Securities | FORECLOSURE FRAUD | by DinSFLA

Tag Archive | "securities"

Alison Frankel | Securities lawyers beware: The SEC may be coming after you

Alison Frankel | Securities lawyers beware: The SEC may be coming after you


Alison Frankel-

If you’re a lawyer who advises securities issuers, there was an ominous confluence of events Friday. Kenneth Lench of the Securities and Exchange Commission’s Enforcement Division said publicly, according to Bloomberg, that the SEC is considering enforcement actions against lawyers who helped put together dubious transactions involving complex securities. And quicker than you could say Janus Capital v. First Derivative, the full Commission issued a notice that it’s reviewing the scope of protection the U.S. Supreme Court’s 2011 ruling offers secondary-player defendants in enforcement actions. (Hat tip: Securities Law Prof Blog.)

The Janus decision, you’ll recall, held that Janus Capital wasn’t liable for the alleged misstatements its mutual funds made in an offering prospectuses. The Supreme Court said that only the funds “made” the offending statements, no matter how much of a behind-the-scenes role the parent company played. Janus hasn’t turned out to be an absolute bar on claims against financial advisers — National Century bondholders won a summary judgment ruling last month that permits them to proceed with their securities fraud case against Credit Suisse — but continued the line of Supreme Court rulings that has made it increasingly difficult for investors to tag secondary players with liability.

[ON THE CASE -REUTERS]

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California reportedly subpoenas BofA over toxic securities

California reportedly subpoenas BofA over toxic securities


Me thinks this just sunk the Foreclosure Fraud Settlement ship!

California is trying to determine whether BofA and its Countrywide Financial subsidiary sold investments backed by risky mortgages to investors in California under false pretenses, a source says.

Oh Hella Yeah…they did & They everyone knows this!

La Times-

Investigators with the state attorney general’s office have subpoenaed Bank of America Corp. in connection with the sale and marketing of troubled mortgage-backed securities to California investors, according to a person familiar with the probe.

The state is trying to determine whether the bank and its Countrywide Financial subsidiary sold investments backed by risky mortgages to institutional and private investors in California under false pretenses, according to the person, who was not authorized to speak publicly and requested confidentiality.

The subpoenas, which were served Tuesday…

[LA TIMES]

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OPINION: In Re: WASHINGTON MUTUAL, INC., Bankruptcy Judge Denies Reorganization Plan

OPINION: In Re: WASHINGTON MUTUAL, INC., Bankruptcy Judge Denies Reorganization Plan


THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re:

WASHINGTON MUTUAL, INC., et al.,

OPINION1

Before the Court is the request of Washington Mutual, Inc. (“WMI”) and WMI Investment Corp. (collectively the “Debtors”) for confirmation of the Modified Sixth Amended Joint Plan of Affiliated Debtors (the “Modified Plan”). For the reasons stated below, the Court will deny confirmation of the Modified Plan.

[…]

[ipaper docId=65005674 access_key=key-12ublt66lyyiduhx6y0j height=600 width=600 /]

 

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Banks May Fight Banks as Mortgage Securities Investors Seek Class Status

Banks May Fight Banks as Mortgage Securities Investors Seek Class Status


Just as in Abigail C. Field’s Fortune piece “Fighting a foreclosure suit? Hope for the right judge”, the same may be true for these investors…

Bloomberg-

Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and other banks may pay more to resolve claims over their alleged roles in the collapse of a $2.3 trillion mortgage- backed securities market if sophisticated investors are allowed to sue as a group along with less savvy ones.

Class-action status allows investors to pool financial and legal resources, giving them greater leverage to win larger settlements or verdicts. The banks, however, have a court ruling on their side that may help fend off such blockbuster cases. It says class status is barred because some investors are too sophisticated — in fact, because some of them are other banks, including JPMorgan.

[BLOOMBERG]

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Settlement Said to Be Near for Fannie and Freddie, Comes at an Awkward Time

Settlement Said to Be Near for Fannie and Freddie, Comes at an Awkward Time


POT MEETS KETTLE…

Lets guess they neither ADMIT nor DENY…as it always goes.

But hmmm…

“a settlement would represent the most significant acknowledgement yet … they [GSEs] played a central role”

Deal Time-

Regulators are nearing a settlement with Fannie Mae and Freddie Mac over whether the mortgage finance giants adequately disclosed their exposure to risky subprime loans, bringing to a close a three-year investigation.

The proposed agreement with the Securities and Exchange Commission, under the terms being discussed, would include no monetary penalty or admission of fraud, according to several people briefed on the case. But a settlement would represent the most significant acknowledgement yet by the mortgage companies that they played a central role in the housing boom and bust.

[NEW YORK TIMES]

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Janet Tavakoli: “Fraud As a Business Model”

Janet Tavakoli: “Fraud As a Business Model”


If William K. Black and Janet would only team up to write a book?

HuffPO-

There were many factors that contributed to our recent financial bubble: deregulation, cheap money from the Fed, failure to enforce remaining regulations, crony capitalism, hubris, speculation, leverage, and fraud among other problems. While fraud wasn’t the only issue, it was and is a significant contributor to the credit bubble. Restraining fraud is a necessary but not sufficient condition for a sound financial system. Congressional investigations in recent years have put ample evidence of fraud in the public domain.

