Articles Posted in Wells Fargo

U.S. District Judge Jesse Furman has turned down the request by Barclays Plc (BARC), Bank of America Corp. (BAC), Deutsche Bank AG (DB), Citigroup Inc. (C), Royal Bank of Scotland Group Plc (RBS), BNP Paribas SA, Credit Suisse Group AG (CS), HSBC Holdings Plc, Goldman Sachs Group Inc. (GS), UBS AG (UBS), JPMorgan Chase & CO. (JPM), Wells Fargo & CO. (WFC), and Nomura Holdings Inc. to dismiss the antitrust lawsuits accusing them of working together to rig the ISDAfix. The benchmark rate is used to establish prices on commercial real estate mortgages, interest-rate swap transactions, and other securities. Another defendant is ICAP Plc, which brokered transactions that set the rate for ISDAfix.

Furman said that plaintiff Alaska Electrical Pension Fund and other investors have brought up “plausible allegations” that there may have been a conspiracy between the defendants that allowed them to collude with one another. The investors are seeking billions of dollars in losses they believe they sustained because ISDAFix was allegedly rigged. In this case, the judge let the breach-of-contract claims and antirust claims proceed to trial but dismissed the other claims.

Continue Reading ›

The Securities and Exchange omission has filed charge against Wells Fargo Securities (WFC) and the Rhode Island Economic Development Corp. accusing them of fraud in a municipal bond offering. According to the regulator, RIEDC, now called Rhode Island Commerce Corporation, used $75M in bonds to finance 38 Studios, which is a startup video game company. Wells Fargo served as the bond underwriter.

The SEC is charging RIEDC and Wells Fargo with Securities Act of 1933 violations. Wells Fargo is also charged with violating the Securities Exchange Act of 1934 and the Municipal Securitas Rulemaking Board’s Rules G-17 and G-32.

The 38 Studios project was part of a state government program to increase economic development and employment opportunities through the lending of bond proceeds to private companies. The regulator said the RIEDC lent $50M in bond proceeds to the video game company, while the remaining proceeds went toward bond offering-related costs and the setting up of a reserve fund and a capitalized interest fund. The loan and investors were to be paid back through revenues made by video games that 38 Studios intended to make.

Continue Reading ›

The Seminole Tribe of Florida is suing Wells Fargo (WFC). The Tribe claims that the bank mismanaged its funds for years while charging it millions of dollars in fees that were not warranted. The plaintiff is claiming over $100M in losses.

The Seminole Tribe said that it set up a trust account with Wachovia Bank, which was Wells Fargo’s predecessor in interest, for the purpose of using the revenue from gaming facilities to help the Tribe garner self-sufficiency, economic development, and strong governments. Rather than helping the Tribe achieve its goals, the bank, instead, purportedly set up confusing and deficient accounts statements to conceal unauthorized fees. The tribe also said that they lost at least $100M from mismanagement and poor investment strategies. The Seminole Tribe contends that the bank failed to give proper investment advice, invested in a deficient portfolio to bilk minor beneficiaries, and charged fraudulent fees.

The trust fund is the Seminole Tribe of Florida Minors’ Per Capita Payment Trust Agreement. It was set up in 2005. The Tribe said it put in $16.8M into the trust during the first year, with the Trust principal eventually growing to about $1.4B.

According to the Tribe’s complaint, in 11/07, it merged its 2005 trust into three trust investments. Wachovia was reappointed as trustee. Wachovia then revised the fee schedule of the trust five times in five years. The Tribe contends that even though the fees were adjusted downward, Wachovia was also collecting fees that were concealed from the minor beneficiaries. It was last year while reviewing the account records of the Minor’s Trust that the tribe claims that they discovered an elaborate fraud involving the unauthorized fees.

Continue Reading ›

Commerzbank is suing Wells Fargo (WFC) for losses sustained on failed mortgage-backed securities (MBS). The German finance firm claims the California lending giant did not properly supervise MBS during the housing bubble, which Commerzbank argues, led to hundreds of millions of dollars in losses.

Commerzbank alleges that Wells Fargo caused it over $100 million in losses because of Wells Fargo’s purported lack of action. The German firm invested over $290 million in MBSs and Wells Fargo was the trustee of 19 of the MBSs. A lot of the securities were backed by mortgages from subprime lender Option One.

The German bank believes that Wells Fargo and other trustees should have ensured that the loans backing the securities satisfied certain standards, notified investors when loans defaulted, and forced mortgage lenders to compensate investors for the poor quality loans. Instead, Wells Fargo did not do any of these actions.

Morgan Stanley (MS) will pay $225 million to resolve claims brought by the National Credit Union Administration (NCUA) for Western Corporate Federal Credit Union, U.S. Central Federal Credit Union, Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union. The credit unions contend that the firm left out material facts and made false statements when selling mortgage backed securities (MBS). The credit unions argued that their purchase of the faulty MBS led to their demise.

Structured products, such as MBS, that are tied to residential mortgage-backed securities (RMBS) played a major part in credit unions failing after the 2008 financial crisis. U.S. Central, which was the largest credit union to fail in 2009, sustained billions of dollars of losses after purchasing faulty MBSs.

As of 9/25/15, the unpaid balance of the securities was approximately $194 million, with losses incurred by the certificates at $31 million. As part of the MBS settlement, pending lawsuits against the firm will be dropped in New York and Kansas. Proceeds from the settlement will go toward claims made against the corporate credit unions.

