SEC Wants More Detail on Loans Backing Securities

WASHINGTON—U.S. regulators will take long-awaited steps to give investors more information about the quality of mortgages and other loans underpinning certain securities. The Securities and Exchange Commission is expected to complete rules Wednesday that would require banks and other firms to provide investors with more details about loans pooled into bonds known as asset-backed securities. The data will include borrowers’ credit scores and metrics to gauge levels of debt—information the SEC expects will aid investors in determining the health of certain loans and reduce reliance on credit ratings, according to people familiar with the matter. More in the Wall Street Journal [...]

MF Global Seeks Permission to Repay Creditors

MF Global Inc. wants court approval to pay $295 million owed to its creditors, now that it has paid back most of its customers. In a Tuesday filing with the U.S. Bankruptcy Court in Manhattan, trustee James W. Giddens said he wanted to distribute $295 million to creditors, who have waited nearly three years as all but a few individual brokerage and commodity customers received 100% of payments owed. The bulk of the money is earmarked for unsecured creditors, who would receive a first distribution of about 20% of what Mr. Giddens has agreed to pay. Holders of secured, administrative and priority claims that have been resolved will get 100% of their money all at once if the request is approved. More in the Wall Street Journal [...]

Judge Denies Claims by Investors in Retirement Accounts Tied to Madoff

Hundreds of people whose employers invested their retirement funds with Bernard Madoff cannot recover money from the liquidation of Mr. Madoff’s firm because they weren’t direct customers of the imprisoned Ponzi scheme operator, a bankruptcy judge has ruled.
The decision, by Judge Stuart Bernstein of the U.S. Bankruptcy Court in Manhattan on Friday, is the latest in a string of rulings denying claims put forward by investors in either retirement funds or so-called feeder funds that in turn invested with Mr. Madoff. More in the Wall Street Journal [...]

As federal regulators move slowly on equity crowdfunding, states adopt their own rules

With federal regulations for equity-based crowdfunding still unfinished more than two years after the practice was signed into law, numerous states are moving ahead with their own measures that allow residents to funnel small sums of money to local businesses. But the deals allowed by state-level crowdfunding are typically smaller in size and scope than those envisioned by the federal crowdfunding provisions, which entrepreneurs and economic development officials alike have heralded as a new mechanism for businesses to raise capital needed for expansion. More in the Washington Post [...]

What’s Next for the Fiduciary Standard?

While the industry awaits a decision by the SEC on whether it will move forward with a uniform fiduciary rule for brokers and advisors, fiduciary advocates will engage this month in a debate about the importance of the two fiduciary rulemakings being considered by the SEC and the Department of Labor, as well as what the industry’s role should be in shaping fiduciary standards. As Fiduciary September approached—and with only three months remaining until SEC Chairwoman Mary Jo White’s self-imposed deadline for the agency to make by year-end a “threshold decision” on whether and how to move forward on a fiduciary rulemaking—I reached out to top fiduciary thinkers to get their views on where the commission may be headed. More on ThinkAdvisor [...]

Cassidy: SEC should appeal ruling against Stanford victims

Rep. Bill Cassidy, R-Baton Rouge, is asking Securities and Exchange Commission Chair Mary Jo White to appeal a D.C. Court of Appeals ruling that victims of the Stanford Ponzi scheme aren’t eligible for compensation from a fund established by the Securities Investor Protection Corp. The court ruled that the losses, painful as they were, came from foreign certificates of deposit issued by banks that aren’t part of the corporation’s industry members who fund the account to reimburse victims of financial fraud. More on The Hill [...]

Blurred Lines in Big Bank Mortgage Settlements

The latest settlement with a big bank, this time Bank of America’s $16.65 billion resolution over shoddy mortgage and related mortgage-backed securities that lost much of their value, has all the accoutrements we have come to expect: a claim of historic significance supported by a statement of facts referencing a few embarrassing e-mails to establish the requisite venality for a large penalty. A prominent feature is a news conference where Attorney General Eric H. Holder Jr. hails the resolution as yet another blow against the reckless (or worse) banking practices that led to the financial crisis. Like a graduation speech or school concert, however, the settlements start to run together with little to distinguish them. In the past year, JPMorgan Chase and Citigroup joined Bank of America in resolving investigations into mortgage operations, much of which took place in companies that the banks acquired during the financial crisis. More in the New York Times here.

Bank of America to pay record $16.65 billion to settle mortgage claims

Bank of America Corp. has agreed to pay $16.65 billion to end federal and state investigations into the sale of toxic mortgage securities during the subprime housing boom, the largest settlement by a single company in U.S. history, the Justice Department said Thursday. The settlement includes $9.65 billion in fines and $7 billion in aid to communities and homeowners hit hard by the housing market crash that triggered the Great Recession. More in the LA Times [...]

DOJ reaches $17B Bank of America settlement

The Justice Department on Thursday announced that it has struck an almost $17 billion deal with Bank of America to settle government charges over toxic mortgage-backed securities sold to investors in the years leading up to the 2008 financial crisis.
The settlement includes a record $9.65 billion fine and about $7 billion in aid for homeowners still struggling to make their mortgage payments and for potential buyers who have had trouble finding financing for new home loans. More on Politico [...]

How Madoff probe uncovered a hedge-fund scam led by ex-MIT professor

A former associate dean from the Massachusetts Institute of Technology school and his son, a Harvard Business School graduate have been caught running a hedge fund scam, say authorities looking at Bernie Madoff’s Ponzi scheme. Gabriel Bitran, a professor and associate dean at MIT’s Sloan School of Management, and his son, Marco, a money manager, have pleaded guilty to charges of conspiracy to commit securities fraud, wire fraud and obstruction of justice in connection with their hedge fund businesses, by Boston prosecutors. The father and son are facing up to five years in prison. More on MarketWatch [...]