Monthly Archives: November 2016

Ex-Bank of America executive says ‘no truth’ in lawsuit’s racism claims

A former Bank of America Corp. executive accused of abusing one of the bank’s traders denied that he used racist language and said the allegations were “deeply upsetting.”

Anthony Dullaghan, the bank’s former head of short-term fixed income, said that claims he had referred to clients as “French rats” were untrue. The allegations were made in a witness statement released Tuesday in a racial discrimination lawsuit brought by Maurice Marco, an executive on the bank’s Euro Commercial Paper team.

“If I swore about clients it would be in frustration and was never racially motivated,” Dullaghan said in his own witness statement made public Thursday at a London employment tribunal. “I have now retired and it is deeply upsetting for me to be embroiled in this dispute when there is absolutely no truth in the allegations.”

According to Marco’s statement earlier this week, Dullaghan repeatedly referred to French clients as rats and called a Middle Eastern customer a derogatory term involving a camel. A lawyer for the Charlotte-based bank said Tuesday that Marco exaggerated and took his shirt off during a heated argument.

Marco told the employment tribunal that he had panic attacks after Dullaghan assaulted him during a trading floor disagreement when Dullaghan was “pushing the index fingers of both hands firmly” into his chest and asked Marco to “sort this out outside.”

Dullaghan denied assaulting Marco and said he “touched his shoulder” while Marco was screaming and shouting in an attempt to “indicate that he should turn around and leave the floor in order to defuse the situation.”

Citigroup ‘boys’ club’ disfavors women, lawsuit claims

A former Citigroup Inc financial adviser on Monday filed a lawsuit accusing the bank of running a “boys’ club” that favored men over women, treating her as a “glorified secretary,” and firing her in retaliation for whistleblowing activity.

Erin Daly is seeking double back pay, unpaid bonuses and punitive damages over the bank’s alleged harassment, hostile work environment and unlawful retaliation, according to her lawsuit filed in Manhattan federal court.

The resident of Manhattan’s Upper West side said Citigroup let her go less than two weeks after she complained that her manager demanded inside information from her work on restricted stock offerings, so that he could pass it to favored clients.

Daly said she also filed a complaint with the U.S. Equal Employment Opportunity Commission, and plans to add federal discrimination claims against the fourth-largest U.S. bank.

Read on.

CFPB Warns Banks About Risks of Sales Incentives

WASHINGTON-The Consumer Financial Protection Bureau on Monday warned banks about creating incentives tied to sales goals, underscoring its intention to keep a tight rein on banks in the aftermath of the phony-accounts scandal at Wells Fargo & Co.

In a special bulletin, the CFPB said incentives for employees and service providers “can pose risks to consumers, especially when they create an unrealistic culture of high-pressure targets.”

The watchdog agency laid out steps that banks should take to strengthen their compliance management systems to prevent and detect incentives that could lead to violations of the law.

The CFPB said that in addition to opening accounts without customer consent, banks could violate consumer financial law through behaviors caused by unchecked incentives, such as misrepresenting product benefits to customers or steering consumers toward less favorable products or terms.

Read on.

Sen. Warren slams Wells Fargo over arbitration position

Massachusetts Democratic Senator Elizabeth Warren on Monday criticized Wells Fargo & Co’s decision to require customers affected by its unauthorized accounts scandal to go through arbitration rather than allowing them to sue.

The San Francisco-based bank last week asked a U.S. court to uphold contract clauses that mandate arbitration, something financial firms often use to protect against litigation. Wells Fargo’s situation is unusual, though, because it opened accounts without customers’ permission, calling into question whether the contracts and their clauses are legitimate.

In a Facebook post on Monday, Warren, a frequent critic of the banking industry, said Wells Fargo’s promise to treat customers better in light of the scandal is “meaningless” as long as it is pursuing arbitration.

“After dozens of Wells Fargo customers sued the bank to recover fees they were charged from these fake accounts, Wells Fargo tried to boot the claims from court and into the closed-door, industry-friendly arbitration process,” Warren said.

“Unfortunately, there’s a real chance a court will let Wells Fargo shuffle these claims off to die in arbitration.”

A Wells Fargo spokesman said the bank has an arbitration clause in its customer account agreements.

Read on.

Rising Mortgage Rates Are Two-Edged Sword for Banks — Heard on the Street

Banks in the U.S. have much to be thankful for this holiday season. Higher rates on mortgages aren’t necessarily on the list.

The average rate on a 30-year fixed conforming mortgage has risen to 4.16%, according to the Mortgage Bankers Association, up from post-Brexit lows around 3.6%. Higher rates normally are good for lenders as they help them earn more on loans. Mortgages are a special case. Most are sold off to Fannie Mae or Freddie Mac and then packaged into securities. The portion held by banks stands at just a third.

Higher rates also suppress refinancing, which means fewer one-time gains for banks that make loans and sell them. For holders of mortgage-backed securities, though, this is positive. Fewer will be repaid early. As the heaviest holder of such securities among major banks, Bank of America should be the biggest beneficiary.

Ironically, though, after getting pounded by ultralow rates over the summer, BofA changed accounting policies so that quarterly earnings will be less affected. Now it will appear to benefit less from the rebound, though the impact is fundamentally unchanged.

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JPMorgan’s ‘Sons and Daughters’ fine won’t stop Wall Street’s unethical hiring practices

Hiring well connected Chinese princelings to win lucrative deals has never been a revelation in Hong Kong. But when JPMorgan agreed to pay a US$264 million fine to resolve criminal and civil matters relating to its “Sons and Daughters” recruitment programme, its sheer size warrants a second look. The cost of doing business in China just went up.

The US Security and Exchange Commission’s 26 page summary of JPMorgan’s Sons and Daughters programme, which started in 2006, reads like a satire of Game of Thrones – infused with nepotism and medieval like privilege. The Department of Justice assessed that the scheme increased profits at JPMorgan by at least US$35 million.

“The so-called Sons and Daughters Programme was nothing more than bribery by another name,” said assistant attorney-general Leslie Caldwell. “Awarding prestigious employment opportunities to unqualified individuals in order to influence government officials is corruption, plain and simple.”

 She added that, “Most of those offered jobs through the programme lacked the education and experience of other new hires.” The bank admitted that some of these candidates did little more than proof read although they were paid the same salary as entry-level analysts.

Besides the evident absence of hiring compliance at JPMorgan it is a shame that the fine will probably be absorbed by JPMorgan’s shareholders rather than clawed back from their bankers’ bonuses.

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Kochs and Other Madoff Investors Are Winners in Fight Over Profits Held Abroad

The company led by the American billionaire Koch brothers, along with dozens of banks and fund managers, kept billions of dollars in profit fromBernard L. Madoff’s Ponzi scheme in accounts offshore. As it turns out, that was a good decision.

Koch Industries and others who invested in the Madoff fund from offshore accounts won a key ruling in federal bankruptcy court on Monday, when the judge said certain funds held abroad — estimated at about $2 billion — could not be made available to victims of the Madoff scheme.

The ruling highlights the tug-of-war that has been raging between those who lost money when the scheme fell apart eight years ago and those who walked away before the fraud came to light, having recouped their original investments and then some.

Read on.