Daily Archives: December 29, 2016

Wells Fargo Customers: Bank’s Contract Can’t Be Used To Allow Illegal Activity

Even though Wells Fargo has admitted that bank employees opened millions of fraudulent, unauthorized accounts in customers’ names, the bank has avoided or delayed class-action lawsuits over this fake account fiasco by citing terms in customer contracts that prevent account-holders from bringing lawsuits against Wells. However, one group of customers is arguing that the bank can’t use these contracts to shield itself from being held liable for illegal activity.

On Dec. 13, a federal court judge in Utah pressed pause on a potential class action against Wells while the court weighed whether or not to shunt the dispute out of the courtroom and into private arbitration.

Like most major banks — and telecom/cable companies, online retailers, nursing homes, for-profit educators, and just about everything else — Wells Fargo’s customer contracts usually include a clause that allow either party to force any legal dispute with the bank out of the courtroom and into arbitration.

The clauses also generally prohibit customers from joining together with other wronged customers in a class action, even through arbitration. That means each of the more than two million Wells account holders would need to go through this process, rather than being represented in court as part of a class.

If all of the customers who had fake accounts opened in their name were to enter into arbitration, that could be a logistical nightmare for the bank, which would have to deal with hundreds of thousands — potentially millions — of arbitration cases, but research shows that very few people know about this process, and so only a small number of individuals ever go the arbitration route.

The plaintiffs in the Utah case recently filed their objections [PDF] to the bank’s motion to compel arbitration, arguing that the bank can’t use a contract to conduct illegal activity.

The plaintiffs contend that if Wells Fargo intended the Consumer Account Agreements (CAA) to allow the bank to act illegally, that “would void the contract on numerous grounds.” And if these contracts are not intended to cover illegal bank actions, then the arbitration clause can’t be used to shield the bank from liability for fraud.

Read on.

Whistleblower sues Wells Fargo amid accounts scandal

SAN FRANCISCO — A former branch manager for Wells Fargo has filed a federal lawsuit against the embattled bank, claiming that supervisors harassed her after she had alerted them to improper sales and account activity by employees.

Diana Duenas-Brown, who worked for Wells Fargo for 14 years, including 11 as a branch manager in a Sonoma County community, reported at least 25 instances of illegal or improper sales activity by employees in the bank district where she worked, according to the federal lawsuit.

“This case presents a classic example of whistleblower retaliation,” Duenas-Brown stated in the lawsuit, which was filed on Dec. 9. The former branch manager told her supervisor of “fraudulent, illegal, and deceptive practices against Wells Fargo customers,” according to the litigation.

Read on.

Fidelity National Unit Said to Near Settlement Over Robo-Signing

A Fidelity National Financial Inc. subsidiary is in final talks to pay as much as $65 million to resolve U.S. government accusations that it contributed to improper and fraudulent foreclosures after the 2008 credit crisis, according to a person familiar with the deal.

Federal banking regulators agreed that a $65 million penalty could settle the case involving so-called robo-signing of foreclosure papers tied to the firm formerly known as Lender Processing Services Inc., according to the person, who requested anonymity because the negotiations aren’t public. Fidelity National acquired the company during the lengthy settlement talks with the Federal Reserve and other agencies, and it has been divided among subsidiaries including ServiceLink Holdings and Black Knight Financial Services.

Read on.

United Shore lands on DOJ hit list, will pay $48m for FHA lending violations

United Shore Financial Services will pay $48 million to settle allegations brought by the Department of Justice, which accused United Shore of violating the False Claims Act by “knowingly originating and underwriting” mortgages that did not meetFederal Housing Administration standards, the DOJ announced Wednesday.

The settlement makes United Shore just the latest in a long line of mortgage lenders that settled with the DOJ over alleged FHA lending violations.

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Will Donald Trump’s Corporate ‘Tax Holiday’ Create Jobs? Not Necessarily

President-elect Donald J. Trump has said he would like to create a “tax holiday” so that American companies can bring back profit that was generated overseas at a lower rate. In his view, this influx of cash will create jobs.

But corporate boards and executives may have different ideas.

They are likely to use much of the estimated $2 trillion held overseas to acquire businesses in the United States, to buy back their own stock or to pay down debt, say advisers of America’s top corporate executives.

Merger bankers “are sharpening their pencils with what types of deals those larger companies can look at,” said Marc-Anthony Hourihan, co-head of mergers and acquisitions in the Americas for the Swiss bank UBS. “I think M.&A. will be fairly high on the list.”

American corporations have kept an accumulation of earnings abroad because they would be subject to paying more taxes when they bring it home.

Read on.