Daily Archives: August 17, 2015

New York comptroller: State’s foreclosure crisis far from over

Despite efforts to combat the glut of foreclosures that havechoked New York’s court system and blighted many of the state’s neighborhoods, a new report from the New York comptroller shows that the state’s foreclosure crisis is nowhere close to being resolved – and in many cities, it’s actually getting worse.

The report, released Monday by New York State Comptroller Thomas DiNapoli, shows that areas immediately outside of New York City have the greatest number of pending foreclosures in the state.

And those areas aren’t getting any better. According to the report, the number of pending foreclosure cases in Long Island and the Mid-Hudson region rose 63% from 25,097 at the beginning of 2013 to 40,985 in 2015.

During the same time period, pending foreclosure cases across upstate grew by 47%, the report showed.

Read on.

Hacking Case Raises Question on Securities Fraud

“Securities fraud in violation of Section 10(b) of the Securities Exchange Act requires proving a “manipulative or deceptive device” was used “in connection with” the purchase or sale of a security.”

The elaborate scheme described by the Justice Department and theSecurities and Exchange Commission last week, which involved breaking into computer servers to obtain confidential information about impending corporate announcements, certainly looks like a classic case of insider trading. The defendants are accused of making millions of dollars in profits by using information to trade profitably.

But insider trading law as currently interpreted by the courts would not cover this case because the hackers are accused of being thieves, not insiders who breached a duty owed to the source of the information. Indeed, they are as far from a fiduciary as one could find — an important requirement for an insider trading violation. The question is whether trading on stolen information is also a type of securities fraud.

The Justice Department filed indictments in Brooklyn and in New Jerseycharging nine defendants with securities fraud, wire fraud, conspiracy and computer-related violations. Two defendants operating out of Ukraine are accused of breaking into the servers of three companies — Business Wire, PR Newswire and Marketwired — to obtain news releases about publicly traded companies before they were issued. They provided the information to the other defendants who traded on it in exchange for a cut of the trading profits.

Read on.

Bank of America defeats lawsuit over auction-rate securities

Bank of America does not have to face claims that it violated securities laws by misleading a California company that lost nearly $100 million on illiquid securities that collapsed in value during the credit crisis, a federal judge ruled.

In an order on Wednesday, U.S. District Judge Nathaniel Gorton ruled that the company, Tutor Perini Corp, failed to identify false statements made by the bank about so-called auction-rate securities, a $330 billion market that seized up in 2008. Tutor Perini, a construction company, is represented by Boies Schiller & Flexner.

Read on.

The Dallas Fed’s New President Was Until Recently A Vice-Chairman Of This FDIC Insured Hedge Fund

Revolving door… Zerohedge:

Now that Richard Fisher has been put out to pasture (and by “put out to pasture” we actually mean “works for Barclays”), the Dallas Fed needed a new President. Of course when you’re looking around for possible Fed officials one place you want to check is the pool of former Wall Street investment bankers because after all, we have to keep the revolving door spinning.

With that in mind, we present the new President of the Dallas Fed, Harvard professor Robert S. Kaplan who until 2006 was vice chairman of none other than Goldman Sachs.Here’s the press release from the Fed:

The Federal Reserve Bank of Dallas today announced the appointment of Robert Steven Kaplan as president and chief executive officer. In this role, Kaplan will represent the Eleventh Federal Reserve District on the Federal Open Market Committee in the formulation of U.S. monetary policy and will oversee the 1,200 employees of the Dallas Fed.

His appointment is effective September 8, 2015.

Kaplan, 58, is the Martin Marshall Professor of Management Practice and a Senior Associate Dean at Harvard Business School. He is also co-chairman of the Draper Richards Kaplan Foundation, a global venture philanthropy firm that invests in developing non-profit enterprises dedicated to addressing social issues.

Kaplan was appointed by eligible members of the Dallas Fed board of directors and approved by the Board of Governors of the Federal Reserve System. He succeeds Richard W. Fisher, who retired from the Dallas Fed in March 2015.

“The Bank’s search committee considered a broad pool of excellent candidates to ensure we met our goal of finding someone who has a deep understanding of the economy, financial system and monetary policy—yet who also sincerely appreciates the impact decisions made by the Federal Reserve have on people from all walks of life,” said Dallas Fed board chair Renu Khator, chancellor of the University of Houston.

“I believe we found that person in Robert Steven Kaplan.  He has had distinguished careers in business and academia, and has the right combination of leadership skills, business experience and public-service mindset.  Rob is committed to improving the economy for all Americans.”

Khator acknowledged the contributions of board members Matthew Rose, BNSF Railway Company executive chairman, and Ann Stern, Houston Endowment Inc. president and CEO, who led the Dallas Fed’s search committee.

