Daily Archives: October 1, 2015

Judge rules against Wells Fargo in trust mismanagement suit

Wells Fargo was ordered to pay more than $11 million to an Olivette woman who alleged family trusts were mismanaged.

Wednesday’s judgment is in addition to $77 million in damages a jury awarded to Barbara Burton Morriss in May, bringing her total award in the case to $88 million.

Morriss sued Wells Fargo in 2012, alleging the San Francisco-based bank failed to fully disclose financial transactions in two family trusts that were drained of millions of dollars. Her son, venture capitalist B. Douglas Morriss, raised private equity and venture capital funds until the companies he led filed for bankruptcy in January 2012, listing more than $35 million in debts. B. Douglas Morriss, a co-trustee on the family trusts, was sentenced to five years in federal prison for tax evasion in 2013.

In May, a jury awarded Barbara Burton Morriss $45 million in actual damages and about $32 million in punitive damages related to one of the trusts, called the Morriss Trust.

That $77 million award is believed to be the largest plaintiff verdict in St. Louis County history. That jury award was finalized Wednesday, giving Wells Fargo 30 days to file a motion for a new trial.

Read on.

Citigroup Execs Under Fire from Shareholders

MANHATTAN (CN) – Dozens of Citigroup’s top execs, including its CEO, were complicit in fraud, corruption and money laundering by the bank’s Mexican operation, leading to hundreds of millions in losses, two stockholders claim in a lawsuit.
In a 121-page complaint, filed Sept. 23, the Fireman’s Retirement System of St. Louis and individual investor Esther Kogus claim that Citigroup officials knew that Mexico was a high-risk banking environment where “deficient controls” were unlikely to prevent fraud and other legal violations, but they “nonetheless failed to implement anything resembling a true system of internal controls.”
Those Mexican operations are Citigroup’s Banamex Nacional de Mexico and its affiliate, Banamex USA, which, according to the complaint, “have accounted for more than 10 percent of Citigroup’s revenue in recent years.”
Instead of implementing and observing the appropriate controls, the complaint says, the Citigroup directors willfully ignored what was going on and permitted a $400 million fraud to continue until 2014.
In addition, the shareholders claim, the defendants issued false and misleading statements as part of the “March 2013-2015 Proxies,” which, among other things, encouraged them re-elect the board.
The shareholders say the illicit activities remained unknown to them until earlier this year when the Federal Deposit Insurance Corporation fined Citigroup $140 million, and the U.S. Justice Department said it found evidence of illegal cross-border transactions.
The shareholders are asking that Citigroup officials be ordered to pay back their compensation in connection with the 2013-2015 plans, and to void the most recent election of board directors.

Read on.

12 Big Banks Settle Antitrust Claims for $1.9 Billion

(CN) – Twelve of the world’s biggest banks agreed to pay $1.86 billion to settle claims that they colluded to obstruct greater transparency in the credit default swap market.
A Los Angeles retirement fund led more than 10 plaintiffs in a class action lobbing antitrust claims at a dozen major banks, the International Swaps and Derivatives Association (ISDA), and its data-service provider Markit.
Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Royal Bank of Scotland and UBS all were named as defendants.
The $1.86 billion settlement is one of the largest ever in an antitrust class action, according to a statement Thursday from class counsel at Quinn Emanuel Urquhart & Sullivan and Pearson, Simon & Warshaw.
Each of the banks has also agreed to changes in licensing procedures that will make it easier for electronic-trading platforms to enter the credit default swap market, a change intended to promote competition and transparency.
The class action had accused the banks of conspiring against the Credit Market Derivatives Exchange (CMDE), a credit default swap clearinghouse and exchange designed to promote transparency and competition.

Read on.

Judge Rules for J.P. Morgan in $8.6 Billion Lehman Lawsuit

A federal judge in New York granted a victory to J.P. Morgan & Co. in its $8.6 billion legal fight with Lehman Brothers Holdings Inc.’s, rejecting the failed investment bank’s claim that J.P. Morgan illegally siphoned billions of dollars from Lehman before the bank’s collapse.

Judge Richard Sullivan of the U.S. District Court in New York said J.P. Morgan didn’t abuse its leverage as Lehman’s primary clearing bank to force the investment bank to hand over more collateral in the weeks before its historic September 2008 collapse.

In a 31-page decision made available Thursday, Judge Sullivan said he rejected Lehman’s “fundamental premise” that J.P. Morgan “was obligated to extend credit to Lehman under its credit agreement.”

While the judge granted the bulk of J.P. Morgan’s summary judgment motion to dismiss Lehman’s claims, he said the investment bank could pursue its bid to subordinate J.P. Morgan’s claim to those of other creditors.

Read on.

[Snapshot] Here’s the latest progress on Chase’s RMBS settlement

Chase credited with $3.6B in consumer relief

Here is a snapshot of the update consumer relief

Click to enlarge

(Source: Joseph Smith)


National Mortgage Settlement Monitor Joseph Smith credited Chase with $3,555,280,673 in consumer relief to 158,107 borrowers through March 31, 2015.

This is Smith’s sixth report on JPMorgan Chase’s (JPM) progress on its settlement with the federal government and five states concerning claims that Chase,Bear Stearns and Washington Mutual packaged and sold bad residential mortgage-backed securities to investors before the financial crisis.

“We continue to help thousands of families become homeowners and assist those who may be struggling.  We have helped nearly 162,000 families through more than $19 billion in total mortgage relief,” JPMorgan said in a statement.

