William McCloskey worked for Ameriquest from November 2004 till March 2005. William was fired after he reported illegal activity behind the walls of his Ameriquest branch, which virtually mirrored all of the widespread reports about the company (to local detectives, the PA Attorney General, the S.E.C. and the F.B.I).
William sued Ameriquest Mortgage Company under the whistleblower provision of the Sarbanes Oxley Act of 2002. The act pertained to publicly traded companies and issuers of securities under Section 15(d) and 12h-3 of the Securities and Exchange Act of 1934.
A former top U.S. official in charge of investigating the financial crisis said the government has concluded that many inquiries of wrongdoing by financial executives can’t succeed as criminal prosecutions.
“There’s been a realization and a more deliberate targeting by the Department of Justice before we launch criminally on some of these cases” said David Cardona, who was a deputy assistant director at the Federal Bureau of Investigation until he left last month for a job at the Securities and Exchange Commission. The Justice Department has decided it is “better left to regulators” to take civil-enforcement action on those cases, …
Sure he will do all in his power to squirm out of this one.
REUTERS-
Goldman Sachs Group Inc Chief Executive Officer Lloyd Blankfein may be asked to testify in a market regulator’s insider-trading case against a former director of the Wall Street bank, a judge ruled.
The U.S. Securities and Exchange Commission has accused Rajat Gupta, a former board member at Goldman and Procter & Gamble, of giving inside tips about the two companies to his friend Raj Rajaratnam in 2008 and 2009.
The Securities and Exchange Commission is expected to be filing charges related to the sale of mortgage-linked securities against more Wall Street firms. These should hopefully conclude the various probes arising out of the financial meltdown, at least in the near term.
“It’s fair to say we’re not at the end,” said Kenneth Lench, chief of the structured and new products unit in the SEC enforcement division in a recent interview with the Financial Times. “There will be a handful of additional cases, I believe, over the next several months.”
The news will affect all the banks (NYSEARCA:KBE) involved in the mortgage debacle: …
The Securities and Exchange Commission is warning staffers that their personal brokerage account information may have been compromised, after it uncovered security flaws with an ethics compliance program.
The SEC put the program in place after its internal watchdog raised concerns about possible insider trading among SEC staffers.
Washington, DC – The SEC Inspector General has completed a six-month investigation into allegations of conflict of interest against SEC’s former general counsel, David Becker, concerning his role in the Commission’s work relating to the victims of the Bernie Madoff Ponzi scheme. The IG’s final report was issued publicly today. Ranking Member Elijah E. Cummings issued the following statement:
“In its report, the IG’s office found sufficient evidence of Mr. Becker’s conflict of interest to call into question the integrity of the process used by the Commission to decide how to value fictitious profits made under the Madoff scheme. The IG also found that procedures at the SEC ethics office broke down and failed to prevent a conflict of interest from potentially tainting the agency’s work.
“I believe the victims of the Madoff scheme deserve to know that the SEC’s decision in this case was not tainted by conflicts of interest. The IG recommended that the Commission take a second look and conduct a revote of its decision. I strongly urge the Commission to take these appropriate steps in order to give Madoff’s victims that peace of mind.
“I hope that the Commission will adopt the IG’s other recommendations as well. I am encouraged that Chairman Schapiro asked SEC Inspector General H. David Kotz to open this investigation, which was a good faith effort on her part to get to get to the bottom of this issue. I am also encouraged that Chairman Schapiro decided last year to revamp the office of ethics, to hire new ethics counsel for the agency, and to provide greater resources to that office.”
Massive Collateral Damage has been done and in the age of having files held in electronic data, this is very disturbing.
Executive Gov-
The Securities and Exchange Commission has forbidden its employees from destroying investigative documents, as fallout spreads from a whistleblower’s recent claim that the agency has illegally destroyed thousands of preliminary investigation documents.
An SEC attorney alerted Sen. Chuck Grassley (R-Iowa) of the possible crimes in August. The whistleblower said the documents in question were “matters under inquiry,” including reviews of AIG, Morgan Stanley, Lehman Brothers and Bernie Madoff.
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.
Thanks to Darcy Flynn, a longtime attorney at the Securities and Exchange Commission, we now have all the ammunition we need to do what should have been done years ago: terminate the SEC, with extreme prejudice, and in its place construct a new regulatory watchdog for Wall Street free of obvious conflicts of interest.
