Wednesday, March 4, 2015

JPMorgan Chase Robo-Signing $50 Million Settlement to Protect Homeowners in Bankruptcy

Settlement Addresses Robo-Signing and Other Improper Practices in Bankruptcy Cases

Justice logoThe Department of Justice’s U.S. Trustee Program (USTP) has entered into a national settlement agreement with JPMorgan Chase Bank N.A. (Chase) requiring Chase to pay more than $50 million, including cash payments, mortgage loan credits and loan forgiveness, to over 25,000 homeowners who are or were in bankruptcy.  Chase will also change internal operations and submit to oversight by an independent compliance reviewer.  The proposed settlement has been filed in the U.S. Bankruptcy Court for the Eastern District of Michigan, where it is subject to court approval.

In the proposed settlement, Chase acknowledges that it filed in bankruptcy courts around the country more than 50,000 payment change notices that were improperly signed, under penalty of perjury, by persons who had not reviewed the accuracy of the notices.  More than 25,000 notices were signed in the names of former employees or of employees who had nothing to do with reviewing the accuracy of the filingsThe rest of the notices were signed by individuals employed by a third party vendor on matters unrelated to checking the accuracy of the filings.

Chase also acknowledges that it failed to file timely, accurate notices of mortgage payment changes and failed to provide timely, accurate escrow statements.

“It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” said Acting Associate Attorney General Stuart F. Delery.  “Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.”

“This settlement should signal once again to banks and mortgage servicers that they cannot continue to flout legal requirements, compromise the integrity of the bankruptcy system and abuse their customers in financial distress,” said Director Cliff White of the U.S. Trustee Program.  “It should be acknowledged that Chase responded to the U.S. Trustee’s court actions by conducting an internal investigation and taking steps to mitigate harm to homeowners.  But years after uncovering improper mortgage servicing practices and entering into court-ordered settlements to fix flawed systems, it is deeply disturbing that a major bank would still make improper court filings and fail to provide adequate and timely notices to homeowners about payments due.  Other servicers should take note that the U.S. Trustee Program will continue to police their practices and will work to ensure that those who do not comply with bankruptcy law protections for homeowners will pay a price, just as Chase has done in this matter.”  

Payments, Credits and Contributions of More Than $50 Million:

In the proposed settlement, Chase agrees to provide payments, credits and contributions totaling more than $50 million:

  • Chase will provide $22.4 million in credits and second lien forgiveness to about 400 homeowners who received inaccurate payment increase notices during their bankruptcy cases.

  • Chase will pay $10.8 million to more than 12,000 homeowners in bankruptcy through credits or refunds for payment increases or decreases that were not timely filed in bankruptcy court and noticed to the homeowners.

  • Chase will pay $4.8 million to more than 18,000 homeowners who did not receive accurate and timely escrow statements.  This includes credits for taxes and insurance owed by the homeowners and paid by Chase during periods covered by escrow statements that were not timely filed and transmitted to homeowners.

  • Chase will pay $4.9 million, through payment of approximately $600 per loan, to more than 8,000 homeowners whose escrow payments Chase may have applied in a manner inconsistent with escrow statements it provided to the homeowners.

  • Chase will contribute $7.5 million to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program.

Changes to Internal Operations: In the proposed settlement Chase also agrees to make necessary changes to its technology, policies, procedures, internal controls and other oversight systems to ensure that the problems identified in the settlement do not recur.

Oversight by Independent Reviewer: Amy Walsh, a partner with the law firm Morvillo LLP, has been selected to serve as independent reviewer to verify that Chase complies with the settlement order.  The independent reviewer will file public reports with the bankruptcy court.

No Effect on Additional Relief by Homeowners: This settlement does not affect the rights of any homeowners to seek any relief against Chase that they may deem appropriate.

