Receiving Wide Coverage ...
Bigger Battles Ahead: The Times and the FT warn that JPMorgan Chase, which agreed last week to pay $1 billion to settle a range of government inquiries and investigations, may still have bigger battles ahead of it, including a potential lawsuit in California, where federal prosecutors are looking into details of mortgage securities sales conducted in the run-up to the financial crisis. The case is expected to come as soon as today, according to the NYT. Efforts to reach a settlement have failed, the FT reports, citing a source familiar with the matter. New York Times, Financial Times
More Mortgage Layoffs: Citigroup has slashed 1,000 jobs in its mortgage division in the wake of rising interest rates and waning refinancing activity, and a 4 percent drop in originations in the second quarter versus the first. As the Journal and FT report, most of the layoffs were in Las Vegas and in the Dallas suburb of Irving, Texas. An unnamed source tells the Journal that this will be the largest of the bank's mortgage-related layoffs. We presume he or she was referring only to the current boom-bust cycle for the business Wall Street Journal, Financial Times
Wall Street Journal
U.S. prosecutors may find themselves in an awkward spot as they pursue a case against two former JPMorgan Chase traders accused of overstating the value of group's market positions. The traders, the Journal reports, plan to point fingers not at senior executives of the bank but at Bruno Iskil, aka the London Whale, arguing that he was the person in charge of valuing the positions, not the defendants. This is according to unnamed sources "close to the matter."
The $1.2 billion Ponzi scheme that sent South Florida attorney Scott Rothstein to prison has resulted in fines of $52.5 million against Toronto-Dominion Bank, which is accused by the Securities and Exchange Commission of defrauding investors by manufacturing documents and issuing false statements about Rothstein's accounts at TD Bank. Meanwhile, Bank of America was ordered by a U.S. Labor Department administrative law judge to pay about $2.2 million in back wages and interest to 1,147 African-American job applicants, in a hiring discrimination case that dates back to the 1990s. According to the agency, "unfair and inconsistent selection criteria" blocked African-American applicants from getting teller jobs and entry-level clerical and administrative posts.
Credit Suisse's private bank is retrenching, with a planned exit or partial withdrawal from about 50 markets, mainly in Africa and central Asia where, the paper notes, the returns "do not justify the costs of vetting clients when banks are under mounting pressure to ensure that they do not deal with the holders of ill-gotten wealth." The pullback also will affect certain western markets where the firm lacks scale.
New York Times
It's bribery, it's self-dealing, it's an SEC settlement? Andrew Ross Sorkin argues in his DealBook column that the $920 million that JPMorgan Chase last week agreed to pay to settle civil allegations tied to the London Whale case is really coming out of the pockets of shareholders, making them victims all over again of the bank's bad trading decisions. By bringing a case against "the firm" (i.e. the shareholders), the SEC has an easier time notching a victory and extracting a higher settlement price, versus attempting to bring cases against individual executives, who are less likely to settle, Columbia Law School Professor John C. Coffee Jr. explains. And "the firm," using shareholder money, can essentially "bribe" the agency not to go after individuals, Sorkin writes.