Citigroup Loses Appeal on Investor ASTA/MAT Litigation

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Citigroup marketed high risk investments to wealth management clients without fully disclosing the degree of risk, according to a recent New York Times article by Gretchen Morgenson titled “Secrets of a Sales Machine.”

Details came to light in recent court filings, after Citigroup appealed an award of $54 million granted by a securities arbitration panel. Most of the award covered investment losses, but $17 million was for punitive damages and $3 million was allocated for legal fees.

Citigroup clients Gerald D. Hosier and Jerry Murdock Jr., both high net worth individuals, had sued the bank for fraud and breach of fiduciary duty. Even though they were sophisticated investors, they claimed they were misled about complex investments that Citigroup positioned as being safe.

Internal Citigroup documents showed that the bank itself considered the investments to be risky, with a risk rating of 5 on a scale of 1 to 5 where 1 is very safe and 5 is high risk.

Specifically, the investments were municipal arbitrage portfolios known as ASTA/MAT, part of a family of “alternatives.” Sallie Krawcheck, then head of wealth management at Citigroup, was informed internally that these investments always carried a risk rating of 3 to 5. This rating information was not disclosed to investors.

In late December, Judge Christine M. Arguello, in the District of Colorado, ruled against Citigroup and affirmed the award.

If you feel that you were misled in recent investments, contact Fort Lauderdale securities attorney Howard Kahn to discuss your case. He is a certified FINRA arbitrator, and has represented many investors in bank and brokerage disputes.

Two Commercial Jets Collide at Miami International Airport

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Passengers were shaken up but not hurt when two jetliners collided on the ramp at Miami International Airport yesterday evening.

An Aerolineas Argentinas Airbus was heading to the gate with 240 passengers onboard after arriving from Buenos Aires, when it encountered an Air France 777-300 plane preparing to depart for Paris with more than 300 passengers.

One plane suffered wing damage, while the other plane sustained damage to its tail section. The FAA does not have regulatory oversight in this instance, since the accident occurred in a ramp area.

Last month two commercial planes collided at Fort Lauderdale Hollywood International Airport. One of the planes was parked and out of service at the time.

The Fort Lauderdale Law Firm of  Kahn & Resnik, P.L.

The Florida lawyers at Kahn & Resnik, P.L. are available to service your legal needs.

Our concierge approach to the practice of law reflects our philosophy of personalized and confidential attention. When you retain an attorney at Kahn & Resnik, P.L., we work efficiently and effectively to help you achieve your business and personal objectives.

We can assist you in legal matters relating to commercial litigation, divorce, disability law, real estate litigation, securities litigation, and corporate transactions.

We serve business owners, professionals and individual clients across Florida, including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Naples, Orlando, Tampa, Daytona Beach, Jacksonville, Tallahassee, and other cities throughout the state. Contact Howard N. Kahn, Esq. at 954-321-0176 or online.

 

National Mortgage Settlement Claim Deadline is Friday

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Florida homeowners who lost their home to foreclosure between Jan. 1, 2008 and Dec. 31, 2011 and had their mortgages serviced by Ally/GMAC, Bank of America, Citi, JPMorgan Chase or Wells Fargo may qualify for financial compensation under the $25 billion National Mortgage Settlement. The filing deadline is this Friday, January 18, 2013.

Florida Attorney General Pam Bondi’s office is making outbound calls to reach Florida borrowers who may be eligible for cash payments under the national mortgage settlement.

“We want every borrower who may be eligible for a cash payment under the national settlement to submit a claim. Currently, approximately forty-four percent of the people to whom claim forms have been mailed have submitted their claims,” stated Attorney General Pam Bondi.

The National Mortgage Settlement Administrator mailed Notice Letters and Claim Forms in late September through early October 2012 to those borrowers who lost their home due to foreclosure between January 1, 2008 and December 31, 2011 and whose loans were serviced by one of the five mortgage servicers mentioned above.

Forms must be completed and returned by Jan. 18, 2013, in the envelope provided, or they can be filed online at NationalMortgageSettlement.com. Claims received after January 18th may be considered, but payment to those claimants is not guaranteed.

Payment checks are expected to be mailed in mid-2013. The amount of the payment will be the same for all claimants and depends on the number of eligible claims received. Payments will be a minimum of $840, but higher payments to each eligible consumer are expected.

This $25 billion settlement between the nation’s five largest mortgage servicers and the federal government and 49 states and the District of Columbia, earmarked approximately $1.5 billion in payments for 2 million borrowers nationwide.

In Florida, approximately $170 million is available for cash payments to Florida borrowers. All available funds will be distributed to those who file claims; none of this money will be returned to the banks or used by the states for any other purpose.

