In the years after the financial crisis nearly toppled the U.S. economy, few government officials were successful in holding Wall Street accountable. That is changing. The reckoning for Wall Street’s sins, while still in the early phases, may finally be at hand. And some analysts and officials point to three figures in New York and Washington who have been at the forefront of the effort: a prosecutor, a judge and a regulator. There is no formal collaboration among the three — U.S. Attorney Preet Bharara in Manhattan, U.S. District Judge Jed S. Rakoff and Securities and Exchange Commission Chairman Mary Jo White. But their collective efforts have helped usher in a more aggressive era in prosecution and, some analysts say, may have even helped lay the legal groundwork for many of the government’s probes against megabanks such as JPMorgan Chase. More in the Washington Post [...]
DALLAS — With the Dallas Mavericks’ season-opening game still a month away, the basketball team’s outspoken owner, Mark Cuban, will be seeing a different kind of court this week. The government’s insider-trading case against Cuban goes to trial Monday in federal court in Dallas. Cuban is expected to testify, and experts say the verdict could come down to whether jurors find the billionaire and regular on the ABC reality show “Shark Tank” to be likable or smug. Cuban is accused of using insider information to dump his stock in a small Internet-search company in 2004 just before the shares fell in value. He avoided $750,000 in losses. The Securities and Exchange Commission wants Cuban to give up the money and pay a civil penalty. More in the Huffington Post [...]
The lavish lifestyles of former employees of jailed financier Bernard Madoff can’t be used against them at their upcoming criminal trial, a judge ruled Wednesday. The decision by U.S. District Judge Laura Taylor Swain came during a pretrial hearing for five of Madoff’s former employees after defense lawyers filed papers complaining that the government wanted to use tales of fancy cars and vacation homes to turn jurors against their clients. Swain found that any attempt to portray the defendants “as greedy or extravagant” could unfairly cloud jurors’ perception of them. More in the Associated Press [...]
Even by the lamentable standards of U.S. banking and securities regulators, the settlements unveiled this week with Toronto-Dominion Bank (TD) for its role in a $1.2 billion Florida Ponzi scheme were incredibly lacking. Three federal agencies on Sept. 23 said they had struck deals with TD Bank, the Toronto-based lender’s U.S. unit. The penalties amounted to $52.5 million: $37.5 million to settle allegations by the Office of the Comptroller of the Currency and $15 million to the Securities and Exchange Commission. Per the usual niceties, TD Bank neither admitted nor denied the agencies’ claims, which ranged from negligence to violations of anti-money-laundering laws. It also settled with the Financial Crimes Enforcement Network, a unit of the Treasury Department, but that won’t result in additional payments. More on Bloomberg here.
The U.S. Securities and Exchange Commission’s scrutiny of public pension liabilities will not let up any time soon, a top SEC official said on Thursday. Pension disclosure will be “a continuing and very significant theme of the SEC,” John Cross, head of the SEC’s Office of Municipal Securities, told attendees at the National Association of Bond Lawyers’ (NABL) annual workshop. “I can’t overemphasize the significance and at least the need to focus on pension liabilities because of the sheer magnitude of the numbers,” Cross said, adding that those liabilities go the heart of state and local government fiscal health. More on Reuters [...]
The Madoff Victim Fund controlled by the U.S. Justice Department said it will distribute $2.4 billion in forfeitures from the Jeffry Picower estate “as fast as possible” once all eligible recipients are known. The statement came in answer to calls for an update from victims of the fraud, according to the Madoff Victim Fund’s four-month-old website. The money is part of a $7.2 billion settlement by the widow of one of Bernard Madoff’s largest individual investors of a lawsuit accusing Picower of having known of the fraud, which robbed customers of about $17 billion in principal. More on Bloomberg [...]
People who lost money in the Bernard Madoff Ponzi scheme after investing in feeder funds could get a share in more than $2 billion recovered by the government. So far, feeder fund investors have been shut out of compensation. The Madoff trustee, Irving Picard, has so far been reimbursing people who are defined as customers of Madoff — those who invested in the main fund run by the fraudulent manager. People who invested in funds that subsequently reinvested in Madoff were not regarded as customers under financial rules, so they’ve been out of luck. Richard Breeden, the special master appointed to oversee distribution of $2 billion that was forfeited to the government, says he has a wider brief to make restitution not just to customers, but to victims of Madoff, a term that could encompass feeder fund investors. The forfeiture was made as part of the government’s criminal case against Madoff. More on WNPR News [...]
‘Technical glitches and other operational errors at U.S. exchanges cannot be tolerated, given the high-speed, interconnected nature of the markets, the head of the U.S. Securities and Exchange Commission said on Tuesday. A number of recent high-profile glitches at exchanges and trading firms have roiled markets and shaken investor confidence, prompting the SEC to increase its focus on operational risk. More on Reuters [...]
Bank of America Corp’s Countrywide unit placed profits over quality in a “massive fraud” selling shoddy mortgages to Fannie Mae and Freddie Mac, a U.S. government lawyer said on Tuesday. The claim came at the start of the first case by the government to go to trial against a major bank over defective mortgage practices leading up to the 2008 financial crisis. Pierre Armand, a lawyer in the civil division of the U.S. Attorney’s Office in Manhattan, said Countrywide made $165 million selling loans that it promised were investment quality to Fannie and Freddie. More on Reuters [...]
Last week, JPMorgan Chase agreed to pay $920 million to settle civil allegations brought by the Securities and Exchange Commission and other regulators in connection with a multibillion-dollar trading loss that’s come to be known as the London Whale case.
At first glance, it sounded like a lot of money and, frankly, it sounded as if the S.E.C. had a strong case and had exacted quite a settlement.
But look closer and scrutinize the S.E.C.’s 15-page description of its findings. Then think about this: When the S.E.C. says that JPMorgan is “paying” a record fine, where is the money actually coming from? More in the New York Times [...]