The Securities Litigation Expert Blog

Brokers Switching firms May Have to Disclose Bonuses

Posted by Jack Duval

Dec 2, 2012 5:09:01 AM

Finra is looking into conflicts of interest of brokerages and their Registered Representatives, Reuters reports.  (Reuters)  These concerns were raised by Finra VP Susan Axelrod in October, at an industry conference.

Among the concerns, Axelrod said in October, are that brokers who receive large financial incentives to move to a different firm may promise their clients new and better securities products for bringing their assets to the new firm.  Those products may be no better, or even worse, than what the client already owns, but the broker earns a commission on the sale.  FINRA's proposal would apply to clients who transfer their accounts to a brokerage in order to stay with an adviser who is switching firms. Brokerages would have to tell those clients about compensation used to entice the broker's move.

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Topics: FINRA, bonus, Susan Axelrod, disclosure, Compliance, Reuters

Libor Litigation - Part Deux

Posted by Jack Duval

Sep 27, 2012 1:00:29 PM

Reuters reports that a second wave of Libor litigation could be heading our way depending on how the rate is changed.  You can get the article here.  If you don't feel like making the jump, here's what you need to know:

Major changes to the way Libor is set could trigger years of legal wrangling between derivatives counterparties to determine what effect those changes have on existing contracts.

The rate to which USD350trn over-the-counter swaps contracts are benchmarked is about to embark on the biggest overhaul of its 26-year history as Martin Wheatley, managing director of the UK's Financial Services Authority, presents his recommendations for the future of Libor on Friday.

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Topics: LIBOR, litigation, Reuters

Washington State Court Weighs in on MERS

Posted by Jack Duval

Sep 17, 2012 3:42:43 AM

Michelle Conlin reports for Reuters about a Washington State Court ruling that MERS (Mortgage Electronic Registration Systems) did/does not have the legal authority to foreclose on a home.  The article can be found here.

The crux of the decision is summarized in this:

The Washington Supreme Court held that MERS' business practices had the "capacity to deceive" a substantial portion of the public because MERS claimed it was the beneficiary of the mortgage when it was not.

This finding means that in actions where a bank used MERS to foreclose, the consumer can sue it for fraud. If the foreclosure can be challenged, MERS' involvement would make repossession more complicated.

On top of that, virtually any foreclosed homeowner in the state in the past 15 years who feels they have been harmed in some way could file a consumer fraud suit.

For those of you not so familiar with MERS, Conlin summarizes nicely:
The company's history dates back to the 1990s, when banks began aggressively bundling home loans into mortgage-backed securities. The banks formed MERS to speed up the handling of all the paperwork associated with recording the filing of a deed and the subsequent inclusion of a mortgage in an entity that issues a mortgage-backed security.

MERS allowed the banks to save time and money because it permitted lenders to bypass the process of filing paperwork with the local recorder of deeds every time a mortgage was sold.

Instead, banks put MERS' name on the deed. And when they bought and sold mortgages, they just recorded the transfer of ownership of the note in the MERS system.

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Topics: Washington State, MERS, litigation, foreclose, mortgage, RMBS, Reuters

Reuters - New York Fed Knew about LIBOR Fixing in August 2007

Posted by Jack Duval

Sep 14, 2012 6:17:19 AM

Reuters is reporting here that it is likely the New York Fed knew about LIBOR rate fixing... back in August 2007.  It then investigated Barclays in the Spring of 2008 and shared their findings with the UK regulators.

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Topics: LIBOR, litigation, New York Fed, Barclays, Reuters

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