The Resolution Law Group: SAC Capital Advisors LP Expected to Plead Guilty to Insider Trading Criminal Charges

According to The Wall Street Journal, hedge fund SAC Capital Advisors is expected to plead guilty to criminal charges involving securities fraud allegations as early as next week. The multibillion-dollar hedge fund is owned by billionaire Stephen Cohen.

Sources told the WSJ that SAC will plead guilty as part of a settlement to resolve insider trading allegations made by federal prosecutors. Also, Cohen is expected to agree to stop managing money outside the fund and pay about $1.2 billion in government penalties—the largest penalty ever for insider trading.

Meantime, SAC and Cohen are still in the middle of hashing out the securities case filed by the Securities and Exchange Commission. That civil lawsuit also seeks a ban against Cohen from managing outside funds because he allegedly disregarded signs that insider trading was taking place at his firm. They say he inadequately supervised employees, allowing the fraud to happen.

Following any or either settlement, Cohen would still be under investigation for possible criminal charges, even though, say the same sources, charges are unlikely.

It was in July that federal prosecutors in Manhattan got an indictment against four SAC units, which is unusual seeing as hedge fund groups rarely face criminal charges for insider trading. The government accused the firm of “unlawful conduct by employees” and “institutional indifference” to the alleged misbehavior. Prosecutors believe there was insider trading going on far back as 1999 and that this resulted in illegal profits of hundreds of millions of dollars even as the fund avoided losses. At least eight ex-SAC employees were charged, with a number of them pleading guilty.

SAC denied the allegations.

SAC and Insider Trading Charges
Investigators have been looking into SAC and Cohen for some time now. In March, the firm agreed to pay about $615 million to the SEC to settle allegations of insider trading by now ex-portfolio managers Michael Steinberg and Mathew Martoma. Both, who have pleaded not guilty to the criminal charges, are schedule to go on trial next month.

Martoma allegedly sold and shorted shares of Wyeth and Elan shares using unpublicized information from drug trials. Steinberg is accused of insider trading involving Nvidia and Dell stocks. Meantime, the SAC profited (at least $276 million from Martoma’s purportedly illicit trades alone).

In the wake of the insider trading allegations against SAC, a number of large investors went on to redeem money from the hedge fund. In mid-February, about $1.67 billion was redeemed by investors. In March, over half of the $15 billion that SAC managed belonged to employees and Cohen.

Securities Fraud
The Resolution Law Group’s insider trading lawyers represent investors seeking to recoup losses stemming from securities fraud. Your best bet if you want to recoup your losses is to speak with an experienced securities attorney and find out about your options.

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The Resolution Law Group: Judge Approves Creditor Vote on Jefferson County, Alabama’s Bankruptcy Plan

A US judge has paved the path for the creditors of Jefferson County, Alabama to vote on a plan to conclude what is being called the second biggest municipal bankruptcy in US history. Now, the county’s creditors—they are owed $4.2 billion—have until October 7 to vote.

Most of them have already agreed to the negiotiated plan, which would deliver just $1.735 billion to warrant holders of the county’s sewer system that are owed $3.078 billion. A deal has also been reached over non-sewer debt.

It will be up to US Bankruptcy Judge Thomas Bennett to look into a timeline that would wrap up Jefferson County’s bankruptcy. He is the one who approved the vote on the plan. If creditors the plan, it will need to be confirmed during a hearing that would take place in November.

The debt-reduction plan is based on a settlement reached between Jefferson County, and JP Morgan Chase & Co (JPM), hedge funds, and other creditors. The financial firm and the funds hold most of the $3 billion in sewer warrants. The county wants to cancel these and approximately $2 billion of new debt would replace them.

Per the plan, JPMorgan would get back 31% of the $1.22 billion owed to it. Several hedge funds would get over 80% of $872 million. Meantime, Jefferson County would up sewer rates of 7.4% a year for four years, susceptible to an increase if interest rates see one too.

