Receiving Wide Coverage ...
Convicted: Sean Stewart, a former investment banker at Perella Weinberg and JPMorgan Chase, was found guilty in federal court on all nine counts of securities fraud for passing tips about pending healthcare mergers to his father. The scheme, in which the father recruited a partner to trade on the information, reaped $1.16 million in profits, according to the U.S. Department of Justice. Wall Street Journal, Financial Times
Wall Street Journal
Bought out: Marketplace lender Avant Inc. said about 220 of its workers, or about 30% of its full-time staff, accepted the buyout offer recently extended to all employees. Among those who took the buyout was Chief Compliance Officer Anna Fridman, who just happens to be the wife of CEO Al Goldstein. It's "not the highlight of my professional career to have to shrink the size of the company," Goldstein said. The company has also had to abandon a no-fee loan product.
Mystery shoppers: The Consumer Financial Protection Bureau used mystery shoppers to investigate accusations of redlining and mortgage discrimination at BancorpSouth, the Mississippi bank that signed a $10.6 million settlement with the CFPB and the Justice Department on June 29. The bank didn't admit wrongdoing, disputed the findings and criticized the methods used in the case. "We have concerns with the way the information was collected, and selectively released," the bank said.
Undercover operations are rarely used by regulators. Under the 1974 Privacy Act, government officials must identify themselves when seeking information, but the CFPB argues the law doesn't apply to mystery shopping when seeking general information.
Reprieve: Canada's bank regulator, the Office of the Superintendent of Financial Institutions, has granted the country's lenders an additional year to implement global reforms aimed at improving risk disclosures. The banks will now have until October 2018 to tighten their disclosure requirements, which are part of reforms introduced by the Basel Committee on Banking Supervision.
Rocky start: Goldman Sachs, the ultimate institutional Wall Street firm, has stumbled in its first-ever foray into consumer financial services. GS Bank's automated menu system failed to recognize simple instructions, and its call center isn't open 24 hours a day, unlike its competitors, the FT reports. "Because it was Goldman everyone expected the white glove service," the head of a cash management firm said. "It was not the white glove service."
Why is Goldman even getting into this business? Because "life on Wall Street has become much tougher since the global financial crisis," including tighter regulation, a shift to electronic platforms, and choppy markets, the paper says.
Macy's closings threaten debt: Morningstar said Macy's plan to close an additional 100 underperforming stores threatens the repayment of $25 billion of debt, including $3.6 billion of the retailer's own securitized mortgage bonds plus another $21.4 billion of loans issued by malls where Macy's is the anchor store.
New York Times
Banks demand arbitration: Big banks are increasingly using mandatory binding arbitration clauses to restrict consumers' ability to settle disputes in court, according to a study by the Pew Charitable Trusts. Over the last four years, 72% of big banks studied used binding arbitration, up from 59% four years ago. "There is a disconnect between what banks are doing and what consumers want," a Pew spokesman said. As American Banker readers know, the CFPB released a plan in May to limit arbitration and banks are gearing up for a fight as well as looking for ways to cut the costs of lawsuits.