Banking Fraud

Bank of America is in talks to settle an investigation into its role in the sale of mortgage-backed securities before the 2008 financial crisis and could pay between $16 and $17 billion, making it the biggest Justice Department settlement by a long shot arising from the economic collapse. However, the deal has not been finalized, and although the two sides have reach an agreement in principle sources say talks could still break down. Under the tentative deal, the bank would pay about $9 billion in cash. The remainder would go toward consumer relief. The deal would be the most recent stemming from the sale of toxic mortgage securities leading up to the recession. The Justice Department last year reached a $13 billion settlement with JPMorgan and in July announced a $7 billion settlement with Citigroup. Leading up to the financial crisis, banks downplayed the risks of subprime mortgages when packaging and selling the securities to mutual funds, investment trusts and [...]

UBS AG is being formally investigated for money laundering by French officials, who ordered the bank to post €1.1 billion ($1.49 billion) bail amidst a growing investigation into claims that it assisted high-profile clients evade French taxes. Just a month ago, UBS' French subsidiary was fined a record-setting €10 million for being slow to correct poor oversight procedures that permitted employees to help clients dodge tax liabilities. In late June, French regulator Autorite de Controle Prudentiel (ACP) said the $13 million UBS France fine was the largest allowed under the country's law. That fine came just weeks after the Swiss bank was placed under a separate formal investigation for their alleged tax evasion assistance. ACP claims that it first warned UBS of its "grave concerns" in 2007, but the bank waited more than 18 months before it enacted additional controls and corrected the questionable procedures. UBS France's controls failed to prevent its employees from sharing data that could identify customers [...]

Bank of America Corp. failed to win dismissal of two government lawsuits in which it is alleged to have misled investors about the quality of loans tied to $850 million in residential mortgage-back securities. U.S. District Judge Max O. Cogburn Jr. in Charlotte, North Carolina ruled that the SEC properly laid out claims that Bank of America lied to investors about the projected health of the mortgages. Additionally, Cogburn found that the government had not properly stated its case in a similar action that bank documents omitted material facts and included false statements but gave the U.S. Justice Department thirty days to revise the suit. The bank attempted to have the suit dismissed but failed. The SEC's case claims that Bank of America committed securities fraud, while the Justice Department's case alleges that the lender violated a rarely used law dating all the way back to the 1980s savings-and-loan crisis. Using this law the DOJ can punish actions too old [...]