Government mortgage fraud lawsuit against BofA headed to trial

In an order made public on Tuesday, U.S. District Judge Jed Rakoff in Manhattan said there were “genuine factual disputes” that justify letting the case continue against the second-largest U.S. bank. The order clears the way for the case to proceed toward a scheduled September 23 jury trial. Only a few prominent cases tied to the financial crisis have ever gone to trial. Rakoff also said he expects to decide before trial which theories he will allow the government to pursue. He said he would explain his reasons for Tuesday’s order “in due course.” More on Reuters [...]

Bernanke’s Deposition: AIG, Goldman, Merrill and Bailouts

The SEC has lost steam in its already very weak push against mortgage lenders and the investment banks that supplied them with money for alleged fraudulent lending. The investment banks supplied funds by allegedly defrauding investors in residential mortgage backed securities (RMBS), collateralized debt obligations (CDOs), CDO-squared (and more). The alleged securities fraud in the sale of mortgage backed securities, CDOs, and related credit derivatives, is only one part of a widespread Ponzi scheme. Mortgage lenders made multi-billion dollar settlements after allegations of fraudulent lending, while producing phony documents that disguised violations of lending standards. They could not have continued this alleged fraud without funding from investment banks. More in the Huffington Post [...]

New York Attorney General Compares Donald Trump To Bernie Madoff (VIDEO)

New York Attorney General Eric Schneiderman blasted Donald Trump on HuffPost Live Tuesday for allegedly making false promises and scamming student entrepreneurs out of money at Trump University. In describing the alleged scam, Schneiderman brought up Bernie Madoff and when asked by host Ahmed Shihab-Eldin whether the two cases were similar, the New York attorney general drew comparisons between the real estate tycoon and Madoff. “What they were telling people they were going to get is clearly not what they got,” Schneiderman said of Trump’s promises to teach his secrets to success in real estate. “And look unfortunately in hard economic times, desperate people sometimes make the best victims.” Watch Huffington Post video [...]

Trump faces two-front legal fight over ‘university’

A newly filed lawsuit that accuses real estate developer Donald Trump of bilking students of his “Trump University” confronts the reality TV star with a potentially risky two-front legal battle over his name, reputation and integrity. New York Attorney General Eric Schneiderman accused Trump of using an unlicensed university real estate program to scam would-be real estate investors who sought the mogul’s secrets of success. The petition, filed Saturday, also charges Michael Sexton, the Trump venture’s former president. More in USA Today [...]

Justice Dept. Again Signals Interest to Pursue Financial Crisis Cases

Patience is a virtue, and waiting for cases from the financial crisis has certainly called for such a temperament. In a recent interview, Attorney General Eric H. Holder Jr. indicated that the wait might be over, but it is unlikely to satisfy those who have found the Justice Department’s response to be tepid at best. “My message is, anybody who’s inflicted damage on our financial markets should not be of the belief that they are out of the woods because of the passage of time,” Mr. Holder said in an interview with The Wall Street Journal last week. “If any individual or if any institution is banking on waiting things out, they have to think again.” More in the New York Times [...]

Madoff trustee reaches $98 mln settlement with Maxam fund

The trustee seeking money for victims of Bernard Madoff has reached a $98 million settlement with Maxam Absolute Return Fund, which fed cash into the imprisoned swindler’s Ponzi scheme. The accord, disclosed in court papers filed in U.S. Bankruptcy Court in Manhattan on Monday, followed a series of other settlements with so-called feeder funds reached by the trustee, Irving Picard. More on Reuters [...]

Former Madoff employees demand details on affairs

Five former employees of Bernard Madoff responded on Thursday to government assertions that all but one of them and Madoff were involved “in romantic and/or sexual relationships” with each other and that Madoff himself was ensnared in a “love triangle.” In short, they want more details, according to a court document filed on Thursday. Madoff pleaded guilty in March 2009 to running a fraud of up to $65 billion at his investment firm and is serving a 150-year prison sentence. While Madoff said he acted alone, prosecutors have since charged 13 individuals in connection with the fraud. Five of them – two women and three men – are set to go on trial in federal court in New York on Oct. 7. More on CNBC [...]

FINRA fines Morgan Stanley $1 million

Morgan Stanley is being fined $1 million by an independent regulator for matters involving corporate and agency bonds and municipal bonds. The Financial Industry Regulatory Authority said Thursday that the firm is being fined the $1 million, and being ordered to pay $188,000 in restitution plus interest, for failing to provide best execution in certain customer transactions involving corporate and agency bonds, and failing to provide a fair and reasonable price in certain customer transactions involving municipal bonds. FINRA said that the restitution payment is in additional to restitution that Morgan Stanley previously paid to customers for transactions covered by the settlement. More on Bloomberg BusinessWeek [...]

Wall Street Courts ‘Princelings’

Wall Street’s biggest banks have for years hired the children of senior Chinese government officials in the hopes that they can open doors and secure deals, David Barboza reports in The New York Times. The hirings, while not well publicized, were no secret. But they are gaining new attention after a Securities and Exchange Commission investigation has raised the question of whether such practices crossed a line at JPMorgan Chase. The focus of the investigation “has prompted a scramble among the Hong Kong rivals of the New York bank to assess the potential risks of their own hirings,” Mr. Barboza writes. Bankers and lawyers said in interviews that the practice of hiring the children of government officials was so widespread that banks competed to hire the most politically connected recent college graduates. JPMorgan, for its part, has not been accused of wrongdoing and has said it is cooperating with the inquiry. More in the New York Times [...]

Justice Department Planning To Announce Financial Crisis Charges

U.S. Attorney General Eric Holder is preparing to announce new cases related to the economic meltdown in the coming months as the Justice Department nears decisions on a number of probes involving large financial firms, the Wall Street Journal reported. “Anybody who’s inflicted damage on our financial markets should not be of the belief that they are out of the woods because of the passage of time,” Holder said in an interview with the Journal on Tuesday. More in the Huffington Post [...]