Friday, April 3, 2015

Mellon For Breakfast

"Mellon settles suits on currency transactions for $714 million" Associated Press  March 19, 2015

ALBANY, N.Y. — New York and federal authorities have reached a $714 million settlement with Bank of New York Mellon Corp. in lawsuits alleging it fraudulently overcharged customers on currency trades for a decade.

I'm sure they made a lot more during the decade they cheated us all! This is the kickback to the government that let them get away with it.

Lawsuits filed in 2011 said BNY Mellon misrepresented rates it would give currency exchanges, providing clients nearly the worst rates of the trading day while promising the best, and then obtaining the best rates for itself — and keeping the difference.

The investigation began with a 2009 whistle-blower complaint led by Harry Markopolos, the financial specialist who alerted authorities to the Bernard Madoff scheme. Clients included public pension funds as well as mutual fund firms such as Fidelity Investments.

Why is that guy having to do all the heavy lifting when there is a $uppo$edly an $EC?

The Massachusetts state pension fund also was a client of BNY Mellon and had alleged that the company overcharged it by $29 million. In a separate settlement in 2013 with Massachusetts Secretary of State William F. Galvin, the bank agreed to reimburse the pension fund $15.5 million without admitting wrongdoing.

Hey, they stole from everybody, with JPMorgan leading the looting related to LIBOR -- which $eems to have fallen right down the old memory hole.

New York Attorney General Eric Schneiderman and US Attorney Preet Bharara said the bank misled customers and breached their trust. “The bank repeatedly deceived its customers and is paying a heavy penalty for it,’’ Bharara said in a statement.


But no jail time or criminal charges for this le$$ than $lap on the wrist, huh?

The bank said this fully resolves lawsuits and enforcement proceedings concerning its standing instructions on foreign-exchange services for custody clients before early 2012.

“We are pleased to put these legacy FX matters behind us, which is in the best interest of our company and our constituents. We continue to improve our product offerings to ensure they are meeting client demand,” the bank said in a statement.

Under the settlement, the bank agreed to pay the Department of Justice and the New York attorney general $167.5 million each. The Department of Labor will receive $14 million, and the Securities and Exchange Commission, with which the company has reached a settlement in principle, will receive $30 million.

Like I said, their kickback and cut of the loot. But the state is looking out for you, yup.

The company also has agreed to pay $335 million to settle the customer class-action litigation.

Boston-based State Street Corp. also has been part of the investigations into foreign-exchange trade pricing. Those cases are ongoing.

The company in February restated its fourth-quarter 2014 earnings to add $65 million to its legal reserves for potential settlements in the foreign exchange cases. It has now set aside a total of $185 million for these issues, $115 million of that in the fourth quarter. 

If I $ee anything in the Globe's bu$ine$$ pages I'll give it a link.


Why not ju$t ab$olve them all?

"US attorney to challenge insider trading ruling" by Matthew Goldstein and Ben Protess, New York Times  January 25, 2015

NEW YORK — When an appeals court overturned the convictions of two hedge fund managers last month, the ruling reverberated throughout the legal world and rewrote the government’s insider trading playbook.

Now, federal prosecutors in Manhattan are unveiling their strategy to reverse the ruling, or at least curtail it.

In a filing late Friday, the prosecutors were expected to mount a two-prong challenge to the appellate ruling, according to a spokesman for Preet Bharara, the US attorney in Manhattan. Bharara, the spokesman said, will ask the same three-judge panel that issued the ruling to revisit its decision, which imposed the greatest limits on insider trading prosecutions in decades.

As an alternative, the spokesman said, Bharara’s filing will propose the legal equivalent of a do-over in a process known as en banc. The process would lead every judge on the 2d US Circuit Court of Appeals to hear the case.

While both requests could be long shots — since 2012, the 2d Circuit has held only a single en banc hearing, involving as many as 15 appellate judges — the prosecutors’ requests might lay the groundwork for an appeal to the US Supreme Court. That route could fail as well, or even generate a worse outcome for the government, but it also might nudge the three-judge panel to voluntarily clarify aspects of its ruling.

For Bharara, the outcome is critical. His office has racked up more than 80 convictions from his campaign to root out insider trading on Wall Street.

And now, his decision to appeal will escalate a battle that will shape the boundaries of insider trading law.

It also, if successful, could stem the broader fallout from the three-judge panel’s decision to overturn the convictions of Todd Newman and Anthony Chiasson, the hedge fund managers who were tried together in 2012.

The panel ruled that the judge who presided over their trial set too low a bar for conviction when instructing jurors.


"Appeals court deals blow to US in insider cases" by Ben Protess and Matthew Goldstein, New York Times  December 10, 2014

NEW YORK — A federal appeals court Wednesday overturned two of the government’s signature insider trading convictions, a stunning blow to prosecutors and their campaign to root out illegal activity on Wall Street.

