Investment Fraud Lawyer Blog

According to a whistleblower lawsuit filed recently, J.P. Morgan Chase’s credit card services division sold nearly $200 million worth of supposed credit card judgments to collection agents. Each judgment was represented by Chase to be an enforceable court order against a Chase credit card holder to pay a certain amount of debt owed. But many of the judgments were apparently bogus. Some were not judgments at all and, in some cases, Chase reportedly owed the customer money!

Many others were missing proofs of judgment or other essential information and almost 25 percent misstated how much the credit card customer owed, according to the whistleblower. When Chase superiors were made aware of these problems, they allegedly insisted that employees sell the stuff anyway and robo-sign the bogus sales documentation. When one mid-level executive refused to do that, she was fired. Consequently, people who owed nothing were harassed and collection agents were also defrauded. (“J.P. Morgan Chase’s Ugly Family Secrets Revealed,” by Matt Taibbi, Rolling Stone).

Continue reading "Were JP Morgan Chase Credit Card Holders Victimized By Chase?" »

Could Wall Street’s role in creating the recent financial crisis boil down to something as simple as a conditioned reflex? Apparently so, according to William D. Cohan, a former investment banker. Cohen writes: Wall Street “rewards bankers and traders for the revenue they generate by constantly selling whatever comes across their desks, regardless of its quality, is terribly, terribly broken. People are simple: They do what they are rewarded to do, and they will continue to do that over and over again until they are rewarded to do something else.” “Cohan: Wall Street Confesses to Bonus Culture Ills.”

Continue reading "Wall Street Compensation Systems are the Roots of Many Evils" »

Just when you think you could not become more cynical, Citigroup comes along and throws an award ceremony honoring employees who concealed evidence of mortgage fraud from the Federal Housing Administration (FHA). To make matters worse, the ceremony occurred in January 2011, long after “too-big-to-fail” Citigroup received $45 billion in taxpayer bailout money (the most of any financial institution).

Continue reading "Citigroup 'Honors' Employees for Covering Up Fraud" »

What’s the difference between a Wall Street bank and a whistleblower? Nothing! While Wall Street railed against whistleblower protections for employees in Dodd-Frank, turns out they are falling all over themselves to blow the whistle on each other. Why? Because the first to tattle gets protections that are not offered to the second to tattle. (“UBS Turning Whistleblower in Libor Probe,” Bloomberg). But wouldn’t it be better to encourage more employee whistleblowers so as not to have to dispense protections to corporate wrongdoers that make getting caught just a cost of doing business?

Continue reading "Now Even Wall Street Firms Are Becoming Whistleblowers" »

Congratulations to whistleblower Sherry Hunt of Silex, Missouri, a vice president of quality assurance at CitiMortgage, who will receive approximately $31.7 million or 20 percent of the $158.3 million that Citigroup agreed to pay to settle a False Claims Act suit involving mortgage fraud filed by the U.S. Department of Justice. It is the second-largest settlement ever in a mortgage-fraud case.

Continue reading "Citigroup Whistleblower Hits Jackpot" »

The Securities and Exchange Commission reports that it is receiving about seven (7) whistleblowers tips per day, and has received 334 tips in the first 50 days since the program became fully operational on August 12. At the current rate, the program should receive 2,438 tips a year. (“Whistle-Blowers, 7 per Day, Seek SEC Bounties,” Bloomberg).

Continue reading "A New Way to Get Rich on Wall Street - Become a Whistleblower" »

Members of Congress are repeatedly using their positions to personally profit at the expense of other investors as described in Hoover Institute fellow Peter Schweizer’s recently published a book entitled “Throw Them All Out.” Among other things, it details insider trading by Congressmen that would be clearly illegal if done by anyone else. Last Sunday, a 60-Minutes report featured Schweizer, his book and a number of Congressmen, throwing a harsh light on this practice (“It’s time to ban insider trading by Congress,” Roger Parloff, CNNMoney).

Continue reading "Investment Corruption Runs Deep in Congress" »

The Securities and Exchange Commission improperly destroyed internal documents and the explanation it gave to the National Archives was “inaccurate or misleading,” according to David S. Hilzenrath’s Washington Post article entitled “SEC misled Archives on destroying records, inspector general finds,” citing the Inspector General’s report on the subject.

Continue reading "Inspector General Confirms that SEC Improperly Destroyed Documents" »

What kind of regulator would alter documents requested by its regulator? The Financial Industry Regulatory Authority (FINRA) does, according to the Securities and Exchange Commission. In 2008, employees at FINRA’s Kansas City office altered three documents just hours before producing them to the SEC pursuant to a document request. The documents were records of staff meeting minutes.

Continue reading "Corruption at Securities Self Regulatory Organization" »

Most investors would obviously like to be out of a stock BEFORE a fraud hits the fan. John Waggoner’s recent article entitled “Audit fees can serve as [an] early red flag—If they’re sky-high, that could mean stock trouble” provides a valuable tip that may allow investors to unload a stock before it tanks. He is almost certainly correct in saying that by the time investors read about an auditor’s “substantial doubt about [the company’s] ability to continue as a going concern,” it is probably too late to sell.