As for warrant holders that are owed over $500 million and not included in the deal, they are allowed to vote either to collect 65 cents/dollar owed or, if they surrender the right to get money from insurers, they could get 80 cents for every dollar. The reductions in sewer warrants would be the first time investors of municipal bond in this country would be compelled to sustain losses on the principal they are owed because of a US bankruptcy case. Jefferson County’s bankruptcy is linked to a sewer refinancing marred by political corruption.

Unlike with corporate bankruptcies, creditors cannot seize or sell the county’s assets in a municipal bankruptcy and a trustee cannot be appointed. Recently, the city of Detroit, Michigan made national headlines when it filed the biggest municipal bankruptcy in the US to date and sought Chapter 9 protection. The city has about $18 billion in liabilities.

Please contact The Resolution Law Group if you believe you are the victim of institutional investor securities fraud. Our stockbroker fraud law firm represents corporations, financial firms, partnerships, banks, municipalities, retirement plans, school districts, large trusts, charitable organizations, high net worth individuals, and private foundations. Your case assessment with our securities lawyers is free.  Call the The Resolution Law Group (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

The Resolution Law Group: Investors Claim They Lost $300M in Ohio Ponzi Fraud Lawsuit

In Ohio, investors are suing Glen Galemmo for allegedly running a Ponzi scam. The securities fraud lawsuit claims that approximately 100 to 200 investors lost more than $300 million. Galemmo is now named in two complaints related to these claims. His wife, Kristine Galemmo, is also being sued, as are his business partner Edward Blackledge and numerous investment funds, LLC, and companies. Plaintiffs are grouped as the Galemmo Victims Fund I and II.

The Cincinnati money manager ran Galemmo Investment Group, Queen City Investment Fund, and other entities for over a year. However, last month, he sent out a mass email to investors explaining that Queen City Investments, which he owns, was stopping operations. He told them not to come to the building because they would not be let in and that his lawyer had told him to avoid contact with them. He said that their inquiries should go through the IRS.

According to the complaint, Galemmo claimed to have over $20 million in assets under management. When the S & P 500 was declining between ’06 and ’11 he purportedly said that he’d made earning returns of 432% by investing in individual stock.

The plaintiffs say that if Galemmo’s return numbers had been accurate, then his compensation should have been over $60 million yet he wasn’t even able to pay small tax bills. They say that documents never indicated dividend income payments and filings didn’t state how much of the fund investors held.

Galemmo previously explained his strategy in a media interview with the Cincinnati Business Courier in 2001 as concentrating on stock that were undervalued but showed “potential for runups” and he allegedly told customers that he would purchase low, sell high, and respond fast to changes in the market. He also purportedly hid the Ponzi Scam via a number of actions, including having different brokers invest assets so it would be hard to get a grasp of his holdings or the performance of investments.

Most of the victims are from Cincinnati. They contend that as part of the Ohio Ponzi scam, Galemmo paid some investors’ money to pay earlier investors and that the money manager and his associates bilked them.

They are alleging misrepresentations and omissions, the making of false statements, failure to disclose material facts, failure to exercise reasonable care, breach of fiduciary duty, failure to invest funds in the manner purported, using funds for unapproved purposes, violating the Ohio Revised Code’s Chapter 1707, and other allegations. They want damages and a declaration by the court that laws were violated, a temporary restraining order of the defendants’ funds, and well as preliminary and permanent injunction.

If you suspect that you were the victim of stockbroker fraud, contact our Ponzi fraud lawyers today and ask for your free case assessment. Please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

The Resolution Law Group: UBS Agrees to Pay $120 Million in Lehman Bros. Dispute

UBS has agreed to pay $120 million to settle a lawsuit by investors who accused the Swiss bank of misleading them about the financial condition of Lehman Brothers Holdings in connection with the sale of structured notes.

The preliminary settlement was disclosed in papers filed late Thursday in the U.S. District Court in Manhattan, and requires court approval.