To illustrate just one type of malicious mischief, Senator Carl Levin (D. Mich.), Chairman of a senate investigative panel, issued a memo stating that Goldman ” magnified the impact of toxic mortgages.” The Wall Street Journal reviewed data showing that a $38 million subprime-mortgage bond created in June 2006 was referenced in more than 30 debt pool causing around$280 million in losses to investors by 2008. In other words, Goldman kept repackaging, reselling or protecting (buying credit default protection on) losers. It took the wrong kind of nerve for Goldman’s CEO to say he was doing “God’s work.”

[HUFFINGTON POST]

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New York prosecutors widen Goldman probe: report

New York prosecutors widen Goldman probe: report


REUTERS-

New York prosecutors are widening their probe into the manner in which Goldman Sachs (GS.N) marketed certain mortgage-linked securities before the financial crisis, the Wall Street Journal reported, citing people familiar with the matter.

[REUTERS]

Them were some “Shitty Deals”

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“SERIOUS” | Goldman Sachs CEO Lloyd Blankfein has hired High Profile Attorney Reid Weingarten

“SERIOUS” | Goldman Sachs CEO Lloyd Blankfein has hired High Profile Attorney Reid Weingarten


REUTERS-

Goldman Sachs Chief Executive Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defense attorney whose past clients include a former Enron accounting officer, according to a government source familiar with the matter.

[REUTERS]

Then shortly after from Bloomberg

Goldman Drops on Report Blankfein Hired Lawyer


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GASTINEAU v. GIFFORD, BANK OF AMERICA | VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY

GASTINEAU v. GIFFORD, BANK OF AMERICA | VERIFIED SHAREHOLDER DERIVATIVE COMPLAINT FOR BREACH OF FIDUCIARY DUTY


UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

DORIS GASTINEAU, an individual,
Plaintiff,

vs.

CHARLES K. GIFFORD, THOMAS J.
MAY, BRIAN T. MOYNIHAN,
CHARLES O. HOLLIDAY, JR.,
MUKESH D. AMBANI, SUSAN S. BIES,
FRANK P. BRAMBLE, SR., VIRGIS W.
COLBERT, D. PAUL JONES, JR.,
MONICA C. LOZANO, DONALD E.
POWELL, CHARLES O. ROSSOTTI,
ROBERT W. SCULLY, WILLIAM P.
BOARDMAN, BARBARA J. DESOER
and KENNETH D. LEWIS,
Defendants,

and

BANK OF AMERICA CORPORATION,
Nominal Defendant.

[…]

This is a shareholder derivative action brought on behalf and for the benefit of Bank of America against certain of its current and former directors. Bank of America is a global financial services company, and provides consumers, corporations, governments and institutions with a range of financial products and services. Plaintiff seeks to remedy the serious financial and reputational harm that Bank of America has suffered, and will continue to suffer, from the inadequate servicing of its troubled residential mortgage loans. Plaintiff also seeks redress for the Company’s false and  misleading Schedule 14A definitive proxy statement filed with the SEC on March 30, 2011 (the “Proxy”).

[…]

[ipaper docId=60830442 access_key=key-2ojzndxj7anp8ae5fs0v height=600 width=600 /]

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New York Attorney General Steps Up Probe Into BofA-Merrill Disclosures, Seeks Depositions

New York Attorney General Steps Up Probe Into BofA-Merrill Disclosures, Seeks Depositions


WSJ-

Another headache from the financial crisis is flaring back up for Bank of America Corp.

New York state Attorney General Eric Schneiderman has issued subpoenas seeking new depositions from the Charlotte, N.C., bank’s chief executive and other current and former executives, according to people familiar with the situation.

The subpoenas are a sign that Mr. Schneiderman, who became New York’s top law-enforcement official this year, doesn’t intend to drop the civil-fraud investigation of Bank of America begun more than a year ago under predecessor Andrew Cuomo.

Mr. Cuomo, now the governor of New York, accused Bank of America, former Chief …

Continue reading [WALL STREET JOURNAL]

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NATIONAL CREDIT UNION ADMINISTRATION BOARD v. RBS SECURITIES

NATIONAL CREDIT UNION ADMINISTRATION BOARD v. RBS SECURITIES


IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS


NATIONAL CREDIT UNION
ADMINISTRATION BOARD, as
Liquidating Agent of U.S. Central Federal
Credit Union,

v.

RBS SECURITIES, INC., f/k/a
GREENWICH CAPITAL MARKETS, INC.,
GREENWICH CAPITAL ACCEPTANCE,
INC., FINANCIAL ASSET SECURITIES
CORP., FREMONT MORTGAGE
SECURITIES CORP., RESIDENTIAL
FUNDING MORTGAGE SECURITIES II,
INC., INDYMAC MBS, INC., NOVASTAR
MORTGAGE FUNDING CORP.,
NOMURA HOME EQUITY LOAN, INC.,
LARES ASSET SECURITIZATION, INC.,
SAXON ASSET SECURITIES CO., and
WACHOVIA MORTGAGE LOAN TRUST,
LLC,

[ipaper docId=58313347 access_key=key-po3c7c8bbfaih107t49 height=600 width=600 /]

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California Appeals Court Reverses Investor Lawsuit | LUTHER v. COUNTRYWIDE FINANCIAL CORP.

