The Resolution Law Group: UBS to Pay Fannie Mae and Freddie Mac $885M to Settle RMBS Lawsuit

UBS (UBS) will pay $885 million to settle Federal Housing Finance Agency to settle allegations that it misrepresented mortgage-backed bonds during the housing bubble. $415 million of the mortgage settlement will go to Fannie Mae, while $470 million will be paid to Freddie Mac, both government-sponsored enterprises, over the $200 million in mortgage-backed securities that were sold to them.

According to FHFA, UBS misrepresented the quality of loans that were underlying residential mortgage-backed securities worth billions of dollars that Freddie Mac and Fannie Mae ended up buying. Both firms were seized in 2008 when losses from subprime mortgages brought them close to insolvency. They still are under US conservatorship.

UBS is the third to settle with FHFA over RMBS allegations. Citigroup (C) and General Electric Co. (GE) were the first.

The federal regulator is suing 18 banks, and already, Deutsche Bank (DB) and Credit Suisse (CS) have put money aside for their potential settlements. Analysts are estimating that European banks may end up paying $11 billion for mortgage-related litigation in the US, with Royal Bank of Scotland (RBS) perhaps having to pay $1.6 billion, HSBC $900 million, and Barclays (BCS) $1.1 billion.

Other banks that FHFA is suing on behalf of Freddie and Fannie:

Bank of America Corp. (BAC)
Countrywide Financial Corp.
• Ally Financial
• First Horizon National Corporation
Goldman Sachs & Co. (GS)
JPMorgan Chase 7 Co. (JPM)
• HSBC North America Holdings, Inc.
Morgan Stanley (MS)
Merrill Lynch & Co. (MER)
• Nomura Holding America Inc.
• Société Générale

The securities complaints were filed in state and federal courts and invoke government is seeking, in addition to compensatory damages  GE was the first to settle FHFA’s mortgage bond case against it. The company was one of the underwriters to the RMBS that were sold to Fannie and Freddie. The terms of the settlement, however, remain confidential. However, FHFA did accuse GE of misleading Freddie Mac into purchasing $549 million of securities.  Citibank’s RMBS settlement with FHFA was also resolved with the terms left confidential. That mortgage-backed securities lawsuit was over allegations that it misled Freddie Mac and Fannie Mae into purchasing $3.5B of the securities.
Residential Mortgage-Backed Securities
RMBS are a type of MBS with a cash flow that comes from, residential debt, including home-equity loans, residential mortgages, and subprime mortgages, rather than commercial debt. At The Resolution Law Group, our securities lawyers help investors that suffered losses from mortgage-backed securities in getting their investments back from negligent brokerage firms, brokers, and investment advisers. We represent corporations, high net worth individuals, banks, partnerships, financial firms, private foundations, large trusts, charitable organizations, school districts, retirement plans, and municipalities.

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

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The Resolution Law Group: Morgan Stanley Now Owns Smith Barney, Wells Fargo & JPMorgan Defeat Estimates, MLB All-Star Sues UBS for $7.6M, & Ray Lucia, His Firm Fined Over “Buckets of Money” Strategy

Morgan Stanley Buys Smith Barney from Citigroup
Morgan Stanley (MS) now owns Smith Barney, which it just bought from Citigroup (C) for $9.4 billion. Smith Barney’s new name is Morgan Stanley Wealth Management. Based on its new number of financial advisers, the deal makes Morgan Stanley the largest Wall Street firm and comes in the wake of Federal Reserve approval.

Wells Fargo & JPMorgan Defeat Analysts’ Estimates
JPMorgan Chase (JPM) says it experienced a 31% rise in second quarter earnings, surpassing analysts expectations it would garner $5.47 billion on $24.84 billion, and, instead generating, $6.5 billion in earnings and $25 billion of revenue. A year ago for the same period, revenue for the financial firm was at $22 billion.

Meantime, Wells Fargo (WF) is also reporting a 19% profit rise for Q2. This is its 14th quarterly profit increase in a row and 9th consecutive record report. While net income for the same period last year was at $4.6 billion, its net income second quarter for 2013 was $5.5 billion.

5-Time MLB All-Star Sues UBS for $7.6 Million
Retired fiive-time Major League Baseball All-Star Mike Sweeney is suing UBS Financial Services Inc. (UBS) and his former broker there for $7.6 million. Per the securities fraud case, broker Ralph A. Jackson III invested half of Sweeney’s portfolio, worth millions of dollars, in high-risk private placements that failed.

Sweeney contends that he was an inexperienced investor who trusted Jackson to make sure his money was being invested conservatively. He says that over a five-year period, the UBS broker put $6.85M of his portfolio in private-equity investments that were misrepresented to him as safe and suitable, as well $2.7M into other investments without his consent. Sweeney, who hit it big when he signed with the Kansas City Royals, claims he lost $4.9M.

Ray Lucia, His Firm Fined Over “Buckets of Money” Strategy
Financial adviser and nationally syndicated radio host Ray Lucia and his firm Raymond J. Lucia Cos. Inc. must pay fines for allegedly providing misleading information related to his wealth-management strategy known as “Buckets of Money.” The Securities and Exchange Commission is accusing the California adviser of causing retirees to believe that his approach would allow them to make income that was inflation-adjusted for life.

Now, an administrative-law judge has taken away Lucia’s adviser registration and fined him $50,000. His firm, which must pay $250,000, also has lost its license. Judge Cameron Elliot found that for years, Lucia misrepresented any purported back-testings’ validity in seminars about saving for retirement. The SEC contends that Lucia and the firm hardly, if at all, conducted any back-tests.