It resolves claims over roughly $900 million of Lehman securities that UBS (UBS) underwrote and sold between March 2007 and September 2008, court papers show. Lehman filed for bankruptcy protection on Sept. 15, 2008.

UBS had no immediate comment on the settlement. Lawyers for the investors didn’t immediately respond to requests for comment.

 UBS has agreed to pay $120 million to settle a lawsuit by investors who accused the Swiss bank of misleading them about the financial condition of Lehman Brothers Holdings in connection with the sale of structured notes.

The preliminary settlement was disclosed in papers filed late Thursday in the U.S. District Court in Manhattan, and requires court approval.

It resolves claims over roughly $900 million of Lehman securities that UBS (UBS) underwrote and sold between March 2007 and September 2008, court papers show. Lehman filed for bankruptcy protection on Sept. 15, 2008.

UBS had no immediate comment on the settlement. Lawyers for the investors didn’t immediately respond to requests for comment.

The Resolution Law Group: US gov’t accuses Bank of America of civil fraud in sale of $850M of mortgage bonds in 2008

WASHINGTONThe U.S. government has accused Bank of America Corp. of civil fraud, saying the company failed to disclose risks and misled investors in its sale of $850 million of mortgage bonds during 2008.

The Justice Department filed a lawsuit Tuesday against the bank and several subsidiaries in federal court in Charlotte, N.C., where Bank of America is based. The Securities and Exchange Commission filed a related lawsuit against Bank of America there, too.

Bank of America disputed the allegations.

The lawsuits accuse the second-largest U.S. bank of misleading investors about the risks of the mortgages tied to the securities.

And the government said the bank failed to tell investors that more than 70 percent of the mortgages backing the investment were written by mortgage brokers outside the banks’ network. That made the mortgages more vulnerable to default, they said. The bank disclosed the percentage of such mortgage loans in the investment only to a select group of investors, the suits alleged.

Bank of America could face monetary penalties. The government didn’t specify how much it is seeking, but it estimated that investors lost more than $100 million on the deal.

Bank of America’s CEO at the time described those mortgages as “toxic waste,” the SEC said.

“Bank of America’s reckless and fraudulent … practices in the lead-up to the financial crisis caused significant losses to investors,” Anne Tompkins, the U.S. attorney for the Western District of North Carolina, said in a statement. “Now, Bank of America will have to face the consequences of its actions.”

Bank of America said it will refute the government’s allegations in court.

“These were prime mortgages sold to sophisticated investors who had ample access to the underlying data and we will demonstrate that,” company spokesman Lawrence Grayson said in a statement. “The loans in this pool performed better than loans with similar characteristics (made and packaged into securities) at the same time by other financial institutions.”

“We are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result,” Grayson added.

The action was brought by a financial-fraud enforcement task force set up to pursue cases related to the 2008 financial crisis. The Justice Department lawsuit marks the most high-profile action brought by the Obama administration over conduct related to the financial crisis since the department sued credit rating agency Standard & Poor’s in February. That lawsuit alleged that S&P knowingly inflated its ratings of risky mortgage investments ahead of the crisis.

S&P, a unit of McGraw-Hill Cos., has rejected the allegations.

The actions against S&P and Bank of America followed years of criticism that the government had failed to do enough to hold accountable those companies that contributed to the crisis.

When the real estate bubble burst in 2007, home values plunged and millions of people defaulted on their mortgages and lost their homes. Investors who bought securities backed by high-risk mortgages lost billions. Regulators have said that inaccurate statements by banks in packaging and selling mortgage bonds contributed to the investors’ losses.

The lawsuit “marks the latest step forward in the Justice Department’s ongoing efforts to hold accountable those who engage in fraudulent or irresponsible conduct,” Attorney General Eric Holder said.