California Appeals Court Reverses Investor Lawsuit | LUTHER v. COUNTRYWIDE FINANCIAL CORP.


IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE

DAVID H. LUTHER et al.,
Plaintiffs and Appellants,

v.

COUNTRYWIDE FINANCIAL CORPORATION et al.,
Defendants and Respondents.

[ipaper docId=55863497 access_key=key-29ffvu3dvvz2o6y2yrno height=600 width=600 /]

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Putting “trust” back in American housing finance – Christopher Whalen

Putting “trust” back in American housing finance – Christopher Whalen


“If you don’t have the note today, you don’t have no game.”

REUTERS-

News reports suggest that New York prosecutors are preparing fraud charges against a number of large investment banks for defrauding insurance companies with respect to mortgage loans. These allegations and many civil claims with precisely similar predicates illustrate one of the most important aspects of the subprime financial crisis, namely the construction and collapse of the non-bank financial sector.

[…]

But now we know that this was all nonsense. The creation of the ersatz housing title registry, Mortgage Electronic Registration Systems (MERS), by the banking and mortgage servicing industry was effectively an end-run around the clear legal standard set by Brandeis. In litigation and foreclosures, these make-believe standards for securitizing home loans are turning into dust in the hands of the banks and investors. Lenders who relied upon MERS to document their secured interest in a mortgage are increasingly at risk when the title is contested.


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Benedict v. Ratner, 268 US 353 – Supreme Court 1925

Benedict v. Ratner, 268 US 353 – Supreme Court 1925


268 U.S. 353 (1925)

WALLACE BENEDICT, RECEIVER,
v.
RATNER.

No. 11.

Supreme Court of United States.

Argued October 5, 1923. Decided May 25, 1925.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.

354*354 Mr. Selden Bacon, for petitioner.

Mr. Louis S. Posner, for respondent.

357*357 MR. JUSTICE BRANDEIS delivered the opinion of the Court.

The Hub Carpet Company was adjudicated bankrupt by the federal court for southern New York in involuntary proceedings commenced September 26, 1921. Benedict, who was appointed receiver and later trustee, collected the book accounts of the company. Ratner filed in that court a petition in equity praying that the amounts so collected be paid over to him. He claimed them under a writing given May 23, 1921 — four months and three days before the commencement of the bankruptcy proceedings. By it the company purported to assign to him, as collateral for certain loans, all accounts present and future. Those collected by the receiver were, so far as 358*358 appears, all accounts which had arisen after the date of the assignment, and were enumerated in the monthly list of accounts outstanding which was delivered to Ratner September 23. Benedict resisted the petition on the ground that the original assignment was void under the law of New York as a fraudulent conveyance; that, for this reason, the delivery of the September list of accounts was inoperative to perfect a lien in Ratner; and that it was a preference under the Bankruptcy Act. He also filed a cross-petition in which he asked that Ratner be ordered to pay to the estate the proceeds of certain collections which had been made by the company after September 17 and turned over to Ratner pursuant to his request made on that day. The company was then insolvent and Ratner had reason to believe it to be so. These accounts also had apparently been acquired by the company after qthe date of the original assignment.

The District Judge decided both petitions in Ratner’s favor. He ruled that the assignment executed in May was not fraudulent in law; that it created an equity in the future acquired accounts; that because of this equity, Ratner was entitled to retain, as against the bankrupt’s estate, the proceeds of the accounts which had been collected by the company in September and turned over to him; that by delivery of the list of the accounts outstanding on September 23, this equity in them had ripened into a perfect title to the remaining accounts; and that the title so perfected was good as against the supervening bankruptcy. Accordingly, the District Court ordered that, to the extent of the balance remaining unpaid on his loans, there be paid Ratner all collections made from accounts enumerated in any of the lists delivered to Ratner; and that the cross-petition of Benedict be denied. There was no finding of fraud in fact. On appeal, the Circuit Court of Appeals affirmed the order. 282 Fed. 12. A writ of certiorari was granted by this Court. 259 U.S. 579.

359*359 The rights of the parties depend primarily upon the law of New York. Hiscock v. Varick Bank of N.Y., 206 U.S. 28. It may be assumed that, unless the arrangement of May 23 was void because fraudulent in law, the original assignment of the future acquired accounts became operative under the state law, both as to those paid over to Ratner before the bankruptcy proceedings and as to those collected by the receiver;[1] and that the assignment will be deemed to have taken effect as of May 23. Sexton v. Kessler, 225 U.S. 90, 99. That being so, it is clear that, if the original assignment was a valid one under the law of New York, the Bankruptcy Act did not invalidate the subsequent dealings of the parties. Thompson v. Fairbanks, 196 U.S. 516; Humphrey v. Tatman, 198 U.S. 91. The sole question for decision is, therefore, whether on the following undisputed facts the assignment of May 23 was in law fraudulent.

