Daily Archives: May 10, 2016

Wall Street Firms Under Investigation for Treatment of Retail Investors

Authorities sent subpoenas to several firms in connection with probe into the handling of retail clients’ orders

Federal and state authorities are investigating whether Wall Street firms that handle millions of orders annually for retail clients have lived up to their obligation to provide the best possible treatment for those investors, according to people familiar with the matter.

The Justice Department’s civil division has sent subpoenas to several firms including Citadel Securities, the market-making business of Citadel LLC, and KCG Holdings Inc. in connection with the probe, these people said.

The New York attorney general’s office is also conducting a broad investigation into practices that may create an unfair disadvantage for retail investors whose stock orders are handled by electronic market makers, and has sent a subpoena to Citadel and other firms, one of the people said.

The federal subpoenas are issued under a civil fraud law, the Financial Institutions Reform, Recovery and Enforcement Act, or Firrea, which covers fraud affecting federally insured financial institutions, the people said.

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Treasury calls for reining in online lenders

The US Treasury on Tuesday called for greater oversight of online lenders, just one day after Lending Club ousted its CEO over faulty loans and conflicts of interest.

The Treasury, led by Jacob Lew, recommended that eight other regulatory agencies, including the Securities and Exchange Commission and the Consumer Financial Protection Bureau, should get together and figure out how they would oversee the relatively new world of online lending.

In addition to stricter oversight, the government agency said there should be more protections for borrowers, according to its “white paper” released on Tuesday.

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1,413 in Thailand named by ‘Panama Papers’

Names of 1,413 persons with Thai addresses have been identified with links to offshore companies in one of the world’s biggest ever data leaks through an online searchable database made public by the International Consortium of Investigative Journalists (ICIJ) late Monday evening.

The familiar names in the latest release of documents on the website offshoreleaks.icij.org include:

Chutinant Bhirombhakdi, Executive Vice President and Member of Executive Board at Singha Corporation Co Ltd

Tos Chirathivat, CEO of Central Group

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170 Icelanders Found In Panama Papers


ICIJ opened the database yesterday. As Reykjavík Media had disclosed last month that many Icelanders could be found in the Panama Papers, Icelandic journalists were quick to pour over the database. RÚV now reports that some 170 Icelandic names have been found, and tax authorities are finding even more.

Many of these names, both of individuals and companies, are located in Iceland, but a great many are also positioned overseas. While RÚV has not disclosed all the names they found, they do so that they include “investors, CEOs and company board members, merchants, wholesalers, attorneys and fishing industry leaders“.

The curious can search for individuals and companies at ICIJ’s database search. Results for “reykjavik” alone are very revealing, and searching for more Icelandic towns also shows some surprising returns.

The Panama Papers leak has already had a significant effect on the shape of Icelandic politics, as they not only implicated several Icelandic ministers (as well as current and former members of Reykjavík City Council), they also contributed to the resignation of former Prime Minister Sigmundur Davíð Gunnlaugsson, as well as to President Ólafur Ragnar Grímsson dropping out of his re-election campaign.

JPMorgan Investor Suit Accord Is Approved by U.S. Judge

  • Bank agreed to pay $150 million to end London Whale suit
  • Pension funds said high-risk trades hidden from investors

JPMorgan Chase & Co. won a judge’s approval to pay $150 million to settle investor claims that it hid as much as $6.2 million in losses caused by a trade dubbed the London Whale.

U.S. District Judge George Daniels in New York on Tuesday accepted the accord, which ended a suit brought by a group of pension funds in 2012. They accused JPMorgan of turning its London-based Chief Investment Office in London into a “secret hedge fund” that caused the losses.

The accord in the class-action suit “is adequate and reasonable,” the judge said.

The bank told investors that the office’s primary role was managing risk, but the lawsuit alleged it was instead engaging in risky trades to generate profits.

Ohio pension funds and other plaintiffs claimed they incurred tens of millions of dollars of losses because their fund managers were given false and misleading information. Bruno Iksil, who became known as the London Whale because he amassed large, market-moving positions in credit derivatives, made the trades for the bank.

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Why more widowed homeowners are struggling to prevent a foreclosure

en Jesus Sequeira’s wife, Yadira, died in 2008 from lung cancer, times soon grew tough.

Sequeira said his income plunged, leaving him unable to pay the mortgage on the couple’s Canyon Country home when payments more than doubled a year later.

Sequeira hoped a loan modification might save him, but there was a glitch: Even though he was listed on the title, only his wife was on the mortgage note — a setup Sequeira said a Countrywide Financial employee suggested given her superior credit.

The arrangement, he said, turned efforts to secure a modification into a multiyear red-tape nightmare that may end in a trustee sale scheduled for May 11.

“It’s like I can have a heart attack, because I don’t know what is going to happen,” said Sequeira, 58, who owns a small Koreatown market. “It’s been like that for three years.”

Consumer advocates say widows and widowers nationwide are falling into a similar bureaucratic black hole.

Although servicers will generally accept their loan payments, surviving homeowners who are not on the mortgage face significant resistance when they seek loan modifications once they’ve fallen behind on payments — often because they’ve lost their spouse’s income.

“They are being told they can’t do anything to prevent foreclosure,” said Charles Evans, an attorney with pro bono law firm Public Counsel, which is assisting Sequeira.

The problem is growing, advocates say, and has caught the attention of federal regulators and state lawmakers.

Read on.

Citibank Fights Objectors To $2B Forex Settlement

Law360, New York (May 10, 2016, 2:05 PM ET) — Citibank NA urged a New York federal court Monday to reject two settlement class members’ bid to modify a $2 billion deal over alleged foreign exchange market manipulation, arguing the settlement properly releases claims involving undisclosed transaction charges.

In a letter to U.S. District Judge Lorna G. Schofield, Citibank said that an objection filed by traders Eduardo and Gervasio Negrete in April improperly seeks to exclude claims related to undisclosed markups the bank charged for transactions. Not only are the claims appropriately covered by the forex…

Source: Law360