More information about eligibility and filing a claim is available at the National Mortgage Settlement website, or via email to administrator@nationalmortgagesettlement.com. You can also call toll-free: 1-866-430-8358 (hearing impaired: 1-866-494-8281). The line is staffed Monday through Friday from (7 a.m. to 7 p.m. Central).

Fort Lauderdale Foreclosure Defense Attorney

Choosing the best approach to protecting yourself and your family from a mortgage foreclosure involves many legal considerations. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.

Lance Armstrong Admits Doping in Oprah Interview

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Lance Armstrong comes clean in an interview with Oprah Winfrey scheduled for this Thursday and Friday. He has repeatedly denied charges of doping up to this point.

Watch an interview of Oprah Winfrey talking about the upcoming Lance Armstrong interview:

In June of 2012 the U.S. Anti-Doping Agency announced that written notice of allegations of anti-doping rule violations was sent to Mr. Armstrong and five (5) additional individuals all formerly associated with the United States Postal Service (USPS) professional cycling team. These individuals include three (3) team doctors and two (2) team officials. The formal notice letter is the first step in the multi-step legal process for alleged sport anti-doping rule violations.

Mr. Armstrong has been stripped of his Tour de France titles. He also lost most of his sponsorships, and resigned from the Livestrong organization, after being charged with leading a long-running doping scheme.

According to CBS News, the London-based Sunday Times has already filed a $500,000 lawsuit for the return of a settlement it paid in a libel case. SCA Promotions of Dallas is considering a lawsuit seeking to recover more than $7.5 million awarded by an arbitration panel. A South Australia state government plans to seek the repayment of several million dollars in appearance fees paid to Armstrong for competing in the Tour Down Under in 2009, 2010 and 2011.

The Fort Lauderdale Law Firm of  Kahn & Resnik, P.L.

The Florida lawyers at Kahn & Resnik, P.L. are available to service your legal needs.

Our concierge approach to the practice of law reflects our philosophy of personalized and confidential attention. When you retain an attorney at Kahn & Resnik, P.L., we work efficiently and effectively to help you achieve your business and personal objectives.

We can assist you in legal matters relating to commercial litigation, divorce, disability law, real estate litigation, securities litigation, and corporate transactions.

We serve business owners, professionals and individual clients across Florida, including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Naples, Orlando, Tampa, Daytona Beach, Jacksonville, Tallahassee, and other cities throughout the state. Contact Howard N. Kahn, Esq. at 954-321-0176 or online.

Florida Entrepreneurs Await Crowdfunding

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A new source of Internet-based funding may soon be available to Florida’s more than 2 million small businesses. Crowdfunding (also known as crowd financing, equity crowdfunding, or hyper funding) is defined as “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.”

Entrepreneurs from Miami’s Latin American gateway, to Boca Raton’s growing list of corporate headquarters, as well as the I-4 corridor connecting Tampa and Orlando, should be aware of a voluntary Interim Form for Funding Portals designed for prospective crowdfunding portals under the JOBS Act.

Venture capitalists and entrepreneurs who want to launch a funding portal may now voluntarily submit information to the Financial Industry Regulatory Authority (FINRA) regarding their business on the interim form. The information received will help FINRA develop rules specific to crowdfunding portals.

FINRA and the SEC are engaging in an open dialogue about the rules that should apply to funding portals. Once the SEC and FINRA have adopted funding portal rules, FINRA will issue a final funding portal application for FINRA regulation. In applying for membership, crowdfunding portals will not be bound by the responses provided on the Interim Form.

“FINRA is committed to ensuring that the capital-raising objectives of the JOBS Act are advanced in a manner consistent with Congressional intent and investor protection. Crowdfunding portals that file this form will provide FINRA with important information regarding portal business models, which will inform our rulemaking,” said Thomas Selman, Executive Vice President, Regulatory Policy.

The Interim Form asks prospective funding portals to provide information including:

  • ownership;
  • funding;
  • management; and
  • business model and relationships.

FINRA is also asking prospective funding portals to supplement the information in the interim form with any additional information or documents that they believe would be helpful. FINRA will treat information that prospective portals file on the interim form as confidential.

Last year, FINRA solicited comments on the specific rules it should adopt for registered funding portals that become FINRA members. FINRA has also asked for comment on the application of existing rules to broker-dealers engaging in crowdfunding activities.