March 4, 2015 in Current Affairs | Permalink | Comments (0)

Distance Learning for Legal Education March 12-14 (Thursday - Saturday) at Hastings

Register without delay (and without cost) for the Distance Learning for Legal Education workgroup next week (March 12-14, Thursday - Saturday) in exciting San Fran.
Ashley Dymond (Hastings) and Gary Heald (Georgetown) have accomplished an extraordinary job of designing the agenda, graciously hosted by Hastings College of Law in San Fran.  This is the Work Group's 8th gathering as a distinct workgroup since 2011, and 14th including 2010's Future Eds and AALS.
Why should a Dean approve a travel budget for this workgroup?  The American Bar Association initially acquiesced to an online LL.M. in 1998.  Yet, it is since the initial inception of the Work Group in 2010 that most of the 47 LL.M.s offered online by 29 ABA full approved law schools have been founded.  As of 2015, a majority of ABA law schools offer the opportunity for an online academic experience for J.D. students.  One ABA law school has received a variance to offer a hybrid, partially residential / partially online, JD.


Who attends?  Deans, Administrators, and Faculty from at least 83 ABA law schools and other stakeholders, such as foreign and U.S. academic institutions, publishers, and technology companies, have attended.  Normally between 50 - 75 per workshop, and 100 for the AALS breakfasts. 

What is the deliverable for a Dean?  Guaranteed, collaborative engagement in discussions, writing, and editing that create the attached Work Group's recommendations.  These best practice recommendations have been designed to adoptable by institutions and stakeholders through their adaptability and will form a component of a Distance Education policy. Everyone becomes a contributor, hence the name "work group".  Attendees become the leader of the distance education pedagogical and policy discussions at home institutions.

There is no fee - but the host Hastings needs an RSVP for food and beverage.  Thus, please register by Thursday March 5th for the headcount - everything you need to know about location, transportation, accommodation is on the website.  
Still need convincing this workshop will add value to your institution?  Reach out to William Byrnes via my International Financial Law Professor blog author profile below.

March 4, 2015 in Current Affairs | Permalink | Comments (0)

Financing of the Terrorist Organisation Islamic State in Iraq and the Levant

FATF logoFATF’s report on the financing of the Financing of the Terrorist Organisation Islamic State in Iraq and the Levant (ISIL) analyses how this terrorist organisation generates and uses its funding.  This knowledge is crucial in order to determine how FATF and the international community can choke off ISIL funding.

Information collected from a wide range of sources and countries such as Saudi Arabia, Turkey and the United States, demonstrate that ISIL’s primary source of income comes from the territory it occupies.  The appropriation of the cash held at state-owned banks, gave ISIL access to an estimated half a billion USD in late 2014. The exploitation of oil fields also generates significant funds for ISIL, particularly when it first took control of them.  This report identifies other sources of funding that ISIL relies on to finance its terrorist activities and the regular investments into its infrastructure and governance requirements.

Globally, there has been a strong and clear response on the need to disrupt ISIL’s financial flows and deprive it of its assets.   Many countries have established stronger legal, regulatory and operational frameworks, to detect and prosecute terrorist financing activity, in line with the FATF Recommendations.  But more needs to be done.  This report highlights a number of new and existing measures to disrupt ISIL financing, for example:

  • Request countries to proactively identify individuals and entities for inclusion in the UN Al Qaida Sanctions Committee list.
  • Share practical information and intelligence at an international level, both spontaneously and on request, to effectively disrupt international financial flows.
  • Suppress ISIL’s proceeds from the sale of oil and oil products, through a better identification of oil produced in ISIL-held territory.
  • Detect ISIL fundraising efforts through modern communication networks (social media). 

Further in-depth research is needed to determine the most effective countermeasures to disrupt ISIL funding.

March 4, 2015 in Current Affairs | Permalink | Comments (0)

FDIC Banks Earn $152.7 billion in 2014

720px-US-FDIC-Logo.svgCommercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $36.9 billion in the fourth quarter of 2014, down $2.9 billion (7.3 percent) from earnings of $39.8 billion that the industry reported a year earlier. The decline in earnings was mainly attributable to a $4.4 billion increase in litigation expenses at a few large banks. More than half of the 6,509 insured institutions reporting (61.2 percent) had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the fourth quarter fell to 9.4 percent from 12.7 percent a year earlier.

"The banking industry continued to improve at the end of the year," FDIC Chairman Martin J. Gruenberg said. "Although total industry earnings declined as a result of significant litigation expenses at a few large institutions and a continued decline in mortgage-related income, a majority of banks reported higher operating revenues and improved earnings from the previous year. In addition, banks made loans at a faster pace, asset quality improved, and the number of banks on the 'Problem List' declined to the lowest level in six years."