Flynn’s courage has almost been lost in all the recent apocalyptic talk of earthquakes and hurricanes, but a few weeks back he did something remarkable. After raising concerns internally at the SEC last year — and getting nowhere — Flynn went public and alleged in a formal whistleblower complaint that for at least 17 years the SEC “followed a policy of systematically destroying documents” related to what are known as Matters Under Investigation, or MUIs, most of which were focused on possibly illicit or illegal behavior at Wall Street firms. MUIs are the first step in investigating a case that may lead to a formal SEC inquiry.
A whistleblower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation’s worst financial criminals.
Rollingstone-
Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.
WASHINGTON (MarketWatch) — The Securities and Exchange Commission may have destroyed documents and compromised enforcement cases involving activity at large banks and hedge funds during the height of the financial crisis in 2008, according to allegations made by a lawmaker on Wednesday.
“Traditionally, a bank would tell the Department of Justice when an employee engaged in crimes, but what do you do when the bank itself is run by a criminal enterprise?” said Solomon L. Wisenberg, former chief of a Justice Department financial institutions fraud unit.
NYT–
As the financial storm brewed in the summer of 2008 and institutions feared for their survival, a bit of good news bubbled through large banks and the law firms that defend them.
Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.
(Reuters) – U.S. regulators could file civil fraud charges against some credit-rating agencies for their role in developing mortgage-bond deals that helped bring about the financial crisis, the Wall Street Journal reported, citing people familiar with the matter.
The Journal said the Securities and Exchange Commission was reviewing the conduct of companies including McGraw Hill’s Standard and Poor’s and Moody’s Investors Service owned by Moody’s Corp on at least two mortgage-bond deals.
Here’s a lesson for the government and Ally Financial in particular: With bank investors fretting about the potential costs of soured-mortgage claims, it is best to get the details out in the open.
That’s the opposite of how Ally and Freddie Mac handled a payment last year of $325 million by the firm to the mortgage company to settle mortgage-repurchase claims. Neither Ally, General Motors’ former financing arm now majority-owned by the government, nor government-owned Freddie disclosed the amount of the settlement when it occurred. The fact that a deal was struck at all was only disclosed by Ally and …
It Teetered, It Tottered, It Was Bound to Fall Down
This article was adapted from “Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon,” by Gretchen Morgenson, a business reporter and columnist for The New York Times, and Joshua Rosner, a managing director at the independent research consultant Graham Fisher. The book is to be published on Tuesday by Times Books.
MARC COHODES had heard the stories.
Heard how these guys would give a mortgage to anyone — even to a corpse, the joke went. How the place was run like a frat house.
You wouldn’t believe the things that go on there, his brother-in-law had told him.
JPMorgan Chase & Co. (JPM) received a subpoena from the U.S. Securities and Exchange Commission over failed mortgages, a person familiar with the investigation said, as the agency probes banks including Credit Suisse Group AG (CS) for allegedly failing to share refunds from sellers of faulty debt.
“Credit Suisse is now the subject of an investigation by the Securities and Exchange Commission, which issued a subpoena this week seeking the same types of documents as MBIA seeks with this motion,” the bond insurance unit of Armonk, New York-based MBIA Inc. (MBI), said in the filing in New York State Supreme Court. The document, dated April 29, was filed today.
As the housing market deteriorated in April 2007, Fannie Mae Chief Executive Officer Daniel Mudd reported to Congress on his company’s health. The firm’s exposure to subprime loans, he told lawmakers, “remains minimal, less than 2.5 percent of our book.”
Within 18 months, U.S. regulators seized the government- sponsored mortgage firm and its smaller sibling, Freddie Mac, after losses on soured loans pushed them to the brink of insolvency. The two firms have drawn more than $150 billion in life support from the Treasury since then.
Washington, D.C., April 5, 2011 – The Securities and Exchange Commission today announced that Wells Fargo Securities LLC agreed to settle charges that Wachovia Capital Markets LLC engaged in misconduct in the sale of two collateralized debt obligations (CDOs) tied to the performance of residential mortgage-backed securities as the U.S. housing market was beginning to show signs of distress in late 2006 and early 2007.
The SEC’s order found that Wachovia Capital Markets violated the securities laws in two respects. First, Wachovia Capital Markets charged undisclosed excessive markups in the sale of certain preferred shares or equity of a CDO called Grand Avenue II to the Zuni Indian Tribe and an individual investor. As detailed in the order, Wachovia Capital Markets marked down $5.5 million of equity to 52.7 cents on the dollar after the deal closed and it was unable to find a buyer. Months later, the Zuni Indian Tribe and the individual investor paid 90 and 95 cents on the dollar. Unbeknownst to them, these prices were over 70 percent higher than the price at which the equity had been marked for accounting purposes.
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