Collateralized Debt Obligation_1

Post on: 23 Апрель, 2015 No Comment

Current Investigations

Posts tagged collateralized debt obligation

Judge Questions Citigroup CDO Settlement Deal

We recently blogged about a proposed deal between Citigroup and the SEC to resolve fraud charges related to collateralized debt obligations. The SEC had reported that Citigroup, “[had] agreed to settle the…charges by paying a total of $285 million, which will be returned to investors.”

The SEC “charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market in which Citigroup bet against investors as the housing market showed signs of distress.”

Since the $285 million settlement agreement was announced, however, a US District Judge has questioned the agreement. Bloomberg.com reports that the “settlement with the U.S. Securities and Exchange Commission was questioned by a federal judge who asked both sides to justify the accord as fair.” Judge Jed Rakoff set a date of November 9 th for a hearing regarding the proposed settlement.

In his response to the proposed settlement which included 9 key questions that he wants answered, according to Bloomberg, Judge Rakoff, “told the parties to address whether the public has an interest in determining if the SEC claims against Citigroup are true and how the amount of loss to victims and the proposed judgment against the bank were calculated.” He further asked, “How can a securities fraud of this nature and magnitude be the result simply of negligence?”

The SEC plans on defending the proposed agreement and The White Law Group will continue to monitor this situation as it progresses.

If you have concerns about your investment in Citigroup or other CDO’s and would like to speak to a securities attorney about the investments and your potential for recovery you may call our Chicago office at 312/238-9650 .

www.whitesecuritieslaw. com .

Citigroup to Pay $285 Million Settlement for Fraud Case

According to the Securities and Exchange Commission they, “charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market in which Citigroup bet against investors as the housing market showed signs of distress.”

The CDO would default and leave investors with massive losses while Citigroup reportedly “made $160 million in fees and trading profits.” They did this by taking “a proprietary short position against those mortgage-related assets from which it would profit if the assets declined in value. Citigroup did not disclose to investors its role in the asset selection process or that it took a short position against the assets it helped select.”

While not admitting or denying the SEC’s findings, Citigroup has agreed to a settlement to resolve the fraud charges against them. The SEC reports that Citigroup “has agreed to settle the…charges by paying a total of $285 million, which will be returned to investors.”

SEC enforcement director Robert Khuzami had some stern words for Citigroup, he said, “The securities laws demand that investors receive more care and candor than Citigroup provided to these CDO investors.”

www.whitesecuritieslaw.com .

APS Financial Corporation Expelled By FINRA

Financial Industry Regulatory Authority (FINRA) recently announced that it has expelled APS Financial Corporation, located in Austin, Texas, barred the firms former President, George Conwill, and barred Peter Aman, a former broker at the firm, in a scheme which overcharged an elderly investor by $1.2 million.

FINRA found that Aman charged mark-ups ranging from 4.15 percent to fraudulently excessive mark-ups as high as 67 percent when executing 45 transactions for customers of APS Financial. Forty-three of these excessive or fraudulent mark-ups were related to transactions for the accounts of a single elderly investor. Aman overcharged this elderly investor by more than $1.2 million through undisclosed mark-ups, including $767,000 in fraudulently excessive mark-ups.

FINRA also barred Conwill and expelled APS Financial for rule violations relating to trading in corporate high yield bonds, collateralized mortgage obligations and collateralized debt obligations. Both APS Financial and Conwill were cited for charging excessive mark-ups and supervision violations.

In total, APS Financial Corporation overcharged customers on 59 transactions. Conwill approved all 53 mark-ups above 5 percent, including 42 of the 43 excessive or fraudulent mark-ups for the elderly investors accounts.

FINRA also determined that APS Financial Corporation failed to establish and maintain an adequate supervisory system and otherwise failed to reasonably and properly supervise the firm and its registered representatives so as to detect and prevent the mark-up violations. FINRA found that Conwill, as the firms president at the time of the violations, failed to take reasonable steps to ensure that the firm established and maintained an adequate supervisory system, and failed to reasonably and properly supervise the firms registered representatives.

APS Financial Corporation, Aman and Conwill settled these matters without admitting or denying the allegations, but consented to the entry of FINRAs findings.

If you have questions about investments you made with APS Financial, The White Law Group may be able to help. For a free consultation, call the firm’s Chicago office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.

www.whitesecuritieslaw.com .

FINRA Fines Goldman Sachs

FINRA recently announced that it has fined Goldman, Sachs & Co. $650,000 for failing to disclose that two of its registered representatives, including Fabrice Tourre, had received formal notices from the Securities and Exchange Commission (SEC) that they were the subjects of investigations. Tourres Wells Notice was issued in connection with the SECs investigation of an offering of a synthetic collateralized debt obligation (CDO) called ABACUS 2007-ACI (Abacus).

Firms are required to update a representatives regulatory record by filing a Form U4 reporting the receipt of a Wells Notice within 30 days of learning of the Notice. In Tourres case, his Form U4 was not amended until May 3, 2010, more than seven months after Goldman Sachs learned of his Wells Notice, and only after the SEC filed a complaint against Goldman Sachs and Tourre on April 16, 2010.

FINRA found that Goldman Sachs did not have adequate supervisory procedures and systems in place to ensure that required disclosures were made when registered employees received notice that they were the subject of a regulatory investigation. FINRA also found that Goldman Sachs’ written supervisory procedures, manuals and policies were inadequate. Nowhere did the procedures and policies mention Wells Notices specifically and the need to make disclosure when one was issued.

As part of the settlement, Goldman Sachs also agreed to review its supervisory procedures and systems in the reporting area and to implement and document any necessary remedial measures.

In concluding this settlement, Goldman Sachs neither admitted nor denied the charges, but consented to the entry of FINRAs findings.

If you have questions regarding investments you made with Goldman Sachs, The White Law Group may be able to help. For a free consultation, call the firm at 312-238-9650.

www.whitesecuritieslaw.com.