AM | @Mackfinance
. Tom Mitchell: "Chinese police need diggers to unearth 'Ponzi scheme' that that took alleged $7.6bn", Financial Times, 2 February 2016
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. Pan Kwan Yuk: "Wells Fargo to pay $1.2bn over loans case", Financial Times, 3 February 2016
Wells Fargo had been in talks with the US Department of Justice, the Department of Housing and Urban Development, the US Attorney in the Southern District of New York and the Northern District of California for more than a year over allegations that it improperly certified certain mortgage loans that did not qualify for insurance under the Federal Housing Administration (FHA) between 2001 and 2010. The government alleges that Wells Fargo should not have received insurance proceeds when some of the loans later defaulted.
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. Laura Noonan: "JPMorgan pays almost $2.5bn to settle legal disputes", Financial Times, 26 January 2016.
JPMorgan Chase will be left almost $2.5bn out of pocket after the US bank finally settled two of its biggest legal headaches left over from the financial crisis. Insurer Ambac said on Tuesday that it would receive almost $1bn from the bank to settle a long-running lawsuit about the sale of mortgage-backed securities. The news came just hours after court filings revealed that JPMorgan would pay $1.42bn to end most of its remaining disputes with the estate of the defunct Lehman Brothers. The bank issued stock exchange statements saying that neither settlement would “materially” affect earnings for the first quarter. The Ambac lawsuit centred on mortgage-backed securities sold by an arm of Bear Stearns, which JPMorgan acquired in 2008. Ambac alleged that the Bear Stearns unit misrepresented the securities. Court documents showed one Bear Stearns employee referred to some of the securities as a “sack of shit”.
Note 1: on January 24, FT informs that Goldman Sachs paid a $5.1bn penalty for "mis-selling mortgage-backed securities".
Note 2: example of a 'shitty loan'? Quicken Loans was sued on claims that it had fraudulently originated loans: "...abuses such as Quicken endorsing a loan from a borrower who requested a refund of the $400 application fee so she could afford to feed her family. She ultimately made only five mortgage payments before defaulting, costing the government about $94,000 in insurance claims" (Peter Rudegeair: "At Quicken Loans, a Will to Do Battle", Wall Street Journal, 16 June 2015)
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. Gina Chon: "JPMorgan fined $330m for misleading clients", Financial Times, 19-20 December 2015.
JPMorgan Chase has been ordered to pay a $307m penalty for failing to disclose to clients that it was steering them to the bank’s own investment products rather than those offered by rivals.The bank agreed to pay $267m to the Securities and Exchange Commission and admitted wrongdoing in settling charges, which found JPMorgan failed to disclose conflicts of interest to wealth management clients.
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. Joseph Cotterill: "KKR pays $30m to settle disclosure charges", Financial Times, 30 June 2016
The firm “thus, breached its fiduciary duty as an investment adviser”, the order added. “This resolution, which relates to historical expense allocation disclosures and policies and not to any current practices, allows us to focus on delivering value for those who invest with us,” KKR said in a statement. “We take our fiduciary responsibilities seriously and have strived to adapt our policies and practices to the changing nature of the industry, market and our business,” it added.
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