The Resolution Law Group represents institutional and individual investors that have sustained losses due to Securities Fraud.

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.

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: UBS, Morgan Stanley, Merrill Lynch, and Other Brokerage Firms Subpoenaed by Massachusetts Securities Regulator in Probe of Complex Investments Sold to Seniors

William Galvin, the Massachusetts Secretary of the Commonwealth, is subpoenaing 15 brokerage firms in its probe into complex products that were sold to older investors. Morgan Stanley (MS), LPL Financial (LPLA), Merrill Lynch (MER), UBS AG (UBS), Bank of America Corp. (BAC), Fidelity Investments, Wells Fargo & Co. (WFC), Charles Schwab Corp (SCHW), & TD Ameritrade (AMTD) are among the broker-dealers that received notices from the state. The subpoenas are seeking information about investments that were sold to Massachusetts seniors, as well as data about the firms’ compliance, supervision, and training.

Galvin noted that when such investments are sold to inexperienced investors, this creates potential “accidents waiting to happen.” He is among a number of regulators that have expressed worry about how many complex products are being marketed to unsophisticated investors that want higher returns during this era of low interest rates. These financial instruments tend to be among brokers’ favorites because they garner higher commissions.

Already, Galvin has brought in over $11 million in fines from brokerage firms that sold illiquid real estate investment trusts to investors in Massachusetts. This type of REIT is hard to sell when a customer wants out. Galvin said that it was during that probe his staff discovered there were a lot of brokers, who were not only inadequately supervised, but also they were selling complex financial instruments that went beyond even their comprehension. The Massachusetts’s regulator office will continue to look into REITs, in addition into oil and gas partnerships, structured products, and private placement deals.

There was a time when such investments were only for sophisticated investors with an at least $1 million net worth. Now, in the wake of the financial crisis, complex financial instruments have been available to more people, including a lot of older Americans who want to offset losses that their retirement portfolios sustained when the economy tanked.

Senior Investors
It is important for seniors to note that not all investments are suitable for them and their needs. Unfortunately, older investors make easy targets for investment fraud, in part because they tend to have large nest eggs for retirement, and, also, because some of them may have lost the ability to discern when they are being taken advantage of.

Sometimes senior investors are the target of an actual securities scam. On other occasions, they were unfortunate enough to work with a financial adviser that, out of ignorance or hoping to make a bigger commission, persuaded them to get involved in financial products that came with risks that were greater than what their funds could handle/or and incompatible with their investment goals.

At The Resolution Law Group, we help older investors of elder fraud recoup their losses.  If you feel you are the victim of Elder 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: Synthetic CDOs Are Once Again In Demand Among Investors

Despite the damage attributed to them during the 2008 credit market crisis, synthetic collateralized debt obligations are once again in high demand among investors. The popularity of these risky investments, with their high returns and rock-bottom interest rates, are so high that even after being denounced by investors and a lot of lawmakers back in the day, now Morgan Stanley (MS) and JPMorgan Chase (JPM ) in London are among those seeking to package these instruments.

CDOs allow investors to bet on a basket of companies’ credit worthiness. While the basic version of these instruments pool bonds and give investors an opportunity to put their money in a portion of that pool, synthetic CDOs pool the insurance-like derivatives contracts on the bonds. These latest synthetic CDOs, like their counterparts that existed during the crisis, are cut up into varying levels of returns and risks, with investors wanting the highest returns likely buying portion with the greatest risk.

Granted, synthetic CDOs do somewhat spread the risk. Yet, also can increase the financial harm significantly if companies don’t make their debt payments.

The Wall Street Journal reports that a source in the know says that Morgan Stanley and JP Morgan are attempting to draw in even more investors, which the banks need enough of if they are to actually move forward with these latest synthetic CDOs. Due to rules now in place mandating that banks put aside huge quantities of capital against possible losses against such instruments, the two giants are not expected to invest in their deals.

What makes these newer CDOs different from their credit crisis-era ones? (An investor usually buys one of the (generally) six CDO slices.) One slice has been reportedly harder to sell because its yield is not enough. Also, buyers of the slices that aren’t as high risk would now likely receive more protection against possible losses than buyers of similar slices did several years ago.

Creditflux, a data provider, reports that during 2007, financial firms put out $634 billion of synthetic CDOs. In 2009, sales plummeted to $98 billion. While certain banks and hedge funds have been working together to put together private, small deals that have packaged derivatives into trades that are custom made, those deals were usually small and credit rating firms generally haven’t assessed them.

Another source says that there is now also a differently purposed CDO in development that Citigroup (C) Inc. is selling. This CDO uses derivatives linked to the bank’s loans portfolio and involves shipping companies outside the United States. The financial firm’s purported need to make room for new loans while being able to hold less capital to cushion possible shipping loan losses is said to be the motivation for the approximately $500 million deal (expected to bring in 13-15% in yearly yields). The WSJ says that investors of this type of CDO will be “on the hook” for certain losses, reports the WSJ.

Another security that investors seem to be hungry for these days are collateralized loan obligations. CLOs are tied to corporate debt, and to date, this year, over $35 billion of CLs have been sold in this country.

At The Resolution Law Group P.C., we haven’t forgotten the massive losses investors took from synthetic CDOs during the 2008 financial crisis. We continue to represent investors that have suffered securities fraud losses linked to these investments. Contact our institutional investor fraud law firm today  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