Continue reading "High Audit Fees May Be Indicative of Big Problems" »

Bank of New York Mellon has been sued in separate civil lawsuits filed by the U.S. Department of Justice and the Attorney General of New York seeking damages in excess of $2 billion related to BNY’s alleged practice of fraudulently misleading and overcharging public pension funds, universities, and other clients for foreign exchange (FX) currency transactions. In essence, the complaints allege that BNY Mellon profited by giving its foreign exchange clients the worst exchange rates of the day, and even created fake trades.

Continue reading "Forex Fraud Case Reveals the Value of Whistleblowers" »

The SEC’s Inspector General, David Kotz, has reportedly confirmed that the SEC improperly shredded documents related to closed investigations, and misled another federal agency, the National Archives and Records Administration, which had confronted the SEC last year about record destruction. Mr. Kotz’s report was issued to the SEC and has not officially been made public.

Continue reading "SEC Inspector General Confirms that SEC Improperly Destroyed Records" »

Jobs at Wall Street banks are being eliminated at an increasingly rapid pace and this bodes ill for many employed in the financial services sector.

Bloomberg’s recent article “UBS Bankers Face Dwindling Options for Jobs” underscores this situation. Those pushed out at UBS will doubtless find few opportunities on Wall Street. The bigger story, however, is that what is happening at UBS is just a small part of the overall “brain drain” occurring all across Wall Street these days, as the larger global banks are cutting jobs at the fastest rate since 2008.

Continue reading "Job Cuts at UBS - A Microcosm of What's Happening on Wall Street" »

A Bank of America employee will collect $930,000 from his former employer, Bank of America, for being fired in violation of the whistleblower protections. The employee blew the whistle on fraud at Countrywide Financial Corp. and led internal investigations that found “pervasive wire, mail and bank fraud involving Countrywide employees,” according to the U.S. Department of Labor. He was terminated soon after the bank acquired Countrywide in 2008. In addition, Bank of America must reinstate the whistleblower. He claimed that others who tried to report fraud to Countrywide’s employee-relations department suffered persistent retaliation. The $930,000 includes back wages, interest, compensatory damages and attorney fees.

Continue reading "Whistleblower Problems Add to Bank of America's Woes" »

More than a year after it was created by the Dodd-Frank financial reform act, the U.S. Securities and Exchange Commission (SEC) opened its Office of the Whistleblower on August 12, 2011. According to a statement released by SEC Director of Enforcement Robert Khuzami, “early and quick law enforcement action is the key to preventing securities fraud and avoiding investor losses, and the whistleblower program gives us the tools to help achieve that goal.” Investor rights attorney Craig T. Jones of Page Perry LLC in Atlanta agrees: “This program will catch fraud sooner because it gives Wall Street insiders a significant cash incentive to be the first to come forward with information about abusive practices. Not only will whistleblowers and their attorneys profit from doing the right thing, but the investing public as a whole will benefit.”

Continue reading "New SEC Whistleblower Office Opens" »

Bank of New York Mellon Corp. admits it did not act in its clients’ best interest in pricing foreign currency trades but says its clients are to blame because they knew or should have known what was going on, according to a Wall Street Journal article by Carrick Mollencamp and Tom McGinty entitled “Inside a Battle Over Forex.”

Continue reading "The Forex Mess Gets Nasty" »

The Securities and Exchange Commission has voted to allow whistleblower employees to go straight to the SEC with information about securities law violations without reporting it to their employer, and still collect the full amount of the monetary reward authorized by the Dodd Frank financial reform act, according to a May 25, 2011 article in InvestmentNews entitled “SEC lets whistle-blowers bypass internal programs.” The SEC approved the rule by a 3-2 vote on Wednesday, May 25, 2011.

Continue reading "SEC Approves Whistleblower Rewards Program" »

The financial industry implosion of 2008 gave birth to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). One of the most highly publicized sections of Dodd-Frank are the “whistleblower” provisions.

Continue reading "Dodd-Frank: "Whistleblower" Provisions" »

A California federal court has unsealed a whistleblower suit accusing AIG, Goldman Sachs, Merrill Lynch, Deutsche Bank, and Societe Generale of perpetrating a fraudulent scheme to dupe the Federal Reserve Bank of New York and the U.S. Department of the Treasury into issuing AIG more than $137 billion in bailout loans during the 2008 financial crisis, according to a Law 360 article by Derek Hawkins entitled “Whistleblower Accuses AIG, Banks of $137B Bailout Fraud,” referencing an amended complaint that had been under seal since September 2010.

Continue reading "Financial Services Firms Accused of Duping the Government out of $137 Billion" »

Bloomberg commentator Susan Antilla smells a rat. Wall Street is “fighting full-tilt” against the SEC’s whistleblower proposal that would tend to expose hidden wrongdoing. The SEC is “barraged” with their objections. “That’s not how people behave unless they’re hiding something,” Ms. Antilla says in her Bloomberg.com article, “Madoff Repeat Odds Rise With Neutered Watchdog….”

Continue reading "New Whistleblower Law Has Corporations Running Scared" »