MONEY: Current Court Cases

MF Global sues banks for restricting competition in CDS

Jul 30, 2013
“The case, filed on Monday in the U.S. District Court in the Northern District of Illinois, follows similar suits filed by an Ohio-based pension fund, the Sheet Metal Workers Local 33 Cleveland District Pension Plan, and by a group of Danish pension funds in the same court.

An additional plaintiff, the Value Recovery Fund, has filed a similar lawsuit in the Southern District of New York.

The companies allege that dealers used their ownership and controls over clearing, data and other entities crucial to the market to block an independent clearinghouse from offering exchange trading, to deny market participants real-time price information and to stop new participants from entering the market.

As a result of the bank actions, the companies allege that they paid artificially high trading costs to buy and sell the credit default swaps, contracts that are used to protect against losses if a borrower defaults or to speculate on a company or country’s credit quality.

Markit, the main CDS price provider and owner of the benchmark CDS indexes, and trade group the International Swaps and Derivatives Association (ISDA), which owns documentation and other licenses, are also named in the suit.”

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July 23, 2013
Former New Jersey Gov. Jon Corzine is looking to get out of a lawsuit brought over his tenure at MF Global, according to a report by Reuters.
“Louis Freeh, who oversaw the bankruptcy of MF Global’s parent company, in April sued Corzine and two of his top lieutenants at the firm, Bradley Abelow and Henri Steenkamp, in a bid to regain money for the firm’s creditors. He accused them of hastening the collapse of MF Global, which resulted in the eighth-largest bankruptcy in U.S. history and an unprecedented $1.6 billion gap in customer accounts.”

  • Corzine knew that the firm was violating its own policies to meet its liabilities. And while the complaint did not allege that Corzine directed anyone to misuse customer money, it says he demanded that counterparties be paid without asking how the firm could come up with the money to do so, and while knowing it had very little liquid cash on hand.
    “Mr. Corzine is charged with being more than a passive actor in the downfall of MF Global.” Meister, the CFTC’s director of enforcement, said on a conference call with reporters.
    Meister declined to comment on questions about whether the CFTC’s findings were referred to criminal prosecutors. He also declined to comment on whether the CFTC intends to charge other MF Global officials.
    Also charged was Edith O’Brien, the firm’s former assistant treasurer. The CFTC accused her of aiding and abetting the company’s misuse of customer funds. –CFTC hits Jon Corzine with civil charges over MF Global failure

Jury Trial Demanded

LPS Reaches Non-Prosecution Agreement With Justice Department on Robo-Signing Charges

Lender Processing Services Inc. (LPS) has announced that it has entered into a Non-Prosecution Agreement with the U.S. Department of Justice (DOJ) that resolves inquiries made by the U.S. Attorney’s office for the Middle District of Florida. Under terms of the settlement, LPS has agreed to pay $35 million in criminal penalties and forfeiture to address its participation in a six-year scheme to prepare and file more than one million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States. The settlement, which follows a felony guilty plea from the chief executive officer of wholly owned LPS subsidiary DocX LLC, was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Florida Robert E. O’Neill.

The settlement agreement includes a payment by LPS of $20 million to the United States Marshals Service and $15 million to the United States Treasury.

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Philly schools consider suing Wall Street banks for fraud-induced losses: Philadelphia City Paper

The School District of Philadelphia is considering filing suit against Wall Street banks, City Paper has learned, for illegally manipulating a major interest-rate index underpinning complex derivatives that have cost cities and schools billions of dollars.

“The School District is currently in the process of analyzing whether or not the agency has a sufficient basis for pursuing claims against financial institutions which may have been involved in the manipulation of Libor,” a district spokesperson wrote in a short statement issued to CP.

Philadelphia and other cities have filed similar lawsuits, contending that such “interest-rate swaps” — billed as a protection against rising borrowing costs — were tilted in banks’ favor through the fraudulent rigging of the London Interbank Offered Rate, or Libor. – The Network for Public Education

HSBC Says U.S. Mortgage Bond Suit Damages May Cost $1.6 Billion

By Howard Mustoe – Aug 5, 2013

HSBC Holdings Plc (HSBA), Europe’s largest lender, said possible damages from a lawsuit filed by a U.S. regulator over improperly sold mortgage-backed securities could cost the bank as much as $1.6 billion.

The Federal Housing Finance Agency [FHFA]  “alleges that the defendants caused hundreds of millions of dollars in damages to Fannie Mae (FNMA) and Freddie Mac,” the London-based bank said today in its first-half earnings report. “Based upon the information currently available, it is possible that these damages could be as high as $1.6 billion.” – Bloomberg
The U.S. government has accused Bank of America of civil fraud, saying the company failed to disclose risks and misled investors in its sale of US$850 million (NZ$1.07 billion) of mortgage bonds during 2008. The Justice Department filed a civil suit Tuesday (US time) against the bank and several subsidiaries in federal court in Charlotte,… more

Deutsche Bank Hit With Fraud Suit Over $535M RMBS Sale

An investment entity with ties to the Belgian government sued Deutsche Bank AG in New York state court Monday alleging the bank fraudulently induced it to buy more than $535 million worth of residential mortgage-backed securities that are now “essentially …read more

Do You Remember:
WILLIAM K. BLACK in 2008 reporting to House Financial Comm. on the Lehman Bros. Crimes



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