The Resolution Law Group: Cayman Islands LLC Must Replead CLO Securities Case Against Deutsche Bank

The U.S. District Court for the Southern District of New York says that Arco Capital Corp. a Cayman Islands LLC, has 20 days to replead its $37M collateralized loan obligation against Deutsche Bank AG (DB) that accuses the latter of alleged misconduct related to a 2006 CLO. According to Judge Robert Sweet, even though Arco Capital did an adequate job of alleging a domestic transaction within the Supreme Court’s decision in Morrison v. National Australia Bank, its claims are time-barred, per the two-year post-discovery deadline and five-year statute of repose.

Deutsche Bank had offered investors the chance to obtain debt securities linked to portfolio of merging markets investments and derivative transactions it originated. CRAFT EM CLO, which is a Cayman Islands company created by the bank, effected the transaction and gained synthetic exposure via credit default transactions. For interest payment on the notes, investors consented to risk the principal due on them according to the reference portfolio. However, if a reference obligation, which had to satisfy certain eligibly requirements, defaulted in a way that the CDS agreements government, Deutsche Bank would receive payment that would directly lower the principal due on the notes when maturity was reached.

Arco maintains that the assets that experienced credit events did not meet the criteria. It noted that Deutsche Bank wasn’t supposed to use the transaction as a repository for lending assets that were distressed, toxic, or “poorly underwritten.”

Seeking to dismiss the claims, Deutsche Bank contended that Morrison barred the plaintiff’s 1934 Securities Exchange Act Section 10(b) claim. That ruling found that the section is only applicable to transactions in securities found on US exchanges or transactions that occur domestically. The bank argued that since Arco bought the notes offshore, the LLC is unable to allege federal securities fraud violation in relation to the transactions.

While the court was in agreement with Arco that the lawsuit and associate documents allow for the “plausible inference” that there was irrevocable liability in New York and that, for purposes of Morrison, investment in the Notes was a transaction that occurred domestically, it did say that the company could have found the facts pertaining to the violation within two years of that date that a plaintiff that was “reasonably diligent” would have sufficient data to file a case. Hence, the pleading was untimely.

Collateralized Loan Obligation
A CLO is a type of collateralized debt obligation. It is a securities backed by loans or receivables as we as a special purpose vehicle that has securitization payments as different tranches. CLOs are supposed to reduce lending costs for a business while lowering the lending risks for banks, which sell the loans to outside investors.

At The Resolution Law Group, our CLO fraud lawyers represent institutional investors throughout the United States.  If you suspect that you are the victim of Collateralized Loan Obligation, do not hesitate to email or call please contact The Resolution Law Group at (203) 542-7275 for a confidential, no obligation consultation.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

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The Resolution Law Group: Lorraine Brown, an executive at the mortgage servicing company, Lender Processing Services, Inc., and the CEO of DocX, LLC has been sentenced to serve five years in prison for her participation in a six year scheme to prepare and file more than one million fraudulently signed and notarized mortgage related documents.

Lorraine Brown, an executive at the mortgage servicing company, Lender Processing Services, Inc., and the CEO of DocX, LLC has been sentenced to serve five years in prison for her participation in a six year scheme to prepare and file more than one million fraudulently signed and notarized mortgage related documents.

Lender Processing previously entered into a “non-prosecution” agreement with the U.S. Department of Justice and paid $35 million to settle an investigation into its mortgage document signing practices.

Geoffrey Broderick, the senior partner of the Resolution Law Group, says “while Lorraine Brown will sit behind bars for the next five years, Lender Processing still needs to held accountable to the millions of homeowners they have harmed. “

Mr. Broderick adds that “The housing market will continue to suffer until it is fixed by the Courts or the Legislature. Somebody has to fix the problem. That is why The Resolution Law Group continues its fight for homeowners. Homeowners cannot expect the problem to fix itself.”

The Resolution Law Group continues to prosecute ground breaking litigation in Federal Court on behalf of homeowners suing lenders and servicers for, among other things, the illegal use of MERS, robo-signing, and intentionally ignoring underwriting standards and encouraging inflated appraisals.

The Resolution Law Group is currently enrolling clients into the pending lawsuit. For further information, visit its website at www.TheResolutionLawGroup.com

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

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The Resolution Law Group continues its fight for homeowners. Homeowners cannot expect the problem to fix itself.