The Hub Carpet Company was, on May 23, a mercantile concern doing business in New York City and proposing to continue to do so. The assignment was made there to secure an existing loan of $15,000, and further advances not exceeding $15,000 which were in fact made July 1, 1921. It included all accounts receivable then outstanding and all which should thereafter accrue in the ordinary course of business. A list of the existing accounts was delivered at the time. Similar lists were to be delivered to Ratner on or about the 23d day of each succeeding month containing the accounts outstanding at such future dates. Those enumerated in each of the lists delivered prior to September, aggregated between $100,000 and $120,000. The receivables were to be collected by the company. Ratner was given the right, at any time, to 360*360 demand a full disclosure of the business and financial conditions; to require that all amounts collected be applied in payment of his loans; and to enforce the assignment although no loan had matured. But until he did so, the company was not required to apply any of the collections to the repayment of Ratner’s loan. It was not required to replace accounts collected by other collateral of equal value. It was not required to account in any way to Ratner. It was at liberty to use the proceeds of all accounts collected as it might see fit. The existence of the assignment was to kept secret. The business was to be conducted as theretofore. Indebtedness was to be incurred, as usual, for the purchase of merchandise and otherwise in the ordinary course of business. The amount of such indebtedness unpaid at the time of the commencement of the bankruptcy proceedings was large. Prior to September 17, the company collected from accounts so assigned about $150,000, all of which it applied to purposes other than the payment of Ratner’s loan. The outstanding accounts enumerated in the list delivered September 23 aggregated $90,000.

Under the law of New York a transfer of property as security which reserves to the transferor the right to dispose of the same, or to apply the proceeds thereof, for his own uses is, as to creditors, fraudulent in law and void.[2] 361*361 This is true whether the right of disposition for the transferor’s use be reserved in the instrument[3] or by agreement in pais,[4] whether the right of disposition reserved by unlimited in time[5] or be expressly terminable by the happening of an event;[6] whether the transfer cover all the property of the Debtor[7] or only a part;[8] whether the right of disposition extends to all the property transferred[9] or only to a part thereof;[10] and whether the instrument of transfer be recorded or not.[11] oral or written;

If this rule applies to the assignment of book accounts, the arrangement of May 23 was clearly void; and the equity in the future acquired accounts, which it would otherwise have created,[12] did not arise. Whether the rule applies to accounts does not appear to have been passed upon by the Court of Appeals of New York. But it would seem clear that whether the collateral consist of chattels 362*362 or of accounts, reservation of dominion inconsistent with the effective disposition of title must render the transaction void. Ratner asserts that the rule stated above rests upon ostensible ownership, and argues that the doctrine of ostensible ownership is not applicable to book accounts. That doctrine raises a presumption of fraud where chattels are mortgaged (or sold) and possession of the property is not delivered to the mortgagee (or vendee).[13] The presumption may be avoided by recording the mortgage (or sale). It may be assumed, as Ratner contends, that the doctrine does not apply to the assignment of accounts. In their transfer there is nothing which corresponds to the delivery of possession of chattels. The statutes which embody the doctrine and provide for recording as a substitute for delivery do not include accounts. A title to an account good against creditors may be transferred without notice to the debtor[14] or record of any kind.[15] But it is 363*363 not true that the rule stated above and invoked by the receiver is either based upon or delimited by the doctrine of ostensible ownership. It rests not upon seeming ownership because of possession retained, but upon a lack of ownership because of dominion reserved. It does not raise a presumption of fraud. It imputes fraud conclusively because of the reservation of dominion inconsistent with the effective disposition of title and creation of a lien.

The nature of the rule is made clear by its limitations. Where the mortgagor of chattels agrees to apply the proceeds of their sale to the payment of the mortgage debt or to the purchase of other chattels which shall become subject to the lien, the mortgage is good as against creditors, if recorded.[16] The mortgage is sustained in such cases “upon the ground that such sale and application of proceeds is the normal and proper purpose of a chattel mortgage, and within the precise boundaries of its lawful operation and effect. It does no more than to substitute the mortgage as the agent of the mortgagee to do exactly what the latter had the right to do, and what it was his privilege and his duty to accomplish. It devotes, as it should, the mortgaged property to the payment of the mortgage debt.” The permission to use the proceeds to furnish substitute collateral “provides only for a shifting of the lien from one piece of property to another taken in exchange.” Brackett v. Harvey, 91 N.Y. 214, 221, 223. 364*364 On the other hand, if the agreement is that the mortgagor may sell and use the proceeds for his own benefit, the mortgage is of no effect although recorded. Seeming ownership exists in both classes of cases because the mortgagor is permitted to remain in possession of the stock in trade and to sell it freely. But it is only where the unrestricted dominion over the proceeds is reserved to the mortgagor that the mortgage is void. This dominion is the differentiating and deciding element. The distinction was recognized in Sexton v. Kessler, 225 U.S. 90, 98, where a transfer of securities was sustained.[17] It was pointed out that a reservation of full control by the mortgagor might well prevent the effective creation of a lien in the mortgagee and that the New York cases holding such a mortgage void rest upon that doctrine.