Chase also self-reported consumer relief credit for the second quarter of 2015. As of June 30, 2015, Chase claimed an additional $126,253,926 in consumer relief.

Starbucks offers interest-free loans to help employees pay rent

Starbucks (SBUX) already offers its employees helppaying their college tuition. Now, everyone’s favorite omnipresent coffee shop is offering its employees an added benefit aimed to help ease their cost of living – interest-free loans to help them pay their rent.

But there’s one catch. The program is currently only available in the U.K.

The Telegraph has the details of the “home sweet loan” program, which was developed by Starbucks along with housing charity Shelter. The progam provides Starbucks employees with an interest-free loan to help cover the cost of a rental deposit, which is rising significantly in the U.K.

From the Telegraph:

“We know the cost of living is a key concern for many, with the average rental deposit in England now £1,226,” said Kris Engskov, president of Starbucks EMEA.

“And with over half of our partners being under 25 years old, that rent affordability is an issue that affects them. These initiatives are two of the ways we are able to support the great people that work with us.”

According to the always-reliable Google, £1,226 currently equals $1855.55.

Again from the Telegraph:

The rental deposit scheme applies to employees who have been at Starbucks for more than one year and will see the company lend a maximum of one month’s wages, which the employee pays off over 12 months.

No word if the “home sweet loan” program will make its way to the U.S. as well, but with Americans paying more in rent than ever before, a stateside version of the program certainly couldn’t hurt.

HUD-OIG: loanDepot originated substandard FHA mortgages

Did not always meet HUD requirements

The Office of Inspector General of the U.S. Department of Housing and Urban Development found after a recent audit that loanDepot’s FHA-insured loans with down payment assistance gift funds and secondary financing did not always comply with HUD requirements.

The HUD-OIG audited loanDepot based on a referral from HUD’s Quality Assurance Division detailing a separate lender that originated Federal Housing Administration-insured loans containing ineligible down payment assistance gifts.

It selected loanDepot due to its high volume of loans with down payment assistance funds.

The audit found that loanDepot’s FHA-insured loans with down payment assistance gift funds and secondary financing did not always comply with HUD requirements.

As a result, it put the FHA insurance fund at unnecessary risk, including potential losses of $4.7 million for 53 loans with ineligible assistance and $29.9 million for a projected 339 loans that likely contained ineligible assistance.

This is equivalent to at least $25.4 million in potential losses for loans that could contain ineligible assistance and have a higher risk of loss in the first year.

Additionally, the HUD-OIG said loanDepot inappropriately charged borrowers $25,700 in fees that were not customary or reasonable and $46,510 in discount fees that did not represent the purpose of the fee.

Read on.

Rep.McCarthy who is running for Speaker of the House position gives Boehner a B-minus

I had to chuckle at this article of the man who has the least experience in Congress and is running for Boehner’s House Speaker job and the man who while in Congress sponsored only two bills that passed in the House and became law: One renamed a post office and the other a flight research center in California. And the same man who puts his foot in his mouth when confessed what the true goal of taxpayer-funded Benghazi Committee is. McCarthy said, “Everybody thought Hillary Clinton was unbeatable right? But we put together a Benghazi Special Committee, a select committee. What are her numbers today? Her numbers are dropping,” McCarthy said. “Why? Cause she’s untrustable. But no one would have known any of that had happened had we not fought and made that happen.” The man is certainly on Sodium Pentothal and not ready for primetime nor ready to take a job that is 3rd in line to the Presidency..


Kevin McCarthy thinks John Boehner did an above average job as House speaker — but not by much.

The Republican House majority leader — who is competing to replace Boehner when he retires next month — told Fox News host Sean Hannity that despite frustrations, there were a lot of good things that came from his speakership. But he graded Boehner only a B-minus.

“You may disagree with me. He won a majority; we’ve got the highest margin we’ve ever had before. We lowered the deficit within there,” McCarthy said. “There is a lot more — we passed 300 bills this year. If you look into the Senate, they haven’t moved.”

Deutsche Bank to pay $2.5 million swaps penalty

The U.S. Commodity Futures Trading Commission said it ordered Deutsche Bank AG to pay a $2.5 million civil penalty to settle claims the bank failed to properly report swaps transactions between January 2013 and July of this year.

The CFTC said Deutsche Bank didn’t diligently address and correct the reporting errors until the bank was notified of the CFTC’s investigation, and failed to have an adequate swaps supervisory system governing its swaps reporting requirements.

According to the CFTC order, Deutsche Bank consented to the order without admitting or denying any of the findings or conclusions. A company spokesman declined to comment.

Read on.

Ex-Barclays traders facing UK Libor charges may pursue U.S. fee case

Three former Barclays Plc traders facing U.K. charges that they conspired to manipulate Libor may pursue a U.S. lawsuit seeking to force the bank to keep paying their legal fees, a federal judge ruled on Wednesday.

U.S. District Judge Lewis Kaplan in Manhattan rejected Barclays’ request to dismiss the lawsuit by Alex Pabon, Jay Merchant and Ryan Reich, who worked for the British-based bank in New York.

They said Barclays violated the whistleblower protections of the Dodd-Frank financial reform law when it decided in May 2014 to stop paying their fees in retaliation for their cooperation since 2009 in U.S. and U.K. probes into Libor manipulation.

Read on.