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Four Credit Suisse Bankers Accused of Unauthorized Trading in Rich Clients’ Accounts, Bank of America Settles Mortgage Case for $190M, and Goldman Sachs to Pay Illinois Pension Fund $272M

Bank of America to Pay Federal Home Loan Bank of Seattle $190M
Bank of America Corp. will pay $190M to resolve mortgage-backed securities fraud charges brought by the Federal Home Loan Bank of Seattle. The SEC filing stated that the settlement was reached last month and that most of it was previously accrued. The lawsuit alleged misstatements and omissions during the issuance of MBSs.

It was just earlier this year that Bank of America’s Merrill Lynch and 10 other banks agreed to pay over $63M to resolve accusations that they misrepresented residential mortgage-backed securities to the Virginia Retirement System and the state of Virginia.

Judge Approves $270M Mortgage-Backed Securities Fraud Settlement Involving Goldman Sachs
A federal judge has approved the proposed settlement between Goldman Sachs (GS) and lead plaintiff NECA-IBEW Health & Welfare Fund, as well as 400 bondholders and another electrical union pension fund. The Illinois pension fund for electrical workers brought the case in 2008, accusing the firm of leaving out key information and making false statements about the mortgages it sold into 17 trusts the year before.

NECA-IBEW also accused Goldman of misleading investors about the underwriting standards that different originators used and employing inflated appraisals by the trusts’ originating entities. The plaintiffs believe that the firm made false and misleading statements about the quality of asset-backed certificates and mortgage pass-through certificates put out by different securitization trusts in 2007 and that trust registration statements violated securities laws.

Goldman marketed the certificates as high-rated fixed income products. However, plaintiffs contend that the financial instruments were very risky and should have garnered a ‘junk’ rating at best. Instead, they were AAA rated at the time investors bought them. The majority of the certificates’ collateral eventually were downgraded down into junk status.

Goldman denies doing anything wrong.

Swiss Prosecutors Investigate More Ex-Credit Suisse Bankers
Bloomberg reports that according to sources, prosecutors in Switzerland have identified another three ex-Credit Suisse Group AG (CS) employees in its investigation involving unauthorized trades in the accounts of wealthy Eastern European’s accounts. The three individuals join a fourth banker who is also under scrutiny and currently behind bars.

The original banker, also a former wealth manager, admitted to Credit Suisse that he executed trades without the knowledge of customers, including former Georgia prime Bidzina Invanishvili. The banker is also a defendant in a case brought by Top Matrix Holding LTD. That complaint alleges fraud, abuse of confidence, and criminal mismanagement.

Credit Suisse claims that this banker hid his deceptions and that this is an individual case. However, Ivanishvili and two others who have brought cases against him disagree. The former Georgian prime minister’s legal team is also blaming Credit Suisse. They contend that a number of the bank’s departments had to have been involved and they are accusing Credit Suisse of money laundering for purportedly not putting into place adequate procedures to prevent the illegal activity from happening.

Our securities law firm represents high net worth individual clients and institutional investors. Contact The SSEK Partners Group today.

BofA Settles MBS Suit With Former Seattle Bank For $190M, Law360, May 3, 2016

Judge approves Goldman Sachs $272 million toxic mortgage settlement, Housing Wire, May 2, 2016

Credit Suisse Banker Case Said to Widen With 3 New Suspects, Bloomberg, May 6, 2016

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