Some of the nation’s top banks are facing another bad week, legally and financially as they are subjected to increased scrutiny and demand for reparations from federal regulators.
Wells Fargo faces a continued inquest into the extent of its accounts fraud scandal as regional and municipal governments, including Hillsborough County, look further into their interests with the banking giant.
Big banks on Wall Street had been left unchecked for too long and the introduction of sub-prime lending tactics sealed the fate of U.S. financial stability. A culture of smoke-and-mirrors misleading consumers, coupled with a dire lack of regulatory oversight allowed big banks to run rampant.
Years of bad banking tactics caught up with the U.S. economy in 2008, resulting in the worst economic recession seen in the country since the “Great Depression” of the 1930s.
The Federal Reserve has decided to leave interest rates alone for the foreseeable future, according to a report from Reuters. Despite the fact that a target rate-hike was announced last December, the Fed has deferred any increases as part of a long-term plan to reignite the U.S. economy.
President of the Minneapolis Federal Reserve, Neel Kashkari, stated that “the U.S. economy has room to grow before it overheats”.
Investment planning.
The thought sends shivers down the spines of many an investor. In fact, many don’t even want to think about it and will gladly pay someone else to do that for them.
However, taking a hands-on approach to your investments provides an extra surety against incurring extensive losses in the event that an investment goes sour. It also drastically diminishes the likelihood of falling victim to financial losses at the hands of someone looking to take advantage.
This is an update to a previously posted article – “Wells Fargo Pays Out $190 in Financial Fraud Claim”. Read the full story here.
In the wake of the massive fraud scandal stemming from a sales incentives initiative, Wells Fargo as announced that it is ending the company-wide sales product goals.
The banking giant, ordered to pay $190 million in damages and fines earlier this month, stated that as of Jan. 1, 2017 it would eliminate product sales goals. The decision is an effort by the bank to recoup customer faith and public standing.
Raymond James & Associates along with a Milwaukee-based investment firm, Robert W. Baird & Co. reached a settlement over penalties regarding wrap fee compliance with the Securities and Exchange Commission (SEC) last week.
The SEC had charged the long established St. Petersburg, FL-based investment firm with violating Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 by failing to comply with stated regulations concerning wrap fees. Raymond James agreed to pay $600,000 in penalties following the settlement, in accordance with SEC orders.
The SEC’s investigation found that Raymond James had failed to establish policies and procedures regarding what commissions are charged to clients when sub-adviser trade their investments with broker-dealers outside wrap fee programs. Wrap fees are comprehensive, straight-forward charges levied by an adviser to a client in exchange for bundled investment services.
Last week, banking giant, Wells Fargo, agreed to a settlement with federal and state prosecutors in a California court to pay $185 million in penalties and $5 million in damages to affected customers following a wide-spread financial fraud scandal.
In May of last year, it was alleged that Wells Fargo had assigned fee-generating savings and credit accounts to customers with out prior knowledge or consent. According to a report from the Consumer Financial Protection Bureau (CFPB), this led to the creation of more than 2 million potentially unauthorized deposit and credit accounts.
The full amount of the $100 million fine charged by the CFPB will constitute the largest such fine the agency has ever imposed since its inception in the wake of the 2008 financial crisis. A $35 million penalty will be paid to the Office of the Comptroller of Currency and $50 million in damages will be paid to the city and county of Los Angeles. The settlement also provides an additional $5 million in customer restitution.
Yesterday, in a case of investment fraud, the S.E.C. formally charged two former accounting executives with falsifying the financial performance of a real estate investment trust. It is alleged that the former executives of VEREIT Inc., then known as American Realty Capital Properties (ARCP), purposefully and knowingly overstated quarterly earnings by inflating figures in a key accounting metric used by investors and analysts to assess the financial performance.
Former Chief-financial-officer, Brian S. Block and former Chief-accounting-officer, Lisa P. McAlister attempted to defraud investors by manipulating how the company’s adjusted funds from operations (AFFO) were calculated. AFFOs are used by accounting analysts as a non-GAAP measure to further asses the investment value of a company. They are used by companies in addition to mandatory generally accepted accounting principles (GAAP) enforced by the S.E.C. While these non-GAAP methods usually serve to provide a more detailed assessment of a company’s financial performance, fraudulent claims mislead investors as to the viability of their investments.
In this case, the AFFO was used as the primary company measure for providing earnings guidance to its investors. Though the company had, in fact, fallen short of its projected earnings for the quarter, the former executives concocted the investment fraud scheme to conceal those figures before issuing their earnings statement. Investment fraud like this not only jeopardizes investors’ capital, but also severely damages a company’s credibility and good market standing.
Jordan Belfort may have bestowed the title ‘Wolf of Wall Street’ on himself, but we all know that wolves travel in packs – and it looks like Wall Street is full of them. The Consumer Financial Protection Bureau (CFPB) a financial watch-dog group has recently released a database outlining complaints against several of the nation’s top banking and investment groups. The database, which focuses heavily on Wall Street stalwarts, including Citibank (part of Citigroup) and Chase (of JPMorgan Chase), is chock full of consumer complaints against these financial giants in regards to predatory banking tactics.
By navigating a simple search by name of any number of these banks, consumers can find mass-stores of complaints lodged against them, most stemming from the 1999 repeal of the Glass-Steagall Act.
Instituted in 1933, the Glass-Steagell Act served to prevent banks holding insured deposits from affiliating with investment banks and brokerage firms on Wall Street. The Glass-Steagall Act protected consumers from falling prey to stock fraud and financial abuse from these entities. Under pressure from large Wall Street firms, such as Citigroup, the Act was repealed under the Clinton Administration, ushering in a new era of gross misconduct and financial abuse on an unwitting public and laying the groundwork for the eventual economic crash in 2008.
It seems that mosquitoes aren’t the only thing people will have to watch out for on the Zika front. As with any public crisis, the outbreak of the Zika virus has come with the threat of investment fraud in tow. Crooks and scam artists exploit crises like this one by preying on public anxieties. This sort of behavior is not only detrimental to victims of investment scams, but also further clouds public perception of a crisis by circulating false information.
As such, the Securities and Exchange Commission (SEC) has issued an Investor Alert in an effort to prevent anyone falling victim to financial fraud. The SEC’s investor alert covers several tips and warning signs to know if you may be getting involved in an investment scam.
Securities Fraud Lawyers Blog