The results which flow from reserving dominion inconsistent with the effective disposition of title must be the same whatever the nature of the property transferred. The doctrine which imputes fraud where full dominion is reserved must apply to assignments of accounts although the doctrine of ostensible ownership does not. There must also be the same distinction as to degrees of dominion. Thus, although an agreement that the assignor of accounts shall collect them and pay the proceeds to the assignee will not invalidate the assignment which it accompanies,[18] the assignment must be deemed fraudulent in law if it is agreed that the assignor may use the proceeds as he sees fit.

In the case at bar, the arrangement for the unfettered use by the company of the proceeds of the accounts precluded 365*365 the effective creation of a lien[19] and rendered the original assignment fraudulent in law. Consequently the payments to Ratner and the delivery of the September list of accounts were inoperative to perfect a lien in him, and were unlawful preferences.[20] On this ground, and also because the payment was fraudulent under the law of the State, the trustee was entitled to recover the amount.[21]

Stackhouse v. Holden, 66 App. Div. 423, is relied upon by Ratner to establish the proposition that reservation of dominion does not invalidate an assignment of accounts. The decision was by an intermediate appellate court, and, although decided in 1901, appears never to have been cited since in any court of that State.[22] There was a strong dissenting opinion. Moreover, the case is perhaps distinguishable on its facts, p. 426. Greey v. Dockendorff, 231 U.S. 513, upon which Ratner also relies, has no bearing on the case at bar. It involved assignment of accounts, but there was no retention of dominion by the bankrupt. The sole question was whether successive assignments of accounts by way of security, made in pursuance of a contract, were had because the contract embraced all the accounts. The lien acquired before knowledge by either party of insolvency was held good against the trustee.

Reversed.

[1] Williams v. Ingersoll, 89 N.Y. 508, 518-520; Coats v. Donnell, 94 N.Y. 168, 177. See Rochester Distilling Co. v. Rasey, 142 N.Y. 570, 580; MacDowell v. Buffalo Loan, etc. Co., 193 N.Y. 92, 104. Compare New York Security & Trust Co. v. Saratoga Gas, etc. Co., 159 N.Y. 137; Zartman v. First National Bank, 189 N.Y. 267.

[2] Griswold v. Sheldon, 4 N.Y. 580; Edgell v. Hart, 9 N.Y. 213; Russell v. Winne, 37 N.Y. 591; Southard v. Benner, 72 N.Y. 424; Potts v. Hart, 99 N.Y. 168; Hangen v. Hachemeister, 114 N.Y. 566; Mandeville v. Avery, 124 N.Y. 376; Skilton v. Codington, 185 N.Y. 80; Zartman v. First National Bank, 189 N.Y. 267; In re Marine Construction & Dry Docks Co., 135 Fed. 921, 144 Fed. 649; In re Davis, 155 Fed. 671; In re Hartman, 185 Fed. 196; In re Volence, 197 Fed. 232; In re Purtell, 215 Fed. 191; In re Leslie-Judge Co., 272 Fed. 886. Compare Frost v. Warren, 42 N.Y. 204; also Lukins v. Aird, 6 Wall. 78; Robinson v. Elliot, 22 Wall. 513; Smith v. Craft, 123 U.S. 436; Means v. Dowd, 128 U.S. 273; Etheridge v. Sperry, 139 U.S. 266; Huntley v. Kingman, 152 U.S. 527; Knapp v. Milwaukee Trust Co., 216 U.S. 545.

[3] Edgell v. Hart, 9 N.Y. 213, 216; Zartman v. First National Bank, 189 N.Y. 267, 270.

[4] Russell v. Wynne, 37 N.Y. 591, 595; Southard v. Benner, 72 N.Y. 424, 432; Potts v. Hart, 99 N.Y. 168, 172-173.

[5] Southard v. Benner, 72 N.Y. 424, 430; Potts v. Hart, 99 N.Y. 168, 172.

[6] Zartman v. First National Bank, 189 N.Y. 267, 270.

[7] Zartman v. First National Bank, 189 N.Y. 267, 269.

[8] Russell v. Winne, 37 N.Y. 591; Southard v. Benner, 72 N.Y. 424.

[9] Potts v. Hart, 99 N.Y. 168, 172.

[10] Russell v. Winne, 37 N.Y. 591, 593; In re Leslie-Judge Co., 272 Fed. 886, 888.

[11] Potts v. Hart, 99 N.Y. 168, 171. N.Y. Personal Property Law, § 45; Laws, 1911, c. 626, authorizes the creation of a general lien or floating charge upon a stock of merchandise, including after-acquired chattels, and upon accounts receivable resulting from the sale of such merchandise. It provides that this lien or charge shall be valid against creditors provided certain formalities are observed and detailed filing provisions are complied with. It is possible that, if its conditions are performed, the section does away with the rule “that retention of possession by the mortgagor with power of sale for his own benefit is fraudulent as to creditors.”

