The Resolution Law Group: Bank of America’s Countrywide to Pay $17.3M RMBS Settlement to Massachusetts

According to Massachusetts Attorney General Martha Coakley, Countrywide Securities Corp. (CFC) will pay $17 million to settle residential mortgage backed securities claims. The settlement includes $6 million to be paid to the Commonwealth and $11.3 million to investors with the Pension Reserves Investment Management Board. Countrywide is a Bank of America (BAC) unit.

Coakley’s office was the first in the US to start probing and pursuing Wall Street securitization firms for their involvement in the subprime mortgage crisis. Other RMBS settlements Massachusetts has reached include: $34M from JPMorgan Chase & Co. (JPM), $36M from Barclays Bank (ADR), $52 million from Royal Bank of Scotland (RBS), $102 million from Morgan Stanley (MS), and $60 million from Goldman Sachs. (GS).

Meantime, a federal judge is expected to rule soon on how much Bank of America will pay in a securities fraud verdict related to the faulty mortgages that Countrywide sold investors. A jury had found the bank and ex-Countrywide executive Rebecca Mairone liable for defrauding Freddie Mac and Fannie Mae via the sale of loans through that banking unit. The US government wants Bank of America to pay $863.6 million in damages. Mairone denies any wrongdoing.

The case focused on “High Speed Swim Lane,” a mortgage lending process that rewarded employees for the volume of loans produced rather than the quality. Checkpoints that should have made sure the loans were solid were eliminated.

In other recent Countrywide news, a federal judge has given final approval to Bank of America’s $500 million settlement with investors who say the unit misled them, which is why they even invested in high-risk mortgage debt. A number of investors, including union and public pension funds, said they were given offering documents about home loans backing the securities that they purchased and that the content of this paperwork was misleading. They contend that a lot of securities came with high credit ratings that ended up falling to “junk status” as conditions in the market deteriorated.

This payout is the biggest thus far to resolve federal class action securities litigation involving mortgage-backed securities. The second largest was the $315 million reached with Merrill Lynch (MER), which is also a Bank of America unit. That agreement was approved in 2012.

Also, Bank of America was recently named the defendant in a lawsuit filed by the California city of Los Angeles over allegedly discriminatory lending practices that the plaintiff says played a part in causing foreclosures. LA is also suing Citigroup (C) and Wells Fargo (WFC).

The city says that Bank of America offered “predatory” loan terms that led to discrimination against minority borrowers. This resulted in foreclosures that caused the City’s property-tax revenues to decline. BofA, Wells Fargo, and Citibank have said that the claims are baseless.

If you feel you are the victim of Securities Fraud, 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: AIG Settles Ex-Executive’s $274M Lawsuit Over Alleged Failure to Pay Him During 2008 Economic Crisis

American Insurance Group (AIG) and one of its ex-executives, Kevin Fitzpatrick, have reached a settlement deal over his $274 million lawsuit against the insurer. Fitzpatrick, the former president of the AIG Global Real Estate Investment Corp. unit, claims that his then-employer would not pay him during the 2008 economic crisis. The insurer’s refusal to pay occurred not long after the US government said yes to the first part of what would turn into a $182 billion bailout.

Fitzpatrick, who worked for AIG for 22 years, said that AIG breached agreements it had with him and entities under his control. He claims the agreements entitled him to a share of profits made on the insurer’s real estate investments but that on October 2008 AIG stopped paying him and others who were entitled to profit distributions. Fitzpatrick then quit.

Fitzpatrick sued in 2009, claiming that AIG owed him $274 million and that he wanted interest and punitive damages, which is right around the time that the insurer was trying to get past public disapproval over $165 million in bonuses that were paid to employees in the AIG Financial Products unit. That is the group that handled the complex financial instruments that led to its huge losses.

AIG denied wrongdoing and said that Fitzpatrick was paid what he was owed. The insurer contended that Fitzpatrick actually was fired and that he stole data that was confidential and belonged to the company.

In other AIG-related news, a district court judge just threw out a shareholder lawsuit accusing Bank of America (BAC) of not telling them that the insurer was planning to sue the bank with a $10 billion fraud lawsuit. AIG accused Bank of America of misrepresenting the quality of more than $28 million of MBSs that AIG bought from the latter and its Countrywide and Merrill Lynch (MER) units.

Also, there are reports that AIG might file mortgage-backed securities case against Morgan Stanley (MS) over $3.7 billion of MBS.

If you feel you are the victim of Securities Fraud, 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: JPMorgan’s Admission to CFTC of “Reckless” Trading Could Lead to More Securities Fraud Cases

According to one brokerage executive who spoke with Advisen, JPMorgan Chase & CO.’s (JPM) admission to the Commodities Futures Trading Commission when settling securities allegations over its London Whale debacle that it engaged in “reckless” trading could get the financial firm into more legal trouble with investors.

The CFTC implied that because of certain “manipulative” actions, JPMorgan managed to sell $7B in derivatives in one day, including $4.6 billion in three hours. That the term “manipulate” was used could prove useful to plaintiffs (The regulator also accused the firm of using manipulative device related to credit default swaps trading, which violated a Dodd-Frank provision prohibiting such behavior). JPMorgan will pay $100 million to settle the securities fraud cause with the agency.