Bank of America received $45 billion in federal bailout aid during the crisis. It became one of the biggest players in the mortgage market through its acquisitions of Merrill Lynch and Countrywide Financial, which wrote many high-risk mortgages that contributed to the crisis.

Bank of America has been dogged by litigation largely as a result of those acquisitions. The bank has had to pay tens of billions of dollars to settle class-action lawsuits and previous actions brought by the SEC.

If you feel you are the victim of Mortgage Fraud, please do not hesitate to email or call the The Resolution Law Group (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

The Resolution Law Group: Basis Of Our Multi-Party Lawsuits

While each suit is different, below are examples of some of the causes of action we are arguing.  For each client, The Resolution Law Group will argue the causes of action that may apply to that client’s particular circumstances.

 

  • Breach of Fiduciary Duty in the loan modification process (taking trial payments on the promise of a permanent modification then denying the permanent modification)
  • Fraudulent concealment of the facts of securitization process by lenders to homeowners.
  • State consumer protection laws
  • Breach of contract
  • Fraud in the modification process
  • Fair debt collection practices Act
  • Negligent servicing (failing to properly apply payments per Fannie Mac Note Agreement)
  • Truth in Lending Act Violations
  • Real Estate Settlement Procedures Act Violations
  • Common Law Fraud
  • RICO
  • Slander of  Title
  • Unfair Business Practices (falsification of homeowners’ loan documents)
  • Violations of Civil Code (wrongful foreclosure)
  • Violations of Commercial Code (ownership of the note)
  • The fraudulent and illegal use of MERS in connection with those loans and mortgages
  • Defendants’ failure to perform their obligations required, pursuant to accepting TARP funds
  • Defendants’ breach of Plaintiffs‘ statutorily protected rights
  • Defendants breach and willful violation of numerous consumer and homeowner protection statutes and the willful violations of unfair business practices statutes.
  • Accepting money, transferring alleged assets, and foreclosing upon alleged assets in instances where the alleged assets do not exist, and in which these Defendants have no right, title, or interest upon which they can act; and
  • Defendants’ continuing tortuous conduct.

If you suspect that you are the victim of Mortgage Fraud, do not hesitate to email or call please contact The Resolution Law Group at (203) 542-7275 for a confidential, no obligation consultation. Our attorneys are here to help institutional investors recoup losses that are a result of a financial scam or negligence. Your consultation with us is free.

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

 

The Resolution Law Group: $500M MBS Settlement Reached Between Countrywide and Investors

Class action securities plaintiffs, led by the Iowa Public Employees’ Retirement System, have settled their mortgage-backed securities lawsuit against Countrywide for $500 million. This is the largest federal class action MBS securities case in the US that has been resolved to date, even exceeding the $315 million settlement reached with Bank of America’s (BAC) Merrill Lynch (MER) last year.

Per the investors, Countryside, which was acquired by BofA, sold them billions of dollars in MBS certificates that were backed by defective loans. Toward the end of 2008, nearly all of the certificates were relegated to junk bond status.

The plaintiffs allege that offering documents for the mortgage-backed bonds failed to disclose that Countrywide was ignoring its own guidelines regarding home loan originating. In their consolidated class action securities case, investors sought over $351 billion of the Countrywide MBS that had been downgraded after the subprime collapse in 2007. (A district judge would go on to narrow the mortgage-backed securities lawsuit to $2.6 billion in bonds and Bank of America was dismissed as a defendant.)

According to Bank of America, this securities settlement resolves approximately 80% of the principal balance of RMBS that were issued by Countrywide and has not yet been paid. However, now there is news that American International Group can go ahead and file its RMBS lawsuit against Countywide. A judge said that the insurer could pursue claims accusing the latter of making false representations in offering documents that it had abided by underwriting guidelines. It was just earlier this week that Bank of America settled with bond insurance company MBIA Inc. over Countrywide for $1.6 billion.

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, mortgage backed securities, 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 pending lawsuits.

For further information, prospective clients are invited to call the law firm or 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