Daily Archives: July 9, 2015

Senate Passes Bill Letting Schools Give Education Money To Financial Consulting Firms

As budget-strapped Chicago follows a mass school closure with a new plan to layoff more than 1,400 teachers, one set of transactions sticks out: the city’s moves to refinance $1 billion in debt through complex financial instruments called swaps. The deals were spearheaded over the last few years by financial advisory firms brought in by the city to help find money saving efficiencies. Instead of saving money, though, the Windy City took a big hit: The school system has lost more than $100 million on the transactions and has paid millions in fees to its financial consultants.

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Atlanta law firm Morris Schneider Wittstadt officially files for Chapter 11 bankruptcy

As HousingWire first reported Thursday, Morris Schneider Wittstadt officially filed for Chapter 11 bankruptcy on Monday. The firm did open for business on Monday, but went so far as to tell all employees not to bother reporting to work on Monday morning.

On Thursday, HousingWire reported that the Georgia-based law firm and its partners, which made national headlines last year when the firm sued its former managing partner for allegedly embezzling $30 million from the firm’s accounts and the accounts of the firm’s subsidiary, LandCastle Title, allegedly told the firm’s employees that the firm intended to file for bankruptcy and that the firm’s staff would not be paid for their last three weeks of work.

Morris Schneider Wittstadt followed through on its stated intention of filing for bankruptcy, filing for Chapter 11 protection in the United States Bankruptcy Court for the Eastern District of Virginia – Richmond Division.

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Senators Warren, McCain, Cantwell, and King introduce 21st century Glass-Steagall Act

And here is the text of the legislation. Click here.

Former trader Hayes denies trades were bribes for brokers, Libor trial hears

Tom Hayes, the former trader on trial over rate-rigging charges, denied on Thursday that fake trades he had performed to generate commissions for brokers amounted to bribes for their help in manipulating benchmark interest rates.

Hayes, the first person to stand trial over alleged rigging of the London interbank offered rate (Libor), has pleaded not guilty to eight counts of conspiracy to defraud between 2006 and 2010.

Libor, a benchmark used to price $450 trillion of financial products worldwide, is an average interest rate calculated from submissions from a panel of banks.

The prosecution alleges that Hayes’ greed for bigger bonuses led him to persuade and sometimes bribe a network of contacts in brokerages and other banks to try to influence Libor in ways that would increase his trading profits.

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Citi ordered to pay Mercuria $14 million in China metals financing suit

Citigroup Inc has been ordered to pay Swiss-based commodities merchant Mercuria almost $14 million as part of prolonged legal wrangling over Chinese metals financing deals hit by suspected fraud, a report on Wednesday said.

Justice Stephen Phillips of London’s High Court ordered Citi to pay Mercuria $13.6 million plus interest for damages related to a transaction, in which the bank failed to deliver metal paid for by Mercuria last year, according to a Wall Street Journal report citing a court order.

The judge also ordered Citi to pay half of Mercuria’s legal fees, including an immediate payment of roughly $500,000, the report said.

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Mortgage settlement monitor credits Chase with $3.3B in consumer relief

NMS says bank making progress on RMBS relief requirement

National Mortgage Settlement Monitor Joseph Smith released his fifth report on JPMorgan Chase & Co.’s (JPM) residential mortgage-backed securities settlement, detailing the firm’s progress toward satisfying its consumer relief requirements of the settlement.

In his report, Smith confirmed that Chase has provided $3,324,010,726 to 151,436 borrowers through Dec. 31, 2014. Under the settlement, Chase must provide $4 billion in credited relief by Dec. 31, 2017.

“My team and I have completed an in-depth review of Chase’s consumer relief activities through the end of 2014,” Smith said. “As a result of our work, I have credited Chase with more than three-fourths of the $4 billion it must provide under the Settlement.”

This report also includes an update of Chase’s self-reported gross consumer relief, as well as the amount of consumer relief credit claimed by Chase for the first quarter of 2015, which the Monitor has not yet validated.

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U.S. sues dead man’s estate to regain fraudulently obtained TARP funds

SIGTARP and DOJ accuse former owner of One Financial of defrauding TARP

The United States is suing the estate of a deceased former bank owner, alleging that Layton Stuart, the late president and owner of One Financial Corporation, defrauded the federal government out of $17.3 million in funds from theTrouble Asset Relief Program.

The suit was announced Wednesday by the Office of the Special Inspector General for the Troubled Asset Relief Program and the U.S. Department of Justice.

The complaint also marks the first time that a TARP bank has been charged under the False Claims Act for making material misrepresentations to Treasury in order to obtain taxpayer TARP bailout funds, said SIGTARP’s Christy Romero.

In the suit, the government alleges that Stuart, who died in 2013, made misrepresentations to induce the U.S. Department of the Treasury to invest $17.3 million in Arkansas-based One Financial as part of the Treasury’s Capital Purchase Program.

According to the complaint, Stuart, on behalf of One Financial, applied in late-2008 for a TARP investment of $17.3 million. The complaint alleges that Stuart knowingly made false statements about One Bank’s financial condition and what the bank intended to do with the TARP funds.

According to the complaint (which can be read in full here), Stuart’s statements and the bank’s TARP application allegedly concealed “serial frauds” that Stuart and other One Financial director and executives had been committing and “intended to continue committing.”

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