Chairman Gruenberg added: "Community banks performed especially well during the quarter. Their earnings were up 28 percent from the previous year, their net interest margin and rate of loan growth were appreciably higher than the industry, and they increased their small loans to businesses."

Community banks earned $4.8 billion during the quarter. Based on criteria developed for the FDIC Community Banking Study published in December 2012, there were 6,037 community banks (92.7 percent of all FDIC-insured institutions) in the fourth quarter of 2014 with assets of $2.1 trillion (13.3 percent of industry assets). Fourth quarter net income of $4.8 billion at community banks was up $1.0 billion (27.7 percent) from a year earlier, driven by higher net interest income, increased noninterest income, and lower loan-loss provisions. Community banks' net income, net interest income, noninterest income, and loan balances all grew at a faster pace than the industry as a whole. Asset quality indicators showed further improvement, and community banks continued to hold 45 percent of small loans to businesses.

For the industry as a whole, loan and lease balances rose $149.4 billion (1.8 percent) in the fourth quarter to $8.3 trillion. Commercial and industrial loans increased by $42.2 billion (2.5 percent), and credit card balances grew by $35.4 billion (5.2 percent). Over the past 12 months, loan and lease balances increased 5.3 percent. This is the highest 12-month growth rate for loans since mid-year 2008.

Net interest income was $1.1 billion (1 percent) higher than a year ago, as the industry's interest-bearing assets increased 6.2 percent in 2014. Almost three out of four institutions (70.5 percent) reported higher net interest income than in the fourth quarter of 2013. The average net interest margin (the difference between the average yield banks earn on loans and other investments and the average cost of funding those investments) was 3.12 percent, down from the 3.27 average in the fourth quarter of 2013. This is the lowest quarterly average margin since the 3.11 percent reported in the third quarter of 1989, as larger institutions continued to increase their holdings of low-yield, liquid investments.

Noninterest income was down $160 million (0.3 percent) from a year ago, as income from the sale, securitization, and servicing of residential mortgages declined $1.6 billion (30.8 percent). More than half of all banks (54.4 percent) reported year-over-year increases in quarterly noninterest income.

Noninterest expenses were $4.9 billion (4.8 percent) higher than a year ago, as itemized litigation expenses at a few of the largest banks were $4.4 billion higher. Banks set aside $8.2 billion in provisions for loan losses, up 12 percent from $7.3 billion a year earlier. This is the second consecutive quarter that the industry has reported a year-over-year increase in loss provisions.

Asset quality indicators continued to improve as insured banks and thrifts charged off $9.9 billion in uncollectible loans during the quarter, down $2.2 billion (18.3 percent) from a year earlier. The amount of noncurrent loans and leases (those 90 days or more past due or in nonaccrual status) fell $9.2 billion (5.4 percent) during the fourth quarter. The percentage of loans and leases that were noncurrent declined to 1.96 percent, the lowest level since the 1.73 percent posted at the end of the first quarter of 2008.

The average return on assets (ROA) fell to 0.96 percent in the fourth quarter from 1.09 percent a year earlier. The average return on equity (ROE) declined from 9.76 percent to 8.56 percent.

Chairman Gruenberg concluded: "The current operating environment remains challenging. Revenue growth continues to be held back by narrow interest margins and lower mortgage-related income. And, many institutions are reaching for yield given the low interest-rate environment, which is a matter of ongoing supervisory attention. Nevertheless, results from the fourth quarter generally were positive for the banking industry, and for community banks in particular."

Financial results for the fourth quarter of 2014 and the full year are contained in the FDIC's latest Quarterly Banking Profile, which was released today. Also among the findings:

Full-year earnings totaled $152.7 billion. Total net income for 2014 was $1.7 billion (1.1 percent) less than the industry reported in 2013. This is the first decline in annual net income in five years. Full-year ROA was 1.01 percent, marking the third year in a row that the annual ROA has exceeded 1 percent. Reduced revenues from the sale, securitization, and servicing of residential mortgages (down $9.1 billion or 35 percent) and increased litigation expenses at a few large banks (up $6.5 billion or 206 percent) were the main causes of the drop in full-year earnings. Almost two out of every three banks (64 percent) reported higher net income than in 2013.

