A federal judge in New York approved a hotly disputed fee for lawyers who negotiated a $217 million settlement with Madoff “feeder funds,” but only after leveling harsh criticism at the firms for trying to obtain excessive markups for low-paid contract attorneys. In a 43-page opinion issued yesterday, U.S. District Judge Colleen McMahon rejected the New York Attorney General’s objection to a $40.7 million fee request from lawyers led by Lowey Dannenberg who obtained the settlement from Ivy Asset Managment on behalf of pension funds that lost money in the Bernie Madoff swindle. More in Forbes [...]
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JPMorgan Chase & Co. (JPM), the biggest U.S. bank, was warned by federal energy-market regulators that its personnel and two subsidiaries may face claims stemming from a probe into bidding practices. Federal Energy Regulatory Commission staff told JPMorgan in March they may recommend the agency bring an enforcement case, the New York-based company said yesterday in a regulatory filing. Claims may include “alleged violations of FERC rules and the rules of certain independent system operators,” the lender said, without elaborating on the allegations. The FERC has stepped up scrutiny of corporations as it wields policing powers that were expanded in the wake of Enron Corp.’s 2001 collapse. Agency investigators may seek to hold JPMorgan traders and commodities-unit chief Blythe Masters “individually liable,” the New York Times reported last week, citing a 70-page document the watchdog sent the bank in March. More on Bloomberg BusinessWeek [...] The nice thing about being in the financial services world is that you never really have to say you’re sorry. Screw over customers, botch foreclosures, run afoul of important regulations, and violate some important rules—and the worst you’ll have to do is pay some fines or settlements. It’s a cost of doing business, even for America’s most highly regarded banks. Take JPMorgan Chase. The New York–based firm, under the leadership of hard-charging CEO Jamie Dimon, emerged from the financial crisis in much better shape than many of its rivals. But that doesn’t mean the bank wasn’t involved in many of the shenanigans that helped cause the financial crisis and have contributed to a slow recovery. In fact, in the past few years, JPMorgan Chase has been party to a series of very expensive legal settlements. In many recent quarters, as it rang up big profits, the bank was forced to set aside hundreds of millions of dollars to deal with litigation. Joshua Rosner, a financial analyst and co-author of Reckless Endangerment, in March estimated that the company’s litigation expenses since 2009 have totaled $16 billion. And it’s not over yet. Along with a current investigation as to whether it failed to alert authorities to suspicions about Ponzi schemer Bernie Madoff, The New York Times reported that at least eight federal agencies are currently investigating the bank. More in The Daily Beast here. MF Global Holdings Ltd. (MFGLQ) trustee Louis J. Freeh is seeking a jury trial for a lawsuit blaming former Chief Executive Officer Jon Corzine for the firm’s collapse. Freeh made the request May 3 in U.S. Bankruptcy Court in Manhattan. Bankruptcy courts don’t hold trials by jury, and the case would need to go to a district court if Freeh’s demand for a jury is granted. “Many people don’t like banks; many, many people don’t like investment firms,” Michael Weinstein, chairman of Cole, Schotz, Meisel, Forman & Leonard PA’s white-collar practice in Hackensack, New Jersey, said today in a telephone interview. “By going to the jury, one could argue that the trustee is playing into those ideas,” More on Bloomberg [...] It really does take money to make money. So far, lawyers and other consultants have racked up $701 million in fees as they work to recover the $17.5 billion lost to Bernard Madoff’s Ponzi scheme. That’s less than half of the $1.6 billion legal tab associated with the Lehman Brothers’ bankruptcy – the largest legal bill in history. But it’s a considerable sum that’s still growing as efforts to make Madoff investors whole drag on. To date, court-appointed trustee Irving Picard has collected $9.3 billion in cash and assets and repaid $5.4 billion of that to victims. The bulk of the fees associated with the case, $384 million, have been paid to Picard’s law firm, BakerHostetler. Another $292 million has been divided among dozens of other law firms, and $25 million went to “general administrative” costs. Funding these payouts is the Securities Investor Protection Corporation, which collects dues from Wall Street firms that are used to restore lost assets to investors burned by bankruptcy or fraud. More on CNNMoney [...] The head of the U.S. Securities and Exchange Commission’s national examination program is leaving the agency, in what marks the latest major personnel change since Mary Jo White took over as head of the SEC last month, the SEC said Thursday. Carlo di Florio, who was hired more than three years ago to help revamp the agency’s examinations program in the wake of the Bernard Madoff scandal, is leaving to lead a new risk and strategy division at the Financial Industry Regulatory Authority, the Wall Street industry-funded brokerage watchdog. He will be replaced by Andrew Bowden, who currently serves as deputy director of the SEC’s Office of Compliance, Inspections and Examinations (OCIE). More on Reuters [...] Government investigators have found that JPMorgan Chase devised “manipulative schemes” that transformed “money-losing power plants into powerful profit centers,” and that one of its most senior executives gave “false and misleading statements” under oath. The findings appear in a confidential government document, reviewed by The New York Times, that was sent to the bank in March, warning of a potential crackdown by the regulator of the nation’s energy markets. See CNBC report [...] Attorneys representing those with interests in accord with NIAP have submitted a reply brief in Bankruptcy Court arguing against the Trustee’s assertion that inflation adjustments to net equity would be too time consuming and expensive to commence. For innocent investors in Madoff, NIAP emphatically asserts the use of final account statements for the SIPC valuations of Net Equity, and in all cases when the names of real securities and realistic valuations are depicted on their statements. Barring a final account statement methodology, however, applying an appropriate opportunity cost valuation to investor’s accounts is a far superior alternative than the straight cash-in-cash-out method employed thus far by SIPC and the Trustee. Click here for reply brief.” rel=”external”>Click here for reply [...] HSBC Holdings Plc (HSBA), custodian of a fund that lost about 1.1 billion euros ($1.5 billion) through Bernard Madoff’s Ponzi scheme, said liability rules for banks in Europe weren’t as strict at the time of the scandal surrounding the convicted fraudster. The fund in question had “very specific obligations” to investors, HSBC said at the High Court in Dublin today on the third day of a trial scheduled to last 14 weeks. Thema International Fund Plc is seeking about $1.5 billion in damages. The case is the first of dozens of disputes in Europe to focus on the liability of banks as custodians to investment funds that put money with Madoff, who was charged in December 2008. More on Bloomberg [...] Liquidating Bernard L. Madoff’s defunct brokerage has cost $774.8 million, including lawyers’ and consultants’ fees and expenses of $737.1 million, the trustee for the firm said in a report. Irving H. Picard, who has been liquidating the firm since Madoff’s December 2008 arrest, has paid customers about $4.6 billion, out of as much as $20 billion he says they lost in the Ponzi scheme. Another $802 million went to customers from the Securities Investor Protection Corp., which spent almost as much picking up the lawyers’ and consultants’ bills, according to the report filed yesterday in federal court in Manhattan. More on Bloomberg [...] |
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