Switzerland’s biggest bank hoped to settle a tax evasion case with French authorities for $204 millions. But when enforcers dismissed UBS Group’s offer, the bank’s legal team decided to play hardball, pushing the case to trial in the hope of wringing out a smaller penalty, according to a Bloomberg report. That effort failed spectacularly.

The bank has been ordered to pay more than $5 billion in the tax-evasion case — matching what was sought by prosecutors, reports Bloomberg’s Gaspard Sebag.

The article quotes Stephane Bonifassi, a Paris criminal lawyer not involved in the case: “It’s too early to draw any definitive conclusions given the appeals have just begun, but they took a risk in thinking they had a solid case and it’s clear now the strategy didn’t pay off.”

Read the Bloomberg article.

The Washington Post reports that the Justice Department charged four people Tuesday with scheming for decades to hide tens of millions of dollars from the Internal Revenue Service — the first U.S. indictment over alleged tax evasion revealed in 2016 through the Panama Papers.

Post reporter Devlin Barrett writes that those charged include a former investment manager, a former U.S. resident, an American accountant and a Panamanian lawyer who once worked for the “firm at the center of the case, Mossack Fonseca.

“The 11-count indictment unsealed in New York marks the first time the U.S. government has charged anyone with tax crimes related to the firm — and authorities suggested others could soon be charged,” according to Barrett.

Read the Washington Post article.

The CEO of Dallas-based AriseBank was arrested by the FBI on Wednesday for allegedly duping hundreds of investors out of more than $4 million in a splashy cryptocurrency scheme that promised federally insured accounts and brand-name credit cards, The Dallas Morning News reports.

Jared Rice Sr.’s arrest followed his indictment on three counts each of securities fraud and wire fraud, said Erin Nealy Cox, U.S. Attorney for the Northern District of Texas, according to Morning News business editor Paul O’Donnell.

Rice was accused of lying to would-be investors by claiming that AriseBank could offer consumers FDIC-insured accounts and traditional banking services, including Visa-brand credit and debit cards, in addition to cryptocurrency services..

Read the Morning News article.

While a commitment letter in the real estate lending process fleshes out any issues or misunderstandings between the parties prior to the preparation of the ultimate loan documents, it is important to be aware of some potential pitfalls and issues that it can present, warns Benjamin Bruner in a Dickinson Mackaman Tyler & Hagen web post.

The post outlines some of the dangers that cause problems for parties to the contract and then discusses some fundamental terms  that a commitment letter should include for the protection of the bank.

Read the article.

A former precious-metals trader said to have worked at JPMorgan Chase & Co. admitted he engaged in a six-year spoofing scheme that defrauded investors in futures contracts with the help of his colleagues and bosses, Bloomberg Law reports.

Prosecutors said John Edmonds placed hundreds of orders he never intended to execute — orders designed to move the market, but were canceled before being matched. Edmonds and other traders sought to manipulate futures markets for gold, silver, platinum and palladium on the Nymex and Comex exchanges for their own benefit.

The Bloomberg article continues: “Edmonds, who lives in Brooklyn, New York, said he learned the spoofing strategy from more senior traders at the bank and said his immediate supervisors approved of it, according to the Justice Department.”

Read the Bloomberg Law article.

Bloomberg Law reports that class counsel will take home $300 million from settlements over an alleged conspiracy among banks to fix prices in the foreign exchange market.

The court issued the order on Thursday, Nov. 8.

The settlement, approved in August with banks that include Bank of America, JP Morgan and Citibank, is the third largest antitrust class action settlement in history, according to plaintiffs, writes Bloomberg reporter Perry Cooper.

Read the Bloomberg article.

Image by Håkan Dahlström Photography

Housing Wire is reporting that HSBC will pay $765 million to the federal government as part of a settlement that covers the bank’s mortgage bond activities in the run-up to the housing crisis.

An announcement from the U.S. Department of Justice outlines the resolution of an investigation into the bank’s mortgage origination and securitization activities from 2005 to 2007, according to editor Ben Lane.

While previous HSBC statements on the case didn’t disclose the conduct in question, the DOJ’s announcement alleged the bank allegedly knew it was putting toxic loans into residential mortgage-backed securities and sold the bonds anyway, Lane explains.

Read the HousingWire article.

A biotechnology billionaire faces charges from the Securities and Exchange Commission of being part of pump-and-dump schemes that netted $27 million and left retail investors holding the bag, reports MedCity News.

In a lawsuit filed in federal court in New York, the SEC alleged OPKO Health chairman and CEO Phillip Frost took part in three pump-and-dump schemes between 2013 and 2018.

Reporter Alaric Dearment explains that the complaint alleges that Frost was involved in schemes to promote the stock of some companies on the crowd-sourced investment content site Seeking Alpha, on which articles would appear promoting their shares and touting Frost’s involvement in the companies. After the stock prices were pumped up, the defendants would sell it off, the SEC alleges.

Read the MedCity article.

Image by Ben Sutherland

JPMorgan Chase has reached a settlement with financial advisers who say they were treated poorly because they’re black, reports Bloomberg News via the Chicago Tribune.