[12] Field v. Mayor, etc. of New York, 6 N.Y. 179.

[13] Smith v. Acker, 23 Wend. 653; Griswold v. Sheldon, 4 N.Y. 580, 590; Edgell v. Hart, 9 N.Y. 213, 218; Conkling v. Shelley, 28 N.Y. 360. The statutes to this effect merely embody the commonlaw rule. But, in New York, an additional statute provides that unrecorded chattel mortgages under such circumstances are absolutely void as to creditors. New York Lien Law, § 230; Laws, 1909, c. 38, § 230, as amended 1911, c. 326, and 1916, c. 348, See Seidenbach v. Riley, 111 N.Y. 560; Karst v. Kane, 136 N.Y. 316; Stephens v. Perrine, 143 N.Y. 476; Russell v. St. Mart, 180 N.Y. 355. See Stewart v. Platt, 101 U.S. 731, 735. Compare Preston v. Southwick, 115 N.Y. 139; Nash v. Ely, 19 Wend. (N.Y.) 523; Goodwin v. Kelly, 42 Barb. (N.Y.) 194. In the case of a transfer of personal property by sale, retention of possession creates a rebuttable presumption of fraud. See Kimball v. Cash, 176 N.Y. Supp. 541; also New York Ice Co. v. Cousins, 23 App. Div. 560; Rheinfeldt v. Dahlman, 43 N.Y. Supp. 281; Tuttle v. Hayes, 107 N.Y. Supp. 22; Young v. Wedderspoon, 126 N.Y. Supp. 375; Sherry v. Janov, 137 N.Y. Supp. 792; Gisnet v. Moeckel, 165 N.Y. Supp. 82. In order to create a valid pledge of tangible personalty, there must be a delivery to the pledgee. In re P.J. Sullivan Co., 247 Fed. 139, 254 Fed. 660.

[14] Williams v. Ingersoll, 89 N.Y. 508, 522.

[15] Niles v. Mathusa, 162 N.Y. 546; National Hudson River Bank v. Chaskin, 28 App. Div. 311, 315; Curtis v. Leavitt, 17 Barb. (N.Y.) 309, 364; Young v. Upson, 115 Fed. 192. In 1916, Section 230 of the New York Lien Law was amended to the effect that a mortgage, pledge, or lien on stocks or bonds given to secure the repayment of a loan is, if not recorded, absolutely void against creditors unless such securities are delivered to the mortgagee or pledgee on the day the loan is made. See N.Y. Laws, 1916, c. 348.

[16] Conkling v. Shelley, 28 N.Y. 360; Brackett v. Harvey, 91 N.Y. 214; Spaulding v. Keyes, 125 N.Y. 113; Briggs v. Gelm, 122 App. Div. 102. See Robinson v. Elliot, 22 Wall. 513, 524; People’s Savings Bank v. Bates, 120 U.S. 556, 561.

[17] See note 18, infra.

[18] Young v. Upson, 115 Fed. 192. If it is agreed that the transferor may use the original collateral for his own purposes upon the substitution of other of equal value, the transfer is not thereby invalidated. Clark v. Iselin, 21 Wall. 360 (book accounts); Sexton v. Kessler, 225 U.S. 90 (negotiable securities); Chapman v. Hunt, 254 Fed. 768 (book accounts). Compare Casey v. Cavaroc, 96 U.S. 467.

[19] Compare Mechanics’ Bank v. Ernst, 231 U.S. 60, 67.

[20] Schaupp v. Miller, 206 Fed. 575; Grimes v. Clark, 234 Fed. 604; Gray v. Breslof, 273 Fed. 526, 527.

[21] Mandeville v. Avery, 124 N.Y. 376, 382; Stimson v. Wrigley, 86 N.Y. 332, 338; Dutcher v. Swartwood, 15 Hun (N.Y.) 31.

[22] It was cited in Young v. Upson, 115 Fed. 192 (Circ. Ct.); In re Michigan Furniture Co., 249 Fed. 978 (D. Ct.); and in the opinion here under review.

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Jamie Dimon’s ‘Biggest Disaster’ Is Waiting: Simon Johnson

Jamie Dimon’s ‘Biggest Disaster’ Is Waiting: Simon Johnson


Pot meet Kettle. At least they agreed in using something…MERS.

BLOOMBERG-

Jamie Dimon, chief executive officer of JPMorgan Chase & Co., has harsh words for Fannie Mae and Freddie Mac. They are “the biggest disasters of all time,” Dimon told the Financial Crisis Inquiry Commission last fall, according to his just-released interview.


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The Destruction of Economic Facts

The Destruction of Economic Facts


BusinessWeek-

When then-Treasury Secretary Henry Paulson initiated his Troubled Asset Relief Program (TARP) in September 2008, I assumed the objective was to restore trust in the market by identifying and weeding out the “troubled assets” held by the world’s financial institutions. Three weeks later, when I asked American friends why Paulson had switched strategies and was injecting hundreds of billions of dollars into struggling financial institutions, I was told that there were so many idiosyncratic types of paper scattered around the world that no one had any clear idea of how many there were, where they were, how to value them, or who was holding the risk. These securities had slipped outside the recorded memory systems and were no longer easy to connect to the assets from which they had originally been derived. Oh, and their notional value was somewhere between $600 trillion and $700 trillion dollars, 10 times the annual production of the entire world.


