Daily Archives: March 23, 2016

Bank of America settles claims it cheated trainees out of overtime

Here we go again with another overtime lawsuit…

(Reuters) — Bank of America Corp. and its Merrill Lynch unit will pay $14 million to settle lawsuits claiming that they forced financial adviser trainees to work 60 hours and more per week, including on weekends, without paying them overtime.

The settlement filed on Tuesday night in federal court in Manhattan resolves proposed class action claims that the second-largest U.S. bank violated the rights of roughly 9,500 trainees nationwide who worked for several weeks or months in its Practice Management Development program.

Plaintiffs like Andrew Blum of Stuart, Florida, Zaq Harrison of Baltimore, Samuel Jorgenson in New York and Ronni Reiburn in New York claimed that Merrill regularly required them to work 10- to 14-hour days, attend client functions and work on weekends.

They said the work was necessary because Merrill expected them to generate client leads, but that the failure to pay for their extra time violated the federal Fair Labor Standards Act.

Bank of America spokesman Bill Halldin declined to comment on the settlement. The accord requires court approval.

Justin Swartz, a lawyer for the plaintiffs, said the accord provides about $1,000 per class member, after legal fees.

Read on.

UK court orders jailed Libor trader to pay $1.25 million

Tom Hayes, a former star trader serving an 11-year jail sentence for manipulating Libor interest rates, was on Wednesday ordered to pay 878,806 pounds ($1.25 million) by a judge or face further time in prison.

Judge Jeremy Cooke, who convicted Hayes in August and has held him up as an example to errant bankers worldwide, said he expected Hayes’s wife to sell a seven-bedroom house to help pay the penalty aimed at clawing back proceeds from Hayes’s crimes.

The penalty is, however, substantially less than the 2.45 million pounds sought by Britain’s Serious Fraud Office (SFO).

Hayes, a 36-year-old former UBS (>> UBS Group AG) and Citigroup (>> Citigroup Inc) derivatives trader, was the first person jailed for rigging the London interbank offered rate (Libor), which helps set rates on about $450 trillion of financial contracts worldwide.

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Trump Foundation Says It Made Error in 2013 Donation To Political Organization Associated to Florida AG Bondi

The Donald J. Trump Foundation, the charitable organization of the front-runner for the Republican presidential nomination, said it had made an error in making and failing to disclose a $25,000 donation to a political group in 2013.

The statement comes a day after Citizens for Responsibility and Ethics in Washington, or CREW, raised questions about the donation in a complaint sent to the Internal Revenue Service. Tax law bars charitable foundations like Trump’s foundation from engaging in political activities, including contributing money to candidates and PACs. CREW also noted that the donation was not properly disclosed on the foundation’s tax return.

“My understanding is the foundation has been in touch with the IRS and proper adjustments are being made,” Hope Hicks, spokeswoman for the Trump campaign, said in an e-mail.

Read on.

More from complaint filed by Citizens for Responsibilities and Ethics in Washington:

The Donald J. Trump Foundation appears to have illegally given $25,000 to a political organization associated with Florida Attorney General Pam Bondi while her office was reportedly considering joining a lawsuit involving Trump University, and to have failed to disclose the contribution in its tax return, according to an IRS complaint filed today by Citizens for Responsibility and Ethics in Washington (CREW).

According to Florida campaign finance records, in September 2013 the Trump Foundation contributed $25,000 to And Justice for All, a section 527 political organization.  Section 501(c)(3) private foundations like the Trump Foundation, however, are prohibited from all political activity, including contributing to political organizations.  Despite making the political contribution, on its tax forms, the Trump Foundation claimed it did not transfer any money to a 527 organization or engage in any political activity and failed to report the contribution to And Justice for All.

“The rules are clear: a tax-exempt charitable foundation cannot support a political group,” CREW Executive Director Noah Bookbinder said.  “The apparent failure to tell the IRS about this political activity makes matters worse and is something we’ve seen too many organizations doing lately.”

Citigroup says being investigated in Germany over dividend trades

Citigroup (C.N) is being investigated by German tax authorities over an equity trading strategy known as “cum-ex” or “dividend stripping,” the U.S. bank said on Tuesday.

Dividend stripping involves buying a stock just before its dividend rights expire, then selling it, taking advantage of a now-closed legal loophole that allowed both buyer and seller to claim tax credits.

“Citi’s Germany unit has never been trader, broker or structurer of cum ex trades,” a Citi spokesman in Frankfurt said. He said the bank did act as a settlement agent for clients’ trades, but only supplied its infrastructure had no knowledge of the actual trades being carried out.

German daily Handelsblatt reported on Tuesday that the Frankfurt tax office had asked for 706 million euros ($791.07 million) in back taxes from Citi.

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SEC reportedly investigating nonbanks for sending loans to collections too quickly

Bloomberg: Ocwen and Nationstar could be targets

The Securities and Exchange Commission is reportedly investigating several nonbank mortgage servicers for potentially sending borrowers into debt collection too quickly, according to a report from Bloomberg.

The Bloomberg report, from Matt Scully, states that the SEC is probing nonbanks, including Ocwen Financial, for “prematurely unleashing debt collectors on delinquent borrowers.”

From Bloomberg:

When loans go bad, the firms can write them off and send them to outside collectors. One of the questions the SEC is probing is whether borrowers are getting enough time to make good on their home equity loans once they fall behind, the person said. A servicer may be entitled to a receive a percentage of whatever outside collectors recover, which may be higher than the usual fees it would receive, the person said. Sending loans to collectors prematurely may also cut a servicer’s costs.

Read on.