Florida ranked #2 in the country for its favorable business climate, behind only Texas, in Chief Executive’s 2012 eighth annual survey of CEOs. Crowdsourcing is likely to get a lot of attention in Florida, given the state’s commitment to expanding business opportunities.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

New Mortgage Rules Issued by Consumer Financial Protection Bureau

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The U.S. Consumer Financial Protection Bureau (“CFPB”) has issued “Ability to Repay” rules designed to make mortgages more affordable for homeowners. Key features of the new guidelines include the following:

  • Potential borrowers have to supply financial information, and lenders must verify it;
  • To qualify for a particular loan, a consumer has to have sufficient assets or income to pay back the loan; and
  • Lenders will have to determine the consumer’s ability to repay both the principal and the interest over the long term − not just during an introductory period when the rate may be lower.

In addition to the Ability-to-Repay rule, the CFPB also issued a proposal for potential adjustments. There are two key parts to the proposal:

  • First, a proposed exemption for designated non-profit creditors and homeownership stabilization programs, as well as certain Fannie Mae, Freddie Mac, and Federal agency refinancing programs. These programs generally appear to be already subject to their own specialized underwriting criteria, and they are designed to help consumers refinance into a more affordable home loan.
  • Second, a proposed a new category for certain loans made and held in portfolio by small creditors, such as small community banks and credit unions, called “Qualified Mortgages.”

The new rules prohibit a creditor from making a higher-priced mortgage loan without regard to the consumer’s ability to repay the loan.

The final rule implements sections 1411 and 1412 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan).

The rule also implements section 1414 of the Dodd-Frank Act, which limits prepayment penalties. Creditors must retain evidence of compliance with the rule for three years after a covered loan is consummated.

Fort Lauderdale Foreclosure Defense Attorney

Choosing the best approach to protecting yourself and your family from a mortgage foreclosure involves many legal considerations. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.

American Express to Cut 5,400 Jobs

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American Express, the second largest employer in the Fort Lauderdale area with a local payroll of 3,000 employees, is taking a $400 million restructuring charge to cover severance payments related to the elimination of an estimated 5,400 jobs across the U.S. and overseas.

The firm’s Plantation office focuses on commercial and consumer financial services, as well as traveling consulting. Reductions will primarily involve positions that do not directly generate revenue, according to the company. Details on whether or not Fort Lauderdale job area employees will be affected by cuts were not disclosed.

Reductions will be partly offset by jobs the company expects to add during the year.  Overall staffing levels by year end 2013 are expected to be 4 to 6 percent less than the current total of 63,500.

Elements of the restructuring program outlined in an American Express news release include:

  • Re-engineering the business model in Global Business Travel to reduce its cost structure and invest in capabilities that better align it with the shift of customer volumes to online channels and automated servicing tools;
  • Continuing the reconfiguration of card member servicing and collections to drive efficiency globally as more customers use online and mobile channels instead of paper and telephone;
  • Reducing the size of staff groups while continuing to maintain the right focus and resources on risk and control activities;
  • Ensuring the right organizational structure across client management and sales functions to best serve customers; and
  • Consolidating similar functions and eliminating duplicate efforts wherever possible in order to drive efficiency.

The job reductions will take place across seniority levels, businesses and staff groups. The largest reductions will come in the travel businesses, which operate in an industry that is being fundamentally reinvented as a result of the digital revolution.

The Fort Lauderdale Law Firm of  Kahn & Resnik, P.L.

The Florida lawyers at Kahn & Resnik, P.L. are available to service your legal needs.

Our concierge approach to the practice of law reflects our philosophy of personalized and confidential attention. When you retain an attorney at Kahn & Resnik, P.L., we work efficiently and effectively to help you achieve your business and personal objectives.

We can assist you in legal matters relating to commercial litigation, divorce, disability law, real estate litigation, securities litigation, and corporate transactions.

We serve business owners, professionals and individual clients across Florida, including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Naples, Orlando, Tampa, Daytona Beach, Jacksonville, Tallahassee, and other cities throughout the state. Contact Howard N. Kahn, Esq. at 954-321-0176 or online.

Morgan Stanley to Lay-Off 1,600 Bankers and Support Staff

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Pink slips will go out to 1,600 Morgan Stanley employees soon. The firm has Florida offices in Boca Raton and Miami, but details by office location were not disclosed. Half of the lay-offs are expected in the U.S., with the balance of staff reductions overseas. Highly paid investment bankers are targeted, as well support team members.

Click on the link to watch a video news report of the Morgan Stanley staff cuts from Bloomberg News.

According to an early 2012 New York Times article, “the average base pay for managing directors at Morgan Stanley has risen to $400,000 and to $600,000 at Goldman Sachs.” Most Wall Street employees, particularly bankers and senior executive, earn a large annual bonus which may be paid in cash or stock. Morgan Stanley capped 2011 cash bonuses at $125,000, according to the Times.