The number of "problem banks" fell for the 15th consecutive quarter. The number of banks on the FDIC's "Problem List" declined from 329 to 291 during the quarter, the lowest since the end of 2008. The number of "problem banks" now is 67 percent below the post-crisis high of 888 at the end of the first quarter of 2011.

The Deposit Insurance Fund (DIF) balance continued to increase. The DIF balance (the net worth of the Fund) rose to a record $62.8 billion as of December 31from $54.3 billion at the end of September. The Fund balance increased primarily due to decreases in estimated losses for past bank failures. Estimated insured deposits increased 1.0 percent, and the DIF reserve ratio (the Fund balance as a percentage of estimated insured deposits) rose to 1.01 percent as of December 31from 0.88 percent as of September 30. A year ago, the DIF reserve ratio was 0.79 percent.

The complete Quarterly Banking Profile is available at on the FDIC Web site.

March 4, 2015 in Current Affairs | Permalink | Comments (0)

Tuesday, March 3, 2015

Proposals for FIRPTA Reform

ImagesOn February 11, 2015, the Senate Finance Committee approved a bill that primarily affects foreign investors in REITs.  

Under the proposal, any foreign investor owning more than 10-percent ownership in the REIT will have their stock classified as USRPI upon disposition.  As a result, any realized gains will be subject to FIRPTA.  In addition, the proposal also increases Section 1445 withholding from 10-percent to 15-percent.  
For more on the current proposal click here

March 3, 2015 | Permalink | Comments (0)

SEC uncovers Ponzi Scheme using Twitter IPO

Images-2SEC alleges two New York venture capital funds with raising close to $5.3 million from investors.  Instead of purchasing the promised $230,000 pre-IPO Twitter shares under the terms of the fund’s offering documents, the firms purchased only $80,000 shares.  
In an attempt provide the promised shares and profits, the firms would disgorge money from three other funds. 
To read more about the SEC's investigation click here.  

March 3, 2015 | Permalink | Comments (0)

Goldman Sachs Reports Potential $3B Regulatory Legal Losses

WSJ Market Watch reports that Goldman's public disclosure of a possible $3 billion of legal losses -

"The forecast for “reasonably possible” losses doesn’t include “any future claims from the continuing investigations” of a U.S. task force designed to probe banks’ actions in creating mortgage bonds that soured during the financial crisis, Goldman said in the filing."

Read the full WSJ story about Goldman's increasing exposure from selling investors packages of bad mortgages.

March 3, 2015 | Permalink | Comments (0)

Is GameOver Zeus' Evgeniy Bogachev Worth a $3 million Bounty?

US-DeptOfJustice-Seal.svg The Justice Department, in partnership with the U.S. Department of State’s Transnational Organized Crime (TOC) Rewards Program, announced today a reward of up to $3 million for information leading to the arrest and/or conviction of a prolific cyber criminal.  Evgeniy Mikhailovich Bogachev was charged with numerous violations for his role as an administrator of the GameOver Zeus botnet.

The software was used to capture bank account numbers, passwords, personal identification numbers and other information necessary to log into online banking accounts.  It is believed GameOver Zeus is responsible for more than 1 million computer infections, resulting in financial losses of more than $100 million.

“Botnets” are networks of computers that have been secretly infected by malware and controlled by criminals.  Some botnets are millions of computers strong.  Once created, they can be used without a computer owner’s knowledge to engage in a variety of criminal activities, including siphoning off personal and financial data, conducting disruptive cyber attacks, and distributing malware to infect other computers. 

One particularly destructive botnet—called Gameover Zeus—was used by criminals to steal millions of dollars from businesses and consumers and to extort additional millions of dollars in a “ransomware” scheme.  Ransomware is malware that secretly encrypts your hard drive and then demands payments to restore access to your own files and data.  Ransomware called “Cryptolocker” was distributed through the Gameover Zeus Botnet, which infected hundreds of thousands of computers, approximately half of which were located in the United States.  It generated more than $27 million in ransom payments for its creators, including Russian hacker Evgeniy Bogachev, in just the first two months after it emerged.