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UNSEALED “Sigma” COMPLAINT | AFTRA Retirement Board Sues JPMorgan Chase

UNSEALED “Sigma” COMPLAINT | AFTRA Retirement Board Sues JPMorgan Chase


“Very Big Money Making Opportunities As The Market Deteriorates”

NYTimes:

In the summer of 2007, as the first tremors of the coming financial crisis were being felt on Wall Street, top executives of JPMorgan Chase were raising red flags about a troubled investment vehicle called Sigma, which was based in London. But the bank chose not to move out $500 million in client assets that it had put into Sigma two months earlier.


[ipaper docId=52816126 access_key=key-2mp3mwbkl12o0ulxjscw height=600 width=600 /]

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The Federal Reserve made $82 billion last year, mostly from securities it bought during financial crisis

The Federal Reserve made $82 billion last year, mostly from securities it bought during financial crisis


From the Wall Street Journal:

The Federal Reserve‘s net income surged 53% to $81.74 billion last year from 2009 mainly due to higher earnings from securities the central bank bought to counter the financial crisis, according to final audited results released Tuesday.

Almost all of that income — $79.27 billion — will be sent back to the U.S. Treasury. The record transfer marks a 68% increase from the $47.43 billion the Fed sent back to Treasury in 2009. The figures were slightly higher than preliminary results published in January.

To fight the financial crisis, the Fed bought securities whose value had collapsed due to fear and uncertainty in markets and set up emergency lending programs for banks and firms, thus boosting its balance sheet. The central bank came under attack for taking too many risk with taxpayers money and putting itself in a position to suffer losses.

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NYC COMPTROLLER LIU: $432 BILLION PENSION FUND COALITION DEMANDS BANK DIRECTORS IMMEDIATELY EXAMINE FORECLOSURE PRACTICES

NYC COMPTROLLER LIU: $432 BILLION PENSION FUND COALITION DEMANDS BANK DIRECTORS IMMEDIATELY EXAMINE FORECLOSURE PRACTICES


A coalition of seven major public pension systems called on the boards of directors of Bank of America (NYSE: BAC), Citigroup (NYSE: C), JP Morgan Chase (NYSE: JPM), and Wells Fargo (NYSE: WFC) to immediately undertake independent examinations of the banks’ mortgage and foreclosure practices.

PR11-01-003
Contact: Sharon Lee / Matthew Sweeney, (212) 669-3747
January 9, 2011

$432 BILLION PENSION FUND COALITION DEMANDS
BANK DIRECTORS IMMEDIATELY EXAMINE
FORECLOSURE PRACTICES

View in pdf
View coalition’s letter to Bank of America, Citigroup, JPMorgan Chase, Wells Fargo

NEW YORK, NY – A coalition of seven major public pension systems called on the boards of directors of Bank of America (NYSE: BAC), Citigroup (NYSE: C), JP Morgan Chase (NYSE: JPM), and Wells Fargo (NYSE: WFC) to immediately undertake independent examinations of the banks’ mortgage and foreclosure practices.

Led by New York City Comptroller John C. Liu on behalf of the five NYC Pension Funds, the coalition also includes the Connecticut Retirement Plans and Trust Funds, the Illinois State Board of Investment, the Illinois State Universities Retirement System, the New York State Common Retirement Fund, the North Carolina Retirement Systems, and the Oregon Public Employees Retirement Fund.

The coalition of pension funds called for the banks’ Audit Committees to launch independent examinations of their loan modification, foreclosure, and securitization policies and procedures.

“This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants,” the coalition advised in its letter.

The coalition members’ insistence on immediate action reflects the urgency of their concerns over mishandled mortgages.  In November, the New York City Pension Funds and Comptroller Liu made a similar request for bank boards to conduct independent policy reviews as part of a shareholder proposal to the banks’ annual meetings in the spring.

“The banks’ boards cannot continue to pretend the foreclosure mess is the result of technical glitches and paperwork errors,” Comptroller Liu said.  “There is a fundamental problem in their procedures that endangers not just homeowners, but shareholders, and local economies.  Given the risks involved, only a swift and unbiased audit can reassure shareholders that the pension funds of 700,000 working and retired New Yorkers are in safe hands.  The boards of directors have no time to waste.”

The coalition represents more than $430 billion in pension fund investments, including $5.7 billion invested in the four banks.

“We don’t know exactly what the banks were doing, and we don’t know if they did it right,” New York State Comptroller Thomas P. DiNapoli said.  “Millions of families have lost their homes, and the investments of the million members of the Common Retirement System have been put at risk.  As investors, we need to understand what happened.  A full and open examination of the procedures used to foreclose on millions of families is the only way to make sure our investments are protected and no one is ever wrongfully evicted from their home.”

