NCUA Files New Suit Against Morgan Stanley, Other Firms
ALEXANDRIA, Va.-NCUA filed suit in Federal District Court in Kansas last week against Morgan Stanley & Co. and other firms, alleging violations of federal and state securities laws in the sale of more than $566 million in mortgage-backed securities to U.S. Central and WesCorp.
The suit came at the same time the court dismissed almost $2 billion of civil claims NCUA filed against JPMorgan Chase for the sale of mortgage-backed securities (see related story, page 10).
As in other litigation NCUA is pursuing against Wall Street firms, in the case against Morgan Stanley NCUA had alleged that firms made misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central and WesCorp, both of which had to be placed into conservatorship and liquidated as a result of losses from these faulty securities. The complaint alleged the offering documents of the securities sold to the failed corporates contained statements of material fact that were not true or omitted material facts. The originators systematically abandoned the stated underwriting guidelines in the offering documents, according to the complaint, and the securities were significantly riskier than represented. The result, the complaint says, was that the securities were destined from inception to perform poorly.
S&P Alleges Suit Is 'Retaiiation' For Rating
LOS ANGELES-Standard & Poor's called on a federal court here to dismiss a suit brought by the Justice Department over investments it rated for WesCorp FCU, Eastern Financial Florida CU and other investors, saying the $5-billion suit is "retaliation" for its 2011 decision to strip the country of its AAA credit rating.
S&P said in its response to the U.S. suit it was the only major credit rating agency to take away the U.S.'s top rating and the only rating agency sued by the Department of Justice for allegedly misleading credit unions and banks about the credibility of its ratings before the 2008 financial crisis.
The suit focuses on numerous securities rated by S&P that eventually soured and helped sink WesCorp and Eastern Financial Florida CU.
Councilwoman Fined Over Ethics
HONOLULU-City Councilwoman Ann Kobayashi has agreed to pay a $500 ethics fine for not disclosing her role as a director for six CUSOs of Aloha Pacific FCU when she introduced and voted for a bill that could have lowered the property taxes of CUs. The Honolulu Ethics Commission said Kobayashi admitted she failed to disclose her CU ties when she voted on the bill last year. Kobayashi disclosed the conflict after commission staff brought it to her attention. She also resigned her directorship with the subsidiaries and admitted responsibility for not following ethics laws.
Long-time CU, CMG Director Dies
HONOLULU-University of Hawaii FCU said Farouk Wang, a director at the $550-million credit union for more than 30 years and longtime member of the board at CUNA Mutual, died last weekend at 70. Wang, who worked as facilities director at the University of Hawaii at Manoa, also chaired the Hawaii CU League.
Oram named Outstanding Exec
POCATELLO, Idaho-Kent Oram, CEO of Idaho Central CU, has been named the 2013 CUES Outstanding Chief Executive. Under Oram's leadership, ICCU has become one of the fastest growing CUs in the country. It saw a 122.11% overall increase in assets from Oram's start in September 2007 to the end of April, 2013.
APCU's Markland Resigns
MINNEAPOLIS, Minn.-Kyle Markland, the well-known and well-regarded CEO of the $1.6-billion Affinity Plus Credit Union here, has resigned. Markland, 49, had been with the credit union for 16 years. The Minneapolis Star-Tribune quoted a spokesperson as saying the reasons for the departure were personal and were related to he and his wife becoming empty-nesters. The credit union said it has begun a search for a new leader.