With the Securities and Exchange Commission also now seeking to obtain admission of wrongdoing from defendants in certain instances, such acknowledgments to regulators could impact firm’s insurance coverage terms. Right now, standard directors and officers coverage policies exclude personal profiting, fraud, and other illegal conduct. Admissions of fraud, however, could nullify such policies.

Now, in the wake of JPMorgan’s tentative $13B residential mortgage backed securities settlement with the federal government and the possibility that the firm might take the bulk of the penalty as a tax deduction, US Representatives Luis Gutierrez (D, Ill.) and Peter Welch (D., Vt.) have introduced the “Stop Deducting Damages Act,“ which would prevent companies from being able to deduct from their taxes damages that they paid to the government. The two lawmakers have even written JPMorgan CEO James Dimon asking him to not take a tax deduction and agree to be responsible for the full payment. Also expected to speak out against JPMorgan taking any tax deduction on CFTC settlement are Americans for Tax Fairness and the US Public Interest Research Group.

The Wall Street Journal says that the firm’s earlier $5.1 million settlement with Freddie Mac (FMCC) and Fannie Mae (FNMA) will be completely tax deductible and could save JPMorgan close to $1.5 billion in taxes. The firm has declined to confirm this.

Meanwhile, government authorities are continuing with certain probes into numerous business lines at some of the biggest banks in the country, as the number of investigations, settlements, and lawsuits against the latter continue to rise in numbers. For example, there are investigators who are looking into possible global foreign-exchange markets manipulation involving UBS (UBS), Credit Suisse (CS), Barclays, Deutsche Bank (DB), Royal Bank of Scotland (RBS), Citigroup (C), and JPMorgan.

Also under the microscope is Bank of America (BAC). The bank said that a US attorney intends to recommend that the Department of Justice file a civil RMBS lawsuit against it. The group looking into this matter is made up federal and state prosecutors. According to one source, they are also conducting similar probes into several other banks, including Citigroup, Wells Fargo (WFC), UBS (UBS), Goldman Sachs (GS), RBS, Morgan Stanley (MS), Credit Suisse, and Deutsche Bank.

If you feel you are the victim of Securities Fraud, 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: Groupon Loses Dismissal Bid Over IPO Securities Fraud Case

A district court judge has ordered Groupon Inc. to face a securities lawsuit filed against it accusing the deal-of-the-day coupon company of misleading investors regarding its financial state right before its IPO in 2011. The Illinois-based company had sought to have the securities fraud case brought by investor Michael Carter Cohn, dismissed. Cohn wants his claim to get class action securities status.

The investor claims that Groupon committed securities lawsuit and used refund accounting that was not allowed to spike revenues in a prospectus related to its initial public offerings, as well as in filings with the Securities and Exchange Commission. According to U.S. District Judge Charles Norgle in Chicago, the claims “present plausible violations.” Norgle also turned down requests by Morgan Stanley (MS) and Goldman Sachs (GS), and Credit Suisse (CS) to throw out the claims against them. These banks arranged the public offering.

On March 30, 2012—not long after opening at $28 in Nasdaq stock exchange trading on November 4, 2011—Groupon reported a “material weakness” in its financial controls, as well as first reported quarterly sales as a company that was now publicly traded were not as high as stated earlier because of high refunds received by merchants. This lowered revenue during 2011’s last quarter to $492 million—that’s a $14.3 million difference. The company’s shares by November 13, 2012 hit $2.63 dollars.

Judge Norgle has yet to decide on whether Cohn can pursue his securities case for a class. Cohn did not purchase his shares straight from the IPO.

At The Resolution Law Group, our securities fraud lawyers represent institutional investors and individual investors wishing to pursue their investment losses from negligent parties. You can call us today to ask for your free case assessment.

The Resolution Law Group: NCUA Sues Morgan Stanley, JPMorgan, UBS, & Other Banks Over $2.7B in Allegedly Fraudulent RMBS Sales to Credit Unions

The National Credit Union Administration has filed residential mortgage-backed securities lawsuits against JPMorgan (JPM), Morgan Stanley (MS), UBS (UBS), Royal Bank of Scotland Group (RBS), Barclays (BARC), and Credit Suisse (CS) accusing the financial firms of selling $2.7 billion of these fraudulent securities to the credit unions. The Members United Corporate Federal Credit Union and Southwest Corporate Federal Credit Union paid over $416 million for the RMBS in the case against Morgan Stanley and $1.9 billion from the other defendants. One of the credit unions contends that Wachovia (WB), Goldman Sachs (GS), Ally Securities and Wells Fargo (WFC) also defrauded it.

According to the NCUA’s RMBS fraud lawsuits, the investment banks issued misrepresentations related to the underwriting and sale of the securities. Offering documents allegedly contained false statements or omitted facts that were material. The government regulator is accusing the originators of systematically ignoring underlying guidelines in offering documents, which made the mortgage-backed securities’ risks higher than what was presented.

The MBS fraud lawsuits make claims under state and federal securities laws. Whatever is recovered will go toward the Temporary Corporate Credit Union Stabilization Fund.