“I’m honored to be serving the people of the Eleventh Federal Reserve District and the nation as president of the Dallas Fed,” said Kaplan. “I look forward to working with the superb professionals of this Bank and throughout the Federal Reserve System in their vital service to the District and the country.”

Prior to joining Harvard in 2006, Kaplan was vice chairman of The Goldman Sachs Group, Inc. with global responsibility for the firm’s Investment Banking and Investment Management Divisions. Previously, he served as global co-head of the Investment Banking Division. He was also a member of the firm’s Management Committee and served as co-chairman of the firm’s Partnership Committee and chairman of the Goldman Sachs Pine Street Leadership Program.

Upon leaving the firm in 2006, he was given the honorary title of senior director.

Kaplan is the author of several books, including What You Really Need to Lead: The Power of Thinking and Acting Like an Owner; What You’re Really Meant To Do:  A Road Map for Reaching Your Unique Potential; and What to Ask the Person in the Mirror:  Critical Questions for Becoming a More Effective Leader and Reaching Your Potential.

Kaplan serves on the boards of State Street Corporation, Harvard Management Company and Heidrick & Struggles International, Inc. He is also a trustee of the Ford Foundation, founder and co-chairman of the TEAK Fellowship, co-founder and chairman of Indaba Capital Management, LP and chairman of the Investment Advisory Committee at Google, Inc. He will step down from these positions before assuming his responsibilities at the Dallas Fed.

He will continue to serve as co-chairman of Project A.L.S., on the board of Harvard Medical School and as co-chairman of the Draper Richards Kaplan Foundation.

Kaplan previously served on the board of Bed, Bath & Beyond, Inc. and was appointed by the Governor of Kansas as a member of the Kansas Healthcare Policy Authority Board. He also served as a member of the Investors Advisory Committee on Financial Markets of the Federal Reserve Bank of New York.

Born and raised in Prairie Village, Kansas, Kaplan received a bachelor’s degree in business administration from the University of Kansas and a master’s degree in business administration from Harvard Business School.

The Dallas Fed serves the Eleventh Federal Reserve District, which encompasses Texas, northern Louisiana and southern New Mexico. As part of the nation’s central banking system, the Dallas Fed participates in setting monetary policy, supervises and regulates numerous financial institutions, and provides financial services to depository institutions and the U.S. government.

BREAKING: Citi Units To Pay $180M To Settle Hedge Fund Fraud Charges

Law360:

Law360, New York (August 17, 2015, 11:14 AM ET) — Two Citigroup Inc. affiliates agreed Monday to pay nearly $180 million to settle the U.S. Securities and Exchange Commission’s charges that they defrauded investors in two hedge funds that collapsed during the financial crisis by claiming they were safe and appropriate for traditional bond investors.

According to the SEC, Citigroup Global Markets Inc. and Citigroup Alternative Investments LLC misled investors in two hedge funds that collectively raised nearly $3 billion before collapsing in 2008. (Credit: AP) According to the SEC’s order instituting settled administrative proceedings, Citigroup…

And here is the SEC order.  Click here.

Move Over Student Loan Debt: Auto Loan Debt Tops $1 Trillion For First Time; All Consumer Debt Nearing $12 Trillion

Now that the Great Recession has gone from “is it really over?” to “remember when?” more Americans are buying cars, pushing auto loan debt beyond the $1 trillion mark for the first time in U.S. history.

That’s according to a new report [PDF] from the New York Federal Reserve Bank, which found consumers’ overall indebtedness increased $2 billion in the second quarter of 2015.

In all, the report found that consumers took out $119 billion in auto loans from April to June of this year, an increase from the $95 billion in auto loans obtained in the first quarter of the year.

Auto loan originations for 2015 are currently on pace to surpass the record 17.4 million loans issues in 2000, the Los Angeles Times reports.

In addition to the increase in auto loans, the Household Debt and Credit Report for the second quarter of 2015, saw other increases in consumer debt.

Read on.

House for sale because “neighbor’s a douchebag”

Housingwire:

The Houston Chronicle has the story.

A front-yard sign calling a neighbor a “douchebag” may not be the best way to change the neighbor’s behavior.

But for one frustrated Farmers Branch family, it’s at least getting a lot of attention.

James and Lisa Price — who have a sign in their yard that says “‘House for sale by owner because my neighbor’s a douchebag” — have appeared on Dallas TV and now say they’re getting calls from New York news outlets.

The sign went up Aug. 7, after months of tension between the Prices and their next door neighbors culminated in the Prices getting a $121 ticket from the city over their dogs, James Price said Friday.

Shortly after a retired couple moved into the rental house next door about two years ago, Price said the wife came over “a few times” to ask that the Prices keep their four dogs inside the house until 9 a.m. because the retirees liked to sleep late.

“We’re trying to keep them in until 8,” Price said. “I think the city ordinance says 7.”