The North Las Vegas City Council has voted to move forward with a controversial plan to help homeowners whose homes are worth less than the amount they owe. In following the lead of governmental officials in Arizona, City Council is evaluating the use of eminent domain laws to buy underwater homes at the current market price and then venture with a financing company to sell the homes back to the original owners, with no money down and with a more affordable mortgage payment.

Opponents of this plan include lenders, loan servicers, and the Greater Las Vegas Association of Realtors.

Geoffrey Broderick, the senior partner of the Resolution Law Group, says “while the North Las Vegas City Council should be applauded for their willingness to look at creative solutions, it is unlikely that and governmental solution will be adopted that places the financial losses squarely on the banks, and not the borrowers. “

Mr. Broderick adds that “The housing market will continue to suffer until it is fixed by the Courts or the Legislature. Somebody has to fix the problem. That is why The Resolution Law Group continues its fight for homeowners. Homeowners cannot expect the problem to fix itself.”

The Resolution Law Group continues to prosecute ground breaking litigation in Federal Court on behalf of homeowners suing lenders and servicers for, among other things, the illegal use of MERS, robo-signing, and intentionally ignoring underwriting standards and encouraging inflated appraisals.

The Resolution Law Group is currently enrolling clients into the pending lawsuit. For further information, visit its website at www.TheResolutionLawGroup.com

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

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The Resolution Law Group: The Promontory Group, a Washington, D.C. consulting group, admitted to the Senate Banking Committee that it was paid more than $927 million to conduct an independent review of foreclosure files.

The Promontory Group, a Washington, D.C. consulting group, admitted to the Senate Banking Committee that it was paid more than $927 million to conduct an independent review of foreclosure files.

Federal bank regulators have started monitoring the manner in which the banks are spending the money pledged to the multi-billion dollar settlement. Apparently, the banks are hiring consultants to provide “independent” reviews of their files.

Geoffrey Broderick, the senior partner of the Resolution Law Group, says “consulting firms being paid hundreds of millions of dollars by the banks are far from ‘independent’. The homeowners are still waiting to benefit from the settlement and the banks seem more interested in spending the settlement money on companies that are willing to say that banks have acted appropriately. The Government still needs to hold accountable the banks for harming millions of homeowners. “

Mr. Broderick adds that “The housing market will continue to suffer until it is fixed by the Courts or the Legislature. Somebody has to fix the problem. That is why The Resolution Law Group continues its fight for homeowners. Homeowners cannot expect the problem to fix itself.”

The Resolution Law Group continues to prosecute ground breaking litigation in Federal Court on behalf of homeowners suing lenders and servicers for, among other things, the illegal use of MERS, robo-signing, and intentionally ignoring underwriting standards and encouraging inflated appraisals.

The Resolution Law Group is currently enrolling clients into the pending lawsuit. For further information, visit its website at www.TheResolutionLawGroup.com

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

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The Resolution Law Group: Securities Lending Trial Against Wells Fargo & Co. is Underway

It will be up to 11 jurors to determine if Wells Fargo & Co. (WFC) is guilty of grossly mismanaging a securities lending program and lying about the degree of risk involved or whether the economic crisis was actually at fault. The program was marketed to institutional clients, including pension funds. According to investors, the bank committed fraud by taking huge risks with what they were under the impression was a conservative program. Nearly 15% of the portfolio’s by 2007’s fall season had defaulted or was distressed. (Citigroup (C) has since bought most of Wells Fargo’s Clearland securities lending business.)

The plaintiffs contend that rather than investing money in higher grade market instruments and other safe investments, which is what they thought was being done), managers bet on structured investment vehicles and other high-risk financial instruments. Cheyne Finance, one SIV involving subprime mortgages that the bank invested in, was placed in receivership. The securities case, filed in 2011, focuses on cash collateral investments primarily made by Wells Fargo between 2005 and 2008.

Wells Fargo denies the allegations. Contrary to the attorneys for the investors, the bank’s lawyers are arguing that the securities lending business’s investments were conservative and safe and that it’s track record was pretty solid until the economic crisis. Even then, contend the attorneys, the losses suffered were not a big portion of the program. Also, claims Wells Fargo, the securities lending program was overseen at a level that was “extraordinarily high” and the investors’ best interests were primary. The banks’ legal team noted that investors were given written warnings that losses were likely.

This securities lending lawsuit is one of a number of cases against Wells Fargo in Minnesota alone. In an identical securities case against the bank in 2010, jurors found that the bank committed fraud and breached its duty. Four charitable foundations were awarded $30 million. Add another damage award, legal fees, and interest, and the total Wells Fargo was ordered to pay was $57 million.