Already, NCUA has settled RMBS fraud lawsuits against Bank of America (BAC), Citibank (C), Deutsche Bank (DB), and HSBC for more than $335 million.

Contact The resolution Law Group. Our institutional investor fraud law firm to find out whether you have grounds for securities case. Your RMBS fraud case consultation is free.

Bank of America, JPMorgan Chase Among Banks Sued by Danish Pension Funds in Credit Default Swaps Lawsuit

In U.S. District Court for the Northern District of Illinois, Danish pension funds (and their investment manager) Unipension Fondsmaeglerselskab, MP Pension-Pensionskassen for Magistre & Psykologer, Arkitekternes Pensionskasse, and Pensionskassen for Jordbrugsakademikere & Dyrlaeger are suing 12 banks accusing them of conspiring to take charge of access and pricing in the credit derivatives markets. They are claiming antitrust violations while contending that the defendants acted unreasonably to hold back competitors in the credit default swapsmarket.

The funds believe that the harm suffered by investors as a result was “tens of billions of dollars” worth. They want monetary damages and injunctive relief.

According to the Danish pension funds’ credit default swapscase, the defendants inflated profits by taking control of intellectual property rights in the CDS market, blocking would-be exchanges’ entry, and limiting client access to credit-default-swaps prices, and

This securities case comes four years after the US Justice Department acknowledged that it had begun an investigation into possible anticompetitive activities involving credit derivatives clearing, and trading (a probe that is ongoing) and just a few months after the Sheet Metal Workers Local No. 33 Cleveland District Pension Plan sued the banks, Markit, and ISDA also for allegedly taking control of the CDS market, which it says resulted in customers being overcharged some $7 billion annually. The plaintiff contends that there may be billions of dollars in damages and it wants treble damages. Last month, it was the European Commission’s turn to claim that 13 banks, ISDA, and Markit worked together to stop CDSs from being able to trade on open exchanges.

If you think you may have been the victim of securities fraud involving credit default swaps, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

There are over a dozen defendants in the Danish pension funds’ CDS fraud case including:

J.P. Morgan Chase & Co. (JPM)
Citigroup Inc. (C)
Morgan Stanley (MS)
Bank of America Corp. (BAC)
Credit Suisse Group AG (CS)
Deutsche Bank AG (DB)
UBS AG (UBS)
• Royal Bank of Scotland Group PLC (RBS)
Goldman Sachs Group Inc. (GS)
Markit Group Ltd, a financial data provider
• International Swaps and Derivatives Association (ISDA)

The Resolution Law Group: Morgan Stanley to Pay New Jersey Regulators $100K for Selling Exotic ETFs to Investors, Including Seniors

Morgan Stanley will pay $100,000 to the New Jersey Bureau of Securities for allegedly selling exotic exchange-traded funds to investors. The state’s regulators say that the firm’s financial advisers were not properly trained and sold inverse and leveraged ETFs to senior investors that wanted to earn additional income. These clients instead would go on to sustain losses. A state official contends that the financial firm did not properly supervise staff that was dealing with ETF transactions.

Commenting on the securities settlement, Morgan Stanley said it was “pleased’ to have arrived at a resolution and that since the period in question—1/07 to 6/09, the brokerage firm has overhauled its process involving these products. The amount includes $65K in civil penalties, $25K to pay the state back for its investigative expenses, and $10,000 toward investor education. Already, the broker-dealer has paid $96,940 in restitution to investor in New Jersey.

Last year, Morgan Stanley consented to pay close to $2.4 million to settle Financial Industry Regulatory allegations over the firm’s handling of ETFs. According to the SRO, from 1/08 to 1/0, the firm did not set up or maintain a supervisory system and written procedures to ensure compliance with FINRA and NASD rules related to the sale of inverse, leveraged, and inverse leveraged ETFs.

Instead, contends the SRO, Morgan Stanley oversaw these Non-Traditional ETFs as if they were traditional ones. The financial firm also purportedly did not set up proper training for these non-traditional exchange traded funds and its registered representatives who recommended these investments did not fully comprehend them. Also, there were representatives that allegedly recommended these ETFs to clients whose main goal was to incur income, which means these investments were unsuitable for them.

Non-Traditional ETFs
Inverse and leverage ETFs employ debt and derivatives that are supposed to amplify market returns in the short run while substantially moving away from benchmarks over long periods. A lot of the funds reset daily, which means they can be very different from their underlying benchmark’s performance. These non-traditional ETFs come with certain risks.

Also, there is always a chance that certain inverse and leveraged ETFs won’t meet its objective on any trading day, so it is important that investors know how this might impact their portfolio. Non-traditional ETFs may be more expensive than traditional ones, with expenses and fees potentially affecting your investment.

It is important that you invest in funds and other investments that are appropriate for you, your goals, and the amount of risk your finances can handle. When an investor sustains losses due to unsuitable recommendations, misrepresentations, omissions, or inadequate supervision, this may be grounds for an ETF fraud lawsuit. Contact our securities law firm today.  Call The Resolution Law Group at (203) 542-7275 for a confidential, no obligation consultation.

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