Bogachev is on the FBI’s Cyber’s Most Wanted and is believed to be at large in Russia.

Bogachev was charged in 2014 in Pittsburgh, Pennsylvania, with conspiracy, computer hacking, wire fraud, bank fraud, and money laundering in connection with his alleged role as an administrator of the GameOver Zeus botnet. Bogachev was also indicted by criminal complaint in Omaha, Nebraska, in 2012 and charged with conspiracy to commit bank fraud related to his alleged involvement in the operation of a prior variant of Zeus malware known as Jabber Zeus.

March 3, 2015 in Current Affairs | Permalink | Comments (0)

Monday, March 2, 2015

FATF Action on Terrorist Finance

FATF logoTerrorism is an increasingly global problem that requires concerted global action by a united international community. The ISIL phenomenon shows a new type of terrorist organisation with unique funding streams that are crucial to its activities; cutting off this financing is therefore critically important. Given its mandate, the FATF has a particular responsibility to develop a coordinated and decisive response to fight not just terrorist financing, but ultimately, terrorism. The UN Security Council Resolution 2199, passed on 12 February, welcomed the FATF’s October 2014 statement, and the February 2015 G20 Finance Ministers’ statement echoed the need for a renewed focus by the FATF on terrorist financing. This was further reinforced by the French Minister of Finance and Public Accounts, Mr. Michel Sapin, during his opening speech at the FATF Plenary meeting.

The FATF has now published a report on the Financing of the terrorist organisation Islamic State in Iraq and the Levant (ISIL). This significant report will contribute to the international discussion to update global efforts to counter terrorist financing. The report demonstrates that ISIL is essentially living off the capital illicitly generated by the territory it occupies, primarily by looting banks, exploiting oil fields and robbing economic assets. ISIL can be stifled by frustrating its ability to generate funds from these activities and by preventing it from obtaining funds from other sources and activities.

Using the findings of the FATF report on the sources and methods of financing of ISIL, the FATF and the FATF-Style Regional Bodies (FSRBs) will work together with international organisations to develop proposals to strengthen all counter-terrorism financing tools and report back to the G20 by October 2015.     

Making sure the legal and institutional frameworks are in place

FATF and FSRBs will take additional steps to make sure that all members implement measures to freeze terrorist funds and stop terrorist financing. As a priority, the FATF will immediately review whether all its members have implemented measures to cut off terrorism-related financial flows, in accordance with the FATF Recommendations.  All members are required to:  

  • Criminalise the financing of individual terrorists and terrorist organisations.
  • Freeze terrorist assets without delay and implement ongoing prohibitions.
  • Establish the capacity to develop robust designation proposals on individuals that meet the UN designation criteria.

The FATF will put pressure on any country who has failed to implement these measures and will include this in its report to the G20 in October 2015.

Operational measures

It is essential in combating global terrorism that all countries do not just establish laws and regulations to disrupt terrorist financing, but that they also ensure that they are working effectively. They must also actively use them in a whole-of-government approach that focuses on combating key terrorist financing risks, including by:

  • implementing targeted financial sanctions regimes and developing the capacity to propose designations to the United Nations Security Council, and issue third country requests that meet designation criteria.
  • identifying their terrorist financing risks and developing more effective ways to detect, disrupt, deter and prosecute terrorist financing.
  • protecting their non-profit sector from the risk of terrorist abuse. The FATF is updating its best practices paper to help countries respond more effectively to terrorist abuse of this sector.
  • taking steps to identify and target individuals, including travellers, who are suspected of terrorist financing involvement, by using PNR (Passenger Name Record of air travellers), for example, in order to stop, restrain and enable confiscation of illicit cross-border transportation of cash. 
  • devising effective mechanisms to identify, monitor and take action against unregulated money value transfer services, and strengthening the transparency of financial flows.
  • empowering FIUs and other competent authorities to improve the exchange of financial and other relevant information domestically and internationally in a timely manner. The ability to detect, analyse and share information about financial flows is essential to financial investigations. For terrorist-related cases, governments should be able to obtain relevant information from all sources more rapidly.  To achieve this, countries should
    • strengthen inter-agency communication among financial intelligence units, law enforcement and intelligence services
    • encourage spontaneous exchanges of information among countries.