Federal Reserve Governor Daniel K. Tarullo testified to the Senate Banking Committee on December 1 that the Federal Reserve’s preliminary findings on bank foreclosure procedures suggested “significant weaknesses in risk-management, quality control, audit and compliance practices as underlying factors contributing to the problems associated with mortgage servicing and foreclosure documentation.”

The Congressional Oversight Panel has estimated that banks’ potential mortgage liability could total $52 billion, borne largely by the four banks contacted by the pension funds.  The Panel’s November 16 report, “Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation,” concluded that banks’ could suffer “disabling damage” if they were found to have misrepresented the quality of loans sold for securitization and forced to reabsorb billions in troubled loans.

“The responsibility for making sure that internal controls and compliance process are in place for mortgage and foreclosure practices rests squarely with these Audit Committees,” said North Carolina State Treasurer Janet Cowell.  “The recent testimonies and studies strongly suggest the need for these Audit Committees to act swiftly and objectively in conducting an independent and comprehensive review of these practices.”

The coalition of pension funds called for the banks to report the findings of their independent examinations in their 2011 proxy statements this spring. As of December 31, 2010, the coalition’s combined holdings in each bank included: 97.1 million Bank of America shares valued at $1.3 billion; 226.6 million Citigroup shares valued at $1.1 billion; 40.7 million JPMorgan Chase shares valued at $1.7 billion; and 50.6 million Wells Fargo shares valued at $1.6 billion.

The New York City Comptroller serves as the investment advisor to, custodian and trustee of the New York City Pension Funds.  The New York City Pension Funds are comprised of the New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund and the Board of Education Retirement System.  The New York City Pension Funds hold a combined 138,786,887 total shares in Bank of America Corporation (NYSE: BAC), Citigroup Inc. (NYSE: C), JPMorgan Chase & Co. (NYSE: JPM), and Wells Fargo & Company (NYSE: WFC) for a combined asset value of $1,933,160,319 as of 12/31/2010.

The coalition’s letters to each bank are available on Comptroller Liu’s website:
http://comptroller.nyc.gov/press/2011_releases/pr11-01-003.shtm

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ALLSTATE INSURANCE Co. v. COUNTRYWIDE, BANK OF AMERICA, MOZILO et al

ALLSTATE INSURANCE Co. v. COUNTRYWIDE, BANK OF AMERICA, MOZILO et al


Causes of Action:

Common law-fraud; aiding and abetting common-law fraud; negligent misrepresentation; and successor and vicarious liability

read the full complaint below…

[ipaper docId=46032654 access_key=key-1x8xbzdx6t2jo6fgkzy9 height=600 width=600 /]

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Shareholder Claims Against Lender Processing Services Investigated by Goldfarb Branham LLP

Shareholder Claims Against Lender Processing Services Investigated by Goldfarb Branham LLP


DALLAS–(BUSINESS WIRE)– Goldfarb Branham LLP is investigating whether certain officers and directors of Lender Processing Services, Inc. (NYSE: LPS) violated state and federal securities laws due to statements the company made about its home foreclosure procedures. Concerned LPS shareholders are urged to contact securities attorney Hamilton Lindley at 877-583-2855 or hlindley@goldfarbbranham.com about their rights and remedies.

“According to a class action complaint, LPS failed to disclose that its DocX subsidiary used ‘robo signers’ to falsify documents and that LPS engaged in improper fee shifting with foreclosure attorneys to hide these deceptive practices,” said securities lawyer Hamilton Lindley. “After a company press release commented on these allegations, LPS stock price plummeted 13 percent.”

Goldfarb Branham LLP lawyers have significant experience representing shareholders and whistleblowers in securities lawsuits nationwide. The firm may be retained without financial obligation or cost to its clients. Lender Processing Services investors who purchased stock before or between July 29, 2009 and October 4, 2010, and continue to hold their shares, should contact the firm at hlindley@goldfarbbranham.com or 877-583-2855 to learn about their rights.

Goldfarb Branham LLPHamilton Lindley, 214-583-2233877-583-2855 Toll Free214-583-2234 Facsimile hlindley@goldfarbbranham.com

Source: Goldfarb Branham LLP

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Two Additional Law Firms Announce FL CLASS ACTION: Alleging Lender Processing Service “LPS” Violated Federal Securities Laws

Two Additional Law Firms Announce FL CLASS ACTION: Alleging Lender Processing Service “LPS” Violated Federal Securities Laws


This class action was commenced in the United States District Court for the Middle District of Florida on behalf of purchasers of LPS securities between July 29, 2009 and October 4, 2010 (the “Class Period”).

The following Firms have made announcements on:

12/9

Law Offices of Howard G. Smith.

12/10

Lieff Cabraser Heimann & Bernstein, LLP

The Complaint alleges that during the Class Period the Company and certain of its executive officers violated federal securities laws by issuing material misrepresentations to the market concerning the Company’s business, operations and financial performance, thereby artificially inflating the price of LPS securities.

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GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Advertise your business on StopForeclosureFraud.com
Kenneth Eric Trent, www.ForeclosureDestroyer.com

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