Continue Reading ›

SEC Seeks to Limit JP Morgan’s Ability to Raise Client Money
An Over $200K settlement between J.P. Morgan Chase & Co. (JPM) and regulators has stalled because of efforts by federal regulators to limit the firm’s ability to raise money for clients. The move is an attempt to place a wider variety of consequences on financial firms accused of breaking regulations.

J.P. Morgan had settled allegations accusing it of failing to make proper disclosures when marketing its investment products to clients over the products offered by competitors. Now, the SEC wants the firm to say yes to limits on its ability to sell bonds or stocks through private placements for several years. Such a restriction could hamper its private bank’s efforts to raise funds for hedge funds and other clients through a key channel or sell bonds or stocks privately to rich investors and other sophisticated investors.

While banks are allowed to conduct private placement offerings, firms that violate the rules that these securities are under will lose privilege unless they are given a waiver.

Lawsuit Accuses Intel of Investing 401K Monies Improperly
An ex-Intel Corp. employee is suing company officials for breach of fiduciary duty. According to Christopher M. Sulyma, the company invested defined 401K participants’ retirement funds in high risk, costly private equity funds and hedge funds.

Continue Reading ›

Barclays (BARC) will pay $325M to resolve two civil cases related to residential mortgage-backed securities sales that took place during the housing boom. The plaintiff of both securities lawsuits is the National Credit Union Administration, which regulates federal credit unions.

A number of credit unions under NCUA’s purview failed after they invested in mortgage-backed securities. The union believes that the banks that underwrote the securities misled buyers.

RMBS are investments that pool the returns and risks of personal mortgages. The quality of these securities came into question several years ago when homeowners began to default on the mortgages backing them. NCUA believes that it is its statutory duty to obtain recoveries for credit unions while making sure that customers are protected.

By settling, Barclays is not admitting fault. According to The New York Times, the bank sponsored and underwrote approximately $35M in mortgage securitizations in the US and sold $19.4B in loans that were originated and sold to third parties by affiliates of an entity that it had acquired. Upon completion of this settlement, NCUA will dismiss pending litigation against Barclays in district court in Kansas and New York.

Continue Reading ›

The 11th U.S. Circuit Court of Appeals said that a lower court made a mistake when it threw out the city of Miami’s claims accusing Bank of America Corp. (BAC), Wells Fargo & Co. (WFC ), and Citigroup Inc. (C) of engaging in predatory mortgage lending to Hispanic and black borrowers. The Florida city brought its claims under the Fair Housing Act.

Miami claims that the three banks directed non-Caucasian borrowers toward more expensive loans that were frequently not affordable to them even if their credit was good. The city said that because of this “reverse redlining,” there were a lot of foreclosures, a rise in spending to fight blight, and lower property tax collections.

A U.S. district court judge threw out Miami’s mortgage fraud lawsuits last year. Judge William Dimitrouleas claimed that the city did not have the standing to sue and the harm alleged was too remote from the conduct of the banks.

The 11th circuit, however, said that standard was too strict. It believes that the banks could have foreseen that there would be attendant harm from such alleged discriminatory practices.
Continue Reading ›

Wells Fargo Bank (WFC) must pay a Dallas woman over $8 million. Texas State Judge Emily Tobolowsky said that the bank defrauded Angela Militello in its role as trustee for a trust that family members set up for her when she became an orphan at the age of seven.

Militello contends that in 1999, a trust officer sent to her by the bank told her to set up a new account and gave her papers for establishing a revocable trust. After Militello filed for divorce in 2006, she asked the trust officer about withdrawing $200,000 from the trust to purchase a home for her and her child.

The trust officer gave her a check for that amount and a form asking for approval of the completed sale of a percentage of the assets in the trust. The remainder of assets was to be sold within a few months. Militello claims that Wells Fargo and a third party conspired to sell the assets in her trust at way below market value and fraudulently charge her tfor the property taxes after a buyer purchased the assets.

Continue Reading ›

The Financial Industry Regulatory Authority said that LPL Financial, LLC (LPLA), Raymond James & Associates (RJF), Raymond James Financial Services, Wells Fargo Advisors, LLC (WFC), and Wells Fargo Advisors Financial Network, LLC must pay over $30M in restitution plus interest to customers who were impacted when the firms did not waive mutual fund sales charges for certain retirement and charitable accounts. According to the self-regulatory organization, between July 2009 and the end of 2014 the financial firms either improperly overcharged certain investors who had purchased Class A mutual fund shares or sold them Class B or C shares instead. The latter two come with ongoing, high back-end fees.

Mutual funds typically offer different share classes for sale. Each class has its own sales fees and charges. Although Class A shares come with an initial sales charge, they usually have lower annual fees than Class B and C shares. However, mutual funds will usually waive Class A sales charges when selling them to charities and some retirement accounts.

The broker-dealers offered these waivers for the retirement and charitable plan accounts under limited conditions. The waivers also were disclosed in prospectuses. Yet, according to FINRA, at various times since at least July 2009, the firms did not actually waive the sales charges for these customers when they were offered the Class A shares.

Because of this, contends the agency, over 50,000 eligible retirement accounts and charitable organizations either paid sales charges for the Class A shares or bought other share classes that required them to pay higher ongoing fees and other expenses. FINRA said that the firms did not properly supervise the sale of these mutual funds and depended on its brokers to offer the waiver discounts even though they weren’t properly trained.

Continue Reading ›

Contact Information