Wells Fargo’s Former Securities Lending Program
This program involved securities of institutional investors. The securities were in custodial accounts at Wells Fargo. Customers gave the bank permission to loan the securities. Borrowers typically were third-party brokers that traded the shares and paid cash collateral to Wells Fargo that the latter would invest. This would go on until the securities that had been borrowed were given back to the bank’s clients and brokers got back their collateral. There were over a dozen institutional investor plaintiffs to this securities lending case including the Jerome Foundation, St. John’s University Endowment, the St. John’s Abbey Endowment, Blue Cross Blue Shield of Minnesota Pension Equity Plan, and Trust, Meijer Inc. pension plans.

If you have losses on investments that you believe were unsuitable for you or which you purchased based on the misrepresentations of the broker who made the sale, you may be able to recover all or a part of those losses through FINRA arbitration. Call The Resolution Law Group for a no charge consultation to discuss your legal rights. www.TheResolutionLawGroup.com

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

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The Resolution Law Group: FINRA Fines Wells Fargo $1.25 Million for Unsuitable Investments

On June 4, 2013, the Financial Industry Regulatory Authority (FINRA) fined Wells Fargo Advisors, LLC (successor for Wells Fargo Investments, LLC) $1.25 million and ordered them to reimburse $2 million in losses to 239 customers for losses incurred from unsuitable sales of floating-rate bank loan funds. Here is a link to the FINRA news release.

Floating-rate bank loan funds are investments in a portfolio of secured senior loans to companies with below investment-grade credit ratings and are illiquid and subject to various risks. FINRA found that Wells Fargo suggested investment in these products to customers whose risk tolerance, investment objectives and financial conditions were inconsistent the risks associated therewith.

If you have losses on investments that you believe were unsuitable for you or which you purchased based on the misrepresentations of the broker who made the sale, you may be able to recover all or a part of those losses through FINRA arbitration. Call The Resolution Law Group for a no charge consultation to discuss your legal rights. www.TheResolutionLawGroup.com

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

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The Resolution Law Group: Former Millennium Global Investments Portfolio Manager Accused of Fraud Involving Nigerian Sovereign Debt Markups

According to prosecutors, Michael Balboa, an ex-Millennium Global Investments Ltd. portfolio manager, took part in a 10-month financial scam that involved marking up the Nigerian sovereign debt in funds he oversaw.

The federal government contends that Balboa and three unnamed co-conspirators engaged in a scheme in which he provided bogus mark-to-market quotes to a valuation agent that then inflated the market prices at month-end for Nigerian warrants. As a result, one fund’s total valuation for the Nigerian warrants was able to go from over $12 million at the start of 2008 to over $84 million in August of that year. Balboa’s Millennium Global Emerging Credit Fund is now insolvent.

He allegedly overstated the value of the securities positions and illiquid securities in the funds, which caused him to earn performance and management fees that were not legitimate. Balboa also purportedly lied to investors repeatedly about how the funds were faring.

In the process of perpetuating the scheme, says the prosecution, Balboa made $6.5 million for servicing the fund. This amount was determined by the fund’s performance.

In 2010, Balboa allegedly tried to get those that helped him commit the scam to cover up his crimes. One of the men accused of helping him is Gilles De Charsonville, a BCP Securities LLC broker. De Charsonville and two other co-conspirators are working with prosecutors and will testify against Balboa on the government’s behalf. They haven’t been charged with any crimes.

Meantime, Balboa is charged with numerous criminal counts, including securities fraud, conspiracy, investment adviser fraud, and wire fraud. His defense attorney, however, is disputing the allegations, claiming that Balboa cultivated the skill to set illiquid asset valuations and he provided investors with literature letting them know that he had the authority to modify valuations. The lawyer says that Balboa’s customers were experienced institutional investors that were well-versed in the market and could not be easily scammed.

In 2011, the US Securities and Exchange Commission filed civil charges against Balboa and De Charsonville over the same fraud. The complaint says that Balboa gave DeCharsonville and another broker bogus prices that they could give to the Fund’s auditor and outside valuation agent. The regulator says that by overstating the overall net asset value of the fund and its returns, Balboa was able to bring in at least $410 million in new investments, make millions in inflated performance and management fees, and deter approximately $230 million in redemptions that were eligible.

Our securities lawyers represent institutional investors that have suffered losses in financial scams and other types of securities fraud. Contact The Resolution Law Group today.  www.TheResolutionLawGroup.com

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

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