firm and its Washington D.C. office that Holder returns to—he previously worked there for seven years—specializes in defending financial services firms and their executives as well as general white collar defense, including defending the former CEO of IndyMac against an SEC securities fraud case and FDIC lawsuit that sought to hold him liable for one of the largest and most high-profile bank failures of the recent financial crisis.

“I think the cultures have changed, “ Holder told the Financial Times.

Time to crack down on ‘dark money’

Sheldon Whitehouse, U.S. Senator for Rhode Island

With an election season looming that promises to feature upwards of 20 candidates spending untold sums of cash as they vie for the White House, it’s time again to take a serious look at how we can improve our broken campaign-finance system. Without serious reforms, and with so many candidates drawing support from powerful special interests, the stage is being set for a campaign that caters to the needs of everyone but the American people.

How did we get to this point? Simple: Citizens United. That disastrous and misguided 2010 decision by the Supreme Court opened the floodgates for unlimited, secret spending in American elections. Since Citizens United, there has been a dramatic rise in political spending by so-called “independent” groups with no disclosure requirements. In the 2014 elections—the most expensive midterm elections in our history, with over $3.7 billion spent—the Washington Post reported that at least 31 percent of all independent spending was spent by groups that are not required to disclose their donors. And that doesn’t even count spending on so-called “issue ads,” ads that purport to advocate for a specific policy rather than a person, which is not reported.

Here’s how it works: Corporations and wealthy individuals funnel money through organizations with names like “Americans for Prosperity” and “Crossroads GPS,” which are classified as nonprofit “social welfare” organizations by the IRS. This classification enables them to buy campaign ads without disclosing their donors. As a result, the public never knows who is really behind those commercials trying to influence their vote.

Read on.

U.S. Sided With Tax-Avoiding Companies Over Contracting Ban

The Obama administration quietly handed a victory to U.S. companies that avoid taxes by claiming a foreign address, suggesting that virtually all of them are still eligible for government contracts.

The Department of Homeland Security last year endorsed a legal memorandum that argued in part that a 2002 law banning such companies from federal contracts was invalid, according to a copy of the memo obtained by Bloomberg News. Although President Barack Obama later began publicly criticizing the tax maneuvers known as inversions, there’s no sign that he has reversed the department’s decision.

The March 2013 memo was submitted to Homeland Security by one of the country’s largest inverted companies, the manufacturer Ingersoll-Rand Plc. The company argued in part that U.S. trade agreements with foreign governments invalidated the law that would prohibit it from winning federal contracts.

Read on.

Ex-Madoff Accountant Aided Feds In JPM Probe: Prosecutors

Law360, New York (July 6, 2015, 12:35 PM ET) — Bernie Madoff’s personal accountant Paul Konigsberg should receive lenience at sentencing, prosecutors said Thursday, citing his help getting them information that drove a $1.7 billion settlement with JPMorgan Chase & Co. over its alleged failure to report suspicious activity.

The three charges to which Konigsberg pled guilty in June 2014 could have resulted in as much as 30 years’ imprisonment, according to prosecutors. Those charges were conspiracy to falsify books and records, falsifying books and records of a broker-dealer, and falsifying books and records of an…

Source: Law360

Wells Fargo, Others Ordered To Repay $30M Over Fund Sales

Law360, New York (July 6, 2015, 12:47 PM ET) — The Financial Industry Regulatory Authority on Monday said it has ordered three large broker-dealers, including Wells Fargo Advisors LLC, to pay more than $30 million in restitution to certain charities and retirement savers that were improperly hit with sales charges on mutual fund purchases.

According to the self-regulatory organization, the firms, which also included two units of Raymond James Financial Inc. and LPL Financial LLC, had pledged to waive, under limited circumstances, sales charges and other expenses for mutual fund shares sold to certain charitable and…

Source: Law360

BREAKING: Ex-Goldman Coder Gets Theft Conviction Reversed

Law360, New York (July 6, 2015, 10:12 AM ET) — A New York state judge on Monday set aside the conviction of former Goldman Sachs Group Inc. programmer Sergey Aleynikov, who stood accused of stealing the financial giant’s computer code for its high-frequency trading platform, marking the second time a court has overturned his conviction.

Sergey Aleynikov, left, with his lawyer Kevin Marino, has had his conviction for stealing computer code from Goldman Sachs set aside for the second time. (Credit: Getty) Following a nearly month-long trial, Aleynikov had been convicted in May of one count of unlawful…

Source: Law360

Scammers targeting families seeking affordable housing programs

Fraudsters are preying on low-income families who are seeking government-subsidized housing, setting up websites and help lines to get personal information and phony fees and rent deposits.

Fox News has the story.

The scammers are targeting some people who are using Section 8 housing, and they are using fake websites to do it.

Officials said at first the website looks like a normal way to sign up for a voucher and wait list, but it will eventually ask for more information, leading you down a road that could cost you a lot of money.

“The way it works, is if somebody is interested in low income housing, they can go online or talk to the local housing authority and they request a voucher to be put on a waiting list,” Jeff Markle, Director of Marketing and Events for the Better Business Bureau, said.

But that’s where the scammers can take advantage of people.

“They’ve gone and created certain websites to make it look like a specific housing authority,“ Markle said.

Some websites are asking for personal information, including your social security number.

“And also requesting payment for an application fee or a payment for their first month’s rent, saying low income housing is available if they wire them the money for the first month,” Markle said.

Source: Fox News

Here’s the team that caused the Detroit foreclosure crisis

Op-Ed: You break it, you fix it

Detroit didn’t stumble into the the foreclosure mess by itself, so it shouldn’t be left to recovery all on its own. At least that is what one article in The Detroit News argued.

The article blamed the practice of subprime lending, driven in part by federal policies and in part by the irresponsibility of lenders, as having the greatest negative impact on the nicest neighborhoods in Detroit, contributing to the ongoing decline in middle class residents.

Those companies should feel an obligation to help clean-up the mess. The News’ series found that many were exploitive in their practices, focused entirely on issuing loans and unconcerned with whether the borrowers could repay the debt. The News also found evidence of deceptive or misleading claims made to homebuyers who lacked the knowledge to protect themselves.

And the government has its own set of initiatives that it needs to take.

Many homeowners cannot keep up with high interest mortgages and tax bills that are completely out of line with the true value of the home. Mayor Mike Duggan is working to bring assessments to market reality, but it is a slow process.

One of the main solutions out there created by the Community Reinvestment Act might be more a problem, the article noted. This could be an issue since those loans by nature have a higher failure rate.

Read on.

NY Times filed motion to get access to testimony regarding former FHFA acting head in a shareholder lawsuit

Housingwire Monday news:

The New York Times wants to bring some sunshine to the shadow cast by the Treasury Department regarding the conservatorship of Fannie Mae and Freddie Mac, particularly what was involved in the controversial “Third Amendment Sweep” of shareholder profits back in 2012.

The newspaper, led by reporter Gretchen Morgensen, filed a motion to get access to testimony regarding former acting director of the Federal Housing Finance AgencyEdward DeMarco in the shareholder lawsuit Fair Holmes Funds v. The United States, arguing that the government did not show good cause for sealing the documents related to his testimony in the case.

They also want access to documents pertaining to former senior Treasury official Mario Ugoletti, who is now a special advisor to FHFA Director Mel Watt.

Both men testified in the lawsuit in May.