The FATF will focus on developing proposals to take forward these measures.

Additional work on terrorist financing

The FATF report Financing of the terrorist organisation Islamic State in Iraq and the Levant (ISIL) also identified a number of significant and emerging terrorist finance risks, including kidnapping for ransom, non-profit organisations, foreign terrorist fighters, social networks, among others, which all played a role in the financing of this terrorist organisation. Over the course of the next three months, the FATF will conduct further research in identifying and analysing these risks, and determine what more needs to done to prevent financial and economic sectors from being abused for terrorist financing for new and emerging threats. The FATF will discuss the findings of this work at its June 2015 Plenary. 

In September 2015, the annual Joint Experts Meeting will be held in collaboration with GAFILAT and will have as its main theme the ‘financing of terrorism’.

March 2, 2015 in Current Affairs | Permalink | Comments (0)

Three Swiss bankers face U.S. obstruction charges in tax case and soon extradition

Bloomberg reports - "three Swiss bankers accused in 2012 of helping Americans hide more than $1.2 billion from the U.S. Internal Revenue Service face new charges of obstructing the agency from collecting taxes on undeclared accounts.  ... Federal prosecutors in Manhattan filed an expanded indictment Wednesday against former Wegelin & Co. bankers Roger Keller, Urs Frei and Michael Berlinka. Keller, 50, was arrested on Feb. 2 in Frankfurt, where he faces extradition to New York."

Reuters reports - "A former Swiss banker charged by U.S. prosecutors with helping wealthy Americans evade taxes has been arrested in Germany pending extradition to the United States, his lawyer said on Saturday.  Roger Keller, a onetime client adviser in Zurich at Wegelin & Co, was one of three bankers at the now-defunct Swiss private bank charged in a 2012 indictment in New York federal court for helping U.S. taxpayers hide more than $1.2 billion in assets."


March 2, 2015 in Current Affairs | Permalink | Comments (0)

Sunday, March 1, 2015

800,000 taxpayers may have received incorrect health care tax documents, must re-file

Investment News reports 800,000 federal taxpayers and an additional overlapping 100,000 California taxpayers received erroneous Form 1095-As from the Health Care Market Place and the California run Health Care Market Place.

Those who purchased health care coverage in 2014 through the exchanges are supposed to receive a Form 1095-A in the mail, which has details necessary to file a federal income tax return for 2014.

It turns out that some of those forms listed the monthly premium amount of the second lowest cost Silver health care plan for 2015 instead of 2014, according to the blog post. The erroneous information is located in Part III, Column B of Form 1095-A.

HealthcarePolitico reports that "The 800,000 Americans who’ve just gotten erroneous tax forms for their Obamacare subsidy can blame a glitch in that used the wrong year’s data for the calculations. ... Or, as one government health source put it, “an intermittent defect in code” that may cause tens of thousands of people to have to refile their taxes."  Read more:

March 1, 2015 in Current Affairs | Permalink | Comments (0)

Saturday, February 28, 2015

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February 28, 2015 in Current Affairs | Permalink | Comments (0)

IMF Surveillance in Europe

DownloadThe International Monetary Fund has significantly improved its surveillance of the EU and the euro area, along the lines suggested by the Fund’s 2011 Triennial Surveillance Review and in application of its 2012 Integrated Surveillance Decision. Nonetheless, there is still margin for further enhancing IMF surveillance of the EU and the euro area.

This report by the Task Force on IMF Issues of the International Relations Committee of the European System of Central Banks was prepared with the aim of contributing to the preparation of and debate on the 2014 IMF Triennial Surveillance Review.


