This story appeared in Bank Digest.
The Federal Financial Institutions Examination Council has released an updated edition of its white paper on mortgage fraud detection and deterrence. The primary objective is to help examiners understand, identify, and detect mortgage fraud schemes and elements. The white paper defines various types of fraud, gives examples of how individuals commit fraud, provides a list of red flags, and outlines best practices.
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This story appeared in Bank Digest.
The New York Attorney General has filed a civil suit alleging that Bank of American, its former CEO Kenneth Lewis and its former CFO Joseph Price, misled shareholders and the federal government in order to complete a merger with Merrill Lynch. According to the suit, Bank of America's management intentionally failed to disclose massive losses at Merrill so that shareholders would vote to approve the merger and, once the deal was approved, manipulated the government into saving the deal with billions in taxpayer funds by falsely claiming that Bank of America otherwise would back out. Special Inspector General for the Troubled Asset Relief Program Neil Barofsky has assisted in the suit. House Oversight and Government Reform Committee Domestic Policy Subcommittee Chairman Dennis Kucinich, D-Ohio, whose subcommittee held five hearings investigating the merger, called the suit “a critical step towards ending the culture of corruption on Wall Street.”
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This story appeared in Jim Hamilton's World of Securities Regulation.
The SEC's Enforcement Division named leaders of national specialized units it has established in five priority areas dedicated to particular highly specialized and complex areas of securities law. The division also created a new Office of Market Intelligence that will be responsible for the collection, analysis, and monitoring of the tips, complaints and referrals received by the agency. In addition, the Commission announced a series of measures to further strengthen its enforcement program by encouraging greater cooperation from individuals and companies in the agency's investigations and enforcement actions.
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U.S. District Judge Jed Rakoff of the Southern District of New York excluded expert testimony submitted by the Bank of America in its defense to civil charges brought by the SEC. (SEC v. Bank of America Corp.) The Commission charged that the bank falsely stated in the proxy materials that solicited approval of its purchase of Merrill Lynch that the firm was prohibited from paying bonuses without the bank’s subsequent consent. As alleged, the bank had already consented in writing to Merrill’s paying up to $5.8 billion in such bonuses.
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This story appeared in Jim Hamilton's World of Securities Regulation.
The first insider trading action filed by the SEC alleging misconduct in the credit default swaps market (SEC v. Rorech) survived a motion for judgment on the pleadings. The complaint, filed in the U.S. District Court for the Southern District of New York, alleged Renato Negrin, a former portfolio manager at hedge fund investment adviser Millennium Partners, L.P., and Jon-Paul Rorech, a salesman at Deutsche Bank Securities Inc., engaged in insider trading in the credit default swaps of VNU N.V., an international holding company.
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