Credit Suisse & J.P. Morgan to Pay $400M Over RMBS Misstatements
In SEC v. J.P. Morgan, the financial firm is accused of allegedly misstating information related to approximately 620 subprime mortgage loans’ delinquency status. The loans gave collateral for a $1.8M residential mortgage-backed securities offering that J.P. Morgan (JPM) underwrote six years ago and from which it was paid over $2.7 million in fees while investors lost at least $37 million. Now, the firm has agreed to pay nearly $297M to settle the allegations (without denying or admitting to them). The Commission is also accusing J.P. Morgan-owned Bear Stearns Cos. LLC of failing to disclose from 2005 to 2007 that it kept financial settlements from mortgage loan originators on problem loans that it sold into RMBS trusts.
Also settling RMBS Misstatement allegations with the regulator is Credit Suisse Securities (USA) LLC. In an administrative order, the SEC claims that between 2005 and 2010 the financial firm did not accurately disclose that it would keep cash from claims it settled against mortgage loan originators for issues involving loans that it had sold into RMBS trusts. Credit Suisse also allegedly misled investors about when it intended to buy back loans from trusts if those that borrowed did not make the initial payment. The firm has agreed to settle for $120M and is also not denying or admitting to the allegedly negligent conduct.
Money received from both settlements will go to investors that were harmed.
Fox Network’s FOIA Request on AIG Emails Granted
The US Treasury Department must to provide documents related to American International Group (AIG) employees’ retention and bonus payments from 2009 to Fox Business Network. Fox News had requested the papers under the Freedom of Information Act (FOIA). 2009 is when the Federal Reserve and US Treasury restructured the massive aid to AIG in 2008 and Fox Business wants to know more about the government’s bailout. Magistrate Judge Frank Maas of the U.S. District Court for the Southern District of New York is the one who granted the network’s request.
SEC Gets Expedited Discovery in Real Estate ‘Flipper’ Case
The Commission’s enforcement case against Michigan real estate businessman Joel Wilson and two of his companies now goes to expedited recovery. The SEC is accusing the entrepreneur of securities fraud and other violations related to his financing activities, including diverting at least $582K in investor funds toward his own spending. The U.S. District Court for the Eastern District of Michigan recounts that Wilson had gotten about $6.7M from 120 investors who had backed his entities, American Realty Funds Corp. and Group Partnership Management LLC.
The regulator wanted “some types of relief immediately,” and, hence, the court granted via expedited discovery. The SEC’s request for asset freeze and a preliminary injunction, however, has been deferred pending a hearing.
NY Brokerage Owner Linked to Affinity Scam
TWS Financial LLC-owner Roman Sledziejowski is accused of running an alleged affinity scam targeting members of the Polish investment community. The Financial Industry Regulatory Authority has filed disciplinary proceedings against him contending that he defrauded three clients of over $4M, with more than $3M still unaccounted for.
The alleged securities fraud would have occurred between June 2009 and August 2012 when his customers’ money was wired (either by them or by Sledziejowski) from their accounts to Innovest Holdings LLC, a majority TWS owner that he also owns. They allegedly concealed the affinity fraud through bogus account statements or with money that was wired back to the accounts of clients that wanted to take out funds.
SEC v. Wilson (PDF)
Dep’t of Enforcement v. Sledziejowski, FINRA (PDF)
More Blog Posts:
JPMorgan Chase Must Pay Oil Heiress’s Trust $18M For Derivatives Investments, Account Mismanagement, and Unsuitable Investment Advice, Stockbroker Fraud Blog, October 12, 2012
Barclays LIBOR Manipulation Scam Places Citigroup, Credit Suisse, Deutsche Bank, JP Morgan Chase, and UBS Under The Investigation Microscope, Institutional Investor Securities Blog, July 16, 2012
SEC Antifraud Lawsuit Against Goldman Sachs Executive Fabrice Tourre Won’t Be Reinstated, Says District Court, Institutional Investor Securities Blog, December 3, 2012