Receiving Wide Coverage ...
When Nob Met Dread: Two federal officials assigned to investigate Silk Road, the digital marketplace for drugs that only accepted payment via Bitcoin, have been charged with illegally using the defunct black-market service to enrich themselves. An agent with the Drug Enforcement Administration and a Secret Service agent have resigned and been charged with money laundering and wire fraud. The DEA agent, named Carl Mark Force IV, has also been charged with theft of government property and conflict of interest. Force is alleged to have "stole and converted to his own personal use a sizable amount of Bitcoins," approximately $776,000 worth, to be exact. The Secret Service agent, Shaun W. Bridges, is alleged to have diverted more than $800,000 worth of Bitcoin to his personal account. The two agents' cases are separate from the Manhattan U.S. Attorney office's ongoing investigation into Silk Road. Force, a 15-year veteran of the DEA who was the agency's lead uncover agent in its Baltimore office, used the nom de plume Nob to communicate with Ross W. Ulbricht, the alleged mastermind behind Silk Road who went by Dread Pirate Roberts. Speaking of the Dread-man, Ulbricht's lawyer promptly said in court on Monday that the government's investigation into Silk Road was a tad bit flawed. The probe "lacked any integrity, and was wholly and fatally compromised from the inside," lawyer Joshua Dratel said. Ulbricht was convicted in February for his role in operating Silk Road. Going back to Force's role in the alleged scandal, he had a second job while working as a DEA agent. He moonlighted as a compliance officer for CoinMKT, a currency-exchange firm, and invested about $110,000 in that company. Force also reportedly stole $300,000 in cash and virtual currencies from CoinMKT.
Wall Street Journal
The job of bank director has become more time-consuming and directors don't like the increased attention. Regulators are holding more frequent and lengthier meetings with directors of both large banks and community banks, unnamed sources told the Wall Street Journal. One bank executive called the new tactic "Occupy Board Meetings." The meetings between examiners and directors involve discussions on everything from succession planning to how a director views potential transactions. Examiners are also demanding to see detailed board minutes and offering critiques of internal bank operations. Regulators are also getting more aggressive in how they police boards. The Federal Reserve told GE Capital to add two new members who are independent of both GE Capital and General Electric. One result of the stepped-up scrutiny is that more directors are quitting. About a quarter of banks that recently responded to a survey conducted by the American Association of Bank Directors said they had a director resign, decline an offer to join the board or refuse to serve on a loan committee because of fears of personal liability.
The Financial Times provides a smidgeon of detail on the backlash against the Consumer Financial Protection Bureau. The number of lobbyists targeting the CFPB had risen to more than 400 at the end of last year from 140 in early 2011, according to figures from the Center for Responsive Politics. Sen. David Perdue, R-Ga., has called the bureau "rogue" and said, "Washington should not dictate the specific financial decisions consumers and families must make." The FT does offer a lengthy caveat to its lobbyist tally: "The lobbyist count from the Center for Responsive Politics is not exhaustive because disclosures are self-policed. Any organization that lobbied on the CFPB but reported that under a different label would not be found. The lobbyists who are recorded working on the CFPB are likely to handle other issues, too."
New York Times
The Justice Department and Consumer Financial Protection Bureau have ramped up scrutiny of auto dealerships in their investigation into reverse redlining, the practice of singling out minority borrowers for the costliest car loans. At the same time, the settlement into reverse redlining involving banks has been stymied by problems. None of the $80 million settlement reached with Ally Financial in 2013 has been paid out yet, according to unnamed sources. That's because authorities are having trouble determining which minority borrowers were harmed and should receive the money; regulators "wanted to make sure that none were sent to white borrowers," the New York Times reported. The story also reports that JPMorgan Chase is in discussions with authorities over potential reverse redlining. One issue complicating the investigations is that of dealer markups, which are used to tack on additional interest and which have been abused by being added to loans to minorities. No bank wants to be the first to deny a loan from an auto