ECB Occasional Paper No. 158

CAROLINE JANSSENSNational Bank of Belgium
EVELIEN VINCENTNational Bank of Belgium
PETR SEDLACEKUniversity of Amsterdam
AXEL BRÜGGEMANNBank of Finland - Institute for Economies in Transition (BOFIT)
FELIX HAUPTDeutsche Bundesbank
MARY KEENEYCentral Bank and Financial Services Authority of Ireland
JON FROSTDe Nederlandsche Bank
SIMON WHITAKERBank of England - Monetary Analysis
JULIE MCKAYEuropean Central Bank (ECB)
RAYMOND RITTEREuropean Central Bank


February 28, 2015 | Permalink | Comments (0)

Friday, February 27, 2015

United Capital Grows $2B Through Hires, Not Acquisitions

Investment News reports that United Capital's recruitment of a $2 billion registered investment adviser out of a bank is not only the firm's biggest addition since its founding in 2005, it also marks a shift in how the firm plans to compete going forward.

With the hire of the 23-member team, which had formerly operated as Capital Investment Counsel Inc. under Compass Bank, United Capital is now focused on recruiting rather than making acquisitions, according to Matt Brinker, senior vice president of acquisitions at United Capital. The firm had previously only acquired independent RIAs, usually established offices with about $500 million in assets under management.

“It's a bit of a pivot,” Mr. Brinker said. “The platform has evolved to such a point that people are going to be joining us, much like CIC, to avail themselves of the platform, and that means folks that are doing $500,000 in revenue all the way to the size of CIC.”  see Investment News' story

February 27, 2015 in Current Affairs | Permalink | Comments (0)

Former VA Governors Wife Sentenced to Prison for Graft

NY Times reports that

"Maureen McDonnell, the wife of former Gov. Bob McDonnell of Virginia, who along with her husband was found guilty last year of trading favors in return for loans, vacations and gifts from a wealthy businessman, was sentenced Friday to a year and a day in prison for her role in a bribery case that upended her husband’s political career."

February 27, 2015 | Permalink | Comments (0)

Thursday, February 26, 2015

FinCEN Launches Web page to Assist FBAR Filers

720px-US-FinancialCrimesEnforcementNetwork-Seal.svgFinCEN has launched a Web page to assist those individuals and institutions required to file a Report of Foreign Bank Account (FBAR).

Filers can determine if they are required to file the FBAR by going to

Filers will also find numerous resources to aid in FBAR filing. Please note, the FBAR filing deadline is June 30, 2015.

February 26, 2015 in Current Affairs | Permalink | Comments (0)

New Roth 401(k) Rollovers Maximize After-Tax Contribution Value

ThinkAdvisorAs 2015 opens, clients are beginning to focus on retirement income savings strategies for the year—and many are concentrating on newly available options for maximizing the value of employer-sponsored retirement accounts. 

While the non-Roth after-tax contribution option offered wealthy clients a way to increase their 401(k) account values in the past, it did little to mitigate the current or future tax bite. The increasingly widespread availability of in-plan Roth 401(k) rollovers, however, has changed the retirement income planning landscape, creating new opportunities for higher income clients who wish to truly maximize their 401(k) contributions using after-tax dollars. 

Despite this, the rules can prove tricky, and small business and individual clients alike should be advised as to the potential impact of using this nontraditional 401(k) savings strategy. ... read Byrnes and Bloink at Think Advisor

February 26, 2015 in Current Affairs | Permalink | Comments (0)

How Does HSBC Group CEO Avoid Paying UK Tax ?

Bloomberg reported that "Only one British client of HSBC has been convicted for tax evasion after failing to disclosed funds held offshore in Switzerland."

HSBCThe UK HMRC has the account details of hundreds (or possibly thousands) of UK persons with HSBC Swiss bank accounts though (see ICIJ story).  

Now HMRC has HSBC's CEO Stuart Gulliver's Swiss bank account information (see the Guardian story excerpted below about Stuart Gulliver's Swiss bank account and UK non-dom status).  

Gulliver is also among those current and former clients of HSBC Suisse to take advantage of non-dom status. Gulliver is a registered non-dom based on his long residence in Hong Kong – now a special administrative region of China – which he considers to be his home, despite his UK-based position.

A representative for Gulliver said: “Having lived there since the 1980s, our client has become a permanent Hong Kong resident with right of abode, as has his wife who is an Australian national. Hong Kong continues to be their home albeit that our client now works primarily in the UK. As a matter of law, our client is domiciled in Hong Kong.”

Non-dom status can confer several tax advantages on those who claim the status compared with those domiciled in the UK. These include advantages in how inheritance tax is applied, but can also exempt worldwide income earned from outside the UK from incurring UK taxes – a system known as the remittance basis.

Separately, Gulliver did not become employed by HSBC’s main holding company when he took over as chief executive of the bank in 2011. Documents seen by the Guardian at the time showed that Gulliver took the job of chief executive officer as a secondment from the Dutch-headquartered HSBC Asia Holdings, rather than take a straightforward appointment to the UK parent company.

A spokesman for HSBC said around 350 of its staff were employed through the Netherlands. “About 350 of the bank’s most internationally-mobile employees are employed by HSBC BV,” he said. “This enables them to be employed/seconded to any part of the global group without the need to change contracted employer.”

February 26, 2015 in Current Affairs | Permalink | Comments (0)

SEC to Target Deals Giving Visas to Rich Foreign Investors

Bloomberg reported that -- The SEC is preparing sanctions against as many as two dozen immigration lawyers, people familiar with the matter said, for collecting deal fees from foreign investors trying to access the EB-5 visa program, which grants U.S. residency for $500,000 investments that create 10 jobs.

The lawyers were prohibited from earning transaction fees because they weren’t registered as brokers, according to the people, who asked not to be named because the investigations aren’t public.

Previous SEC actions regarding EB-5

SEC Investor Bulletin (EB-5)

February 26, 2015 | Permalink | Comments (0)

Wednesday, February 25, 2015

Will a New Fiduciary Standard Fix the Advisor-Client Conflict of Interests for Retirement Accounts?


See President's Obama Speech about enacting a fiduciary standard for retirement advisors.

Defined contribution plans and IRAs are intricately linked, as the overwhelming majority of money flowing into IRAs comes from rollovers from an employer-based retirement plan, not direct IRA contributions.

Collectively, more than 40 million American families have savings of more than $7 trillion in IRAs. More than 75 million families have an employer-based retirement plan, own an IRA, or both. Rollovers to IRAs exceeded $300 billion in 2012 and are expected to increase steadily in the coming years.

The decision whether to roll over one’s assets into an IRA can be confusing and the set of financial products that can be held in an IRA is vast, including savings accounts, money market accounts, mutual funds, exchange-traded funds, individual stocks and bonds, and annuities. Selecting and managing IRA investments can be a challenging and time-consuming task, frequently one of the most complex financial decisions in a person’s life, and many Americans turn to professional advisers for assistance.

However, financial advisers are often compensated through fees and commissions that depend on their clients’ actions. Such fee structures generate acute conflicts of interest: the best recommendation for the saver may not be the best recommendation for the adviser’s bottom line.

A retiree who receives conflicted advice when rolling over a 401(k) balance to an IRA at retirement will lose an estimated 12 percent of the value of his or her savings if drawn down over 30 years. If a retiree receiving conflicted advice takes withdrawals at the rate possible absent conflicted advice, his or her savings would run out more than 5 years earlier.

Reuters reports - Speaking at an event hosted by the AARP Inc, formerly known as the American Association of Retired Persons, Obama said, "It's a very simple principle: You want to give financial advice, you’ve got to put your client’s interests first. You can't have a conflict of interest."

The proposal is opposed by many Republicans, financial firms and some of Obama's fellow Democrats who fear the plan will limit retirement products available to investors and curb brokers' compensation.

Ken Bentsen, president of the Securities Industry and Financial Markets Association, said the SEC is the appropriate entity to consider any new rules, and called the White House's research supporting reforms inadequate.

Think advisorThink Advisor reports thatSecurities and Exchange Commission Commissioner Daniel Gallagher argued Friday at the SEC Speaks conference in Washington, however, that DOL’s rule to amend the definition of fiduciary on retirement accounts is a “runaway train,” and that the recent White House memo supporting release of the redraft is “thinly veiled propaganda designed to generate support for a widely unpopular rulemaking.”

SEC Chairwoman Mary Jo White said Friday at the same event that she would speak about her position regarding an SEC rule to put brokers under a fiduciary mandate “in the short term,” stating that it remains a priority of hers “to get the Commission in a position to make that decision” on such a rule.


February 25, 2015 | Permalink | Comments (0)