Overall, compensation and benefits expenses in the third quarter of 2012 were $1,638 million, up almost 8 percent from the comparable prior year quarter. As of September 30, 2012, the Company had 57,726 employees worldwide.

Morgan Stanley, a leading competitor to Goldman Sachs, conducts its business from its headquarters in and around New York City, its regional offices and branches throughout the U.S. and its principal offices in London, Tokyo, Hong Kong and other world financial centers.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Mary Curran of Palm Beach to Pay $21 Million Tax Penalty

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Mary Estelle Curran of Palm Beach, Fla., pleaded guilty today in the U.S. District Court for the Southern District of Florida to filing false tax returns for tax years 2006 and 2007, the Justice Department and Internal Revenue Service, Criminal Investigation (IRS-CI) announced.

According to court documents, Curran, a U.S. citizen, maintained undeclared bank accounts at UBS AG in Switzerland and a bank in Liechtenstein, which she inherited from her husband in 2000. The accounts at UBS AG were held in the names of nominee foreign entities, including the Flognet Foundation and Norega Investment. The account earned income each year, which Curran failed to report on her 2001 through 2007 individual income tax returns.

According to the plea agreement, Curran’s conduct caused a tax loss to the government of approximately $667,716.   The value of all undeclared foreign financial accounts owned or controlled by Curran exceeded $42 million in 2007. In order to resolve her civil liability for failure to report her foreign bank accounts, Curran has agreed to pay a civil penalty in the amount of 50 percent of the high balance of the accounts, which is $21,666,929.

“The Justice Department continues to pursue those who hide income and assets from the IRS through the use of nominee businesses and offshore bank accounts,” said Assistant Attorney General Keneally. “U.S. taxpayers who fail to come forward in the voluntary disclosure program risk prosecution and substantial fines, as this case demonstrates.”

“U.S. citizens who seek to avoid their tax obligations by hiding income in undeclared bank accounts abroad should by now be fully on notice that they will be held accountable for their actions, both civilly and criminally,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer. “The U.S. Attorney’s Office is committed to helping the IRS enforce our nation’s tax laws.”

“Offshore accounts can no longer be used to hide from the IRS and avoid paying the fair amount of tax,” said Richard Weber, Chief, IRS Criminal Investigation.  “IRS Criminal Investigation is aggressively pursuing tax cheats – both domestically and internationally.  We owe it to every American taxpayer to use all lawful means to identify and prosecute both those who evade their taxes and those who assist them in evading their tax obligations.”

Curran faces a potential maximum prison term of six years. A sentencing date has not been set.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Florida Homeowners in Foreclosure May Get up to $125,000 in Relief

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Fort Lauderdale area homeowners dealing with mortgage foreclosures may find some relief in a new federal housing settlement announced today by the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board.

Ten mortgage servicing companies will pay $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments. The ten firms involved in today’s agreement are:

  • Aurora
  • Bank of America
  • Citibank
  • JPMorgan Chase
  • MetLife Bank
  • PNC
  • Sovereign
  • SunTrust
  • U.S. Bank
  • Wells Fargo

The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve, and the Office of Thrift Supervision.

How Florida Homeowners in Foreclosure Qualify for Financial Assistance

To qualify for cash compensation, borrowers’ homes must have been in foreclosure in 2009 and 2010 with the participating servicers. Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.

For the ten participating servicers, fulfillment of the agreement would meet the requirements of the enforcement actions that mandated that the servicers retain independent consultants to conduct an Independent Foreclosure Review.

As a result of this agreement, the participating servicers would cease the Independent Foreclosure Review, which involved case-by-case reviews, and replace it with a broader framework allowing eligible borrowers to receive compensation significantly more quickly.

No Application is Required

Eligible borrowers will receive compensation whether or not they filed a request for review form, and borrowers do not need to take further action to be eligible for compensation.

A payment agent will be appointed to administer payments to borrowers on behalf of the servicers.  Eligible borrowers are expected to be contacted by the payment agent by the end of March with payment details. Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment.  In addition, the servicers’ internal complaint process will remain available to borrowers.

Additional Mortgage Servicers May be Named

The agencies continue to work to reach similar agreements in principle with other servicers that are not parties to the agreement announced today, but that are also subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing.

OCC and Federal Reserve examiners are continuing to closely monitor the servicers’ implementation of plans required by the enforcement actions issued in April 2011 to correct the unsafe and unsound mortgage servicing and foreclosure practices.

Click on the link to read about the OCC / Federal Reserve Board mortgage foreclosure settlement.

Fort Lauderdale Foreclosure Defense Attorney

Choosing the best approach to protecting yourself and your family from a mortgage foreclosure involves many legal considerations. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.