In a 28-page decision that could rewrite the course of insider trading law and sharply curtail its boundaries, the US Court of Appeals for the Second Circuit in Manhattan tossed out the case against two former hedge fund traders, Todd Newman and Anthony Chiasson. Citing the trial judge’s “erroneous” instruction to jurors, the court not only overturned the convictions but threw out the cases altogether.

“We conclude that the jury instructions were erroneous and that there was insufficient evidence to support the convictions,” Judge Barrington D. Parker wrote on behalf of a three-judge panel that also included Judge Ralph K. Winter and Judge Peter W. Hall.

The unanimous decision — the first higher court rebuke of an insider trading case filed by Preet Bharara, the US attorney in Manhattan — could portend a broader unraveling of Bharara’s insider trading crackdown. It will also offer a blueprint for traders to defend future insider trading cases, a development that is likely to unnerve prosecutors while delighting defense attorneys.

For now, the decision imperils at least one other of Bharara’s milestone insider trading convictions: Michael Steinberg, of SAC Capital Advisors, the once-giant hedge fund Bharara indicted last year. The judge who presided over Steinberg’s trial, Richard J. Sullivan, also handled the trial of Chiasson and Newman.

The appeals court’s decision Wednesday hinged on Sullivan’s instructions to jurors, ruling that he set too low a bar for proving insider trading. At the heart of the case is whether jurors needed to conclude that Newman and Chiasson knew that corporate insiders at technology companies were improperly leaking confidential information to hedge funds — in exchange for some “personal benefit.”

Sullivan said the government need not prove that Chiasson and Newman knew of the personal benefit. But defense lawyers contended that his instructions ran afoul of a 30-year-old US Supreme Court ruling, and the appeals court agreed.

When the appeals court first signaled its skepticism about the case at oral arguments in April, prosecutors feared that a ruling could effectively legalize Wall Street’s edge in trading. The ruling, prosecutors argued, would encourage higher-ranking traders to distance themselves from insider leaks, even when reaping big profits from the tips.

But the appellate court took a broad swipe at the government’s decision to take aim at traders like Newman and Chiasson who did not directly receive the insider tips. Prosecutors placed them at the end of a four- or five-person chain of information that started with insiders at the technology companies, Dell and Nvidia, and wound its way through a network of traders before reaching Chiasson and Newman.

Slamming the “doctrinal novelty” of recent insider trading prosecutions, the appeals court argued that “the government has not cited, nor have we found, a single case in which tippee as remote as Newman and Chiasson have been held criminally liable for insider trading.”

The ruling will make it harder for prosecutors to prove that a tipper received a personal benefit for passing on information. In the past, prosecutors had argued that mere friendship is enough to prove that a tipper got a benefit from passing on an illegal tip to a friend. But the appellate court took issue with that low standard, saying the government must also show that the tipper expected to receive something more valuable in the future from sharing the information.


The courts were created to counter the power of money, and now that have been overtaken by it.


"A federal appeals court refused Friday to reconsider a ruling that dealt a blow to US Attorney Preet Bharara and the prosecution of insider trading on Wall Street. The court said the government’s flurry of prosecutions, which produced more than 80 convictions since 2008, was “increasingly targeted at remote tippees many levels removed from corporate insiders.” Prior cases generally involved defendants directly participating in the passing of secrets, the court said. At the time, Bharara issued a statement saying the ruling “interprets the securities laws in a way that will limit the ability to prosecute people who trade on leaked inside information and narrow the definition of insider trading.” His office made the same argument in its petition. The court’s ruling Friday did not say why it turned down the petition."

Their silence $ays it all.

UPDATE: Frank DiPascali, Madoff deputy aided US, dies at 58

Lung cancer, huh? Well, he will no longer be talking about former colleagues, will he? Sorry I missed it earlier.

Also see:

"A longtime trader for Bernard Madoff’s firm was sentenced Wednesday to 10 months of home confinement after his testimony helped convict five former co-workers in history’s largest Ponzi scheme. David Kugel, 69, apologized before US District Judge Laura Taylor Swain. ‘‘The guilt, embarrassment, and humiliation have become part of my DNA,’’ he told her. Swain noted he earned a substantial reduction from the up to 85 years in prison he faced. She also ordered him to perform 200 hours of community service and forfeit $7.17 million. The fraud cheated thousands of investors out of about $20 billion. A trustee has recovered more than half the money. When Kugel pleaded guilty to conspiracy and fraud, he admitted he helped create fake, backdated trades for Madoff’s investment business. Madoff, 77, is serving a 150-year prison sentence." 

Will he be found dead in his pool of a heart attack while swimming?