Reporter Max Abelson explains: “Six current and former employees at the largest U.S. bank filed what they asked to be a class action, alleging discrimination that’s ‘uniform and national in scope.’ Instead of fighting it in court, the bank agreed to pay $19.5 million to the members of the class, according to Friday filings. It will also put $4.5 million into a fund that will back recruitment, bias training, a review of branch assignments and a coaching program for black advisers.”

In the settlement, the bank denied any “wrongdoing of any kind whatsoever.”

Read the Bloomberg article.

A federal judge on Thursday refused to overturn the fraud and conspiracy convictions of four former executives for the only financial institution to be criminally charged in connection with the federal bank bailout program, the Associated Press reports.

Judge Richard Andrews refused to enter judgments of acquittal or set new trials for the former Wilmington Trust executives.

“Former bank president Robert Harra Jr., former chief credit officer William North, former chief financial officer David Gibson and former controller Kevyn Rakowski were convicted in May on charges of fraud, conspiracy and making false statements to federal regulators,” writes reporter Randall Chase

Read the AP article.

Thomas B. Hudson of Hudson Cook writes on the firm’s website that a frequent question he encountered when speaking at industry conferences concerns whether a credit buyer can be required to buy a service contract.

In the context of auto sales, he explains, requiring a service contract in connection with the credit sale of a vehicle does not violate the federal Truth in Lending Act and Regulation Z.

“But the fact that federal disclosure laws don’t prohibit the practice doesn’t mean that the practice is not affected by them. In this case, the key to the application of federal law is the word ‘require.’ When a dealer requires a service contract in financing transactions, but not in similar cash transactions, the charge for the service contract must be treated as a finance charge, added to other finance charges and included in the APR calculation. That’s pretty basic,” Hudson writes.

Read the article.

The number of cases involving consumer data breaches is rapidly growing, points out Ehren M. Fournier in a post on the website of Schoenberg Finkel Newman & Rosenberg LLC. Data breaches inflict additional costs on financial institutions, leading those institutions to turn to litigation to recoup their losses from merchants.

Fournier discusses a recent case in which the United States Court of Appeals for the Seventh Circuit Court dealt a significant blow to attempts by financial institutions to bring negligence claims against merchants for failing to adequately safeguard their customers’ data:

In 2012, hackers infiltrated Schnuck Markets, a large Midwestern grocery chain, and stole the data of about 2.4 million credit and debit cards. Financial losses from the unauthorized purchases and cash withdrawals made with the stolen data reached into the millions. Because federal law requires the consumers’ banks to indemnify the consumers for losses incurred as a result of fraudulent activity, four banks brought a class action lawsuit against Schnucks to recover their losses. The plaintiff banks had no direct contract with Schnucks, and instead resorted to common-law negligence/tort claims, common-law contractual claims, and several claims under Illinois statutes. The Seventh Circuit affirmed the lower court’s decision to dismiss all claims, and its decision on the economic loss doctrine bears some discussion. The federal appellate court anticipated that the high courts of both Illinois and Missouri would reject imposing tort liability under these circumstances.

Read the article.

The Merrill Lynch unit of Bank of America Corp. agreed to pay a $42 million fine under a settlement with the U.S. Securities and Exchange Commission for misleading brokerage customers about which firms processed their trades, according to a Reuters report.

Reporters Lisa Lambert and Jonathan Stempel write that Merrill “fell far short of the standards expected of broker-dealers in our markets,” preventing customers from making informed decisions about their orders and broker-dealer relationships, according to Stephanie Avakian, co-director of the SEC enforcement division.

“The SEC said the masking ran from May 2008 to May 2013, and that Merrill kept it hidden after it ended. It said Merrill falsely told customers that more than 15.8 million orders worth over $141 billion had occurred in-house,” according to the reporters.

Read the Reuters article.

Image by Mike Mozart

Bloomberg is reporting that Citigroup Inc. agreed to pay a combined $100 million to 42 U.S. states to resolve a probe into fraudulent conduct tied to interest-rate manipulation that affected financial instruments worth trillions of dollars.

The states had alleged Citigroup misrepresented the integrity of the Libor benchmark to state and local governments, not-for-profit organizations and institutional trading counterparties, sometimes to protect the bank’s own reputation, reports Erik Larson.

“The accord is the latest development in probes by governments around the globe into manipulation of benchmark interest rates, one of the key scandals that led to a cultural overhaul of the industry over the past decade,” Larson writes. “Global fines have topped $9 billion. In October, Deutsche Bank paid 45 states $220 million in penalties and disgorgements to resolve U.S. and U.K. probes.”

Read the Bloomberg article.

A federal bank regulator that has fined Wells Fargo more than $500 million over its creation of unauthorized accounts and other consumer abuses has found evidence of sales practice problems at other large and midsize banks — but is refusing to name those institutions, reports the Los Angeles Times.

The Office of the Comptroller of the Currency found “bank-specific instances of accounts being opened without proof of customer consent” as part of a review of more than 40 banks spurred by the Wells Fargo scandal, according to reporter James Rufus Koren.

But an agency spokesman said the agency will not be naming the banks where it found potentially unauthorized accounts or providing details on banks’ specific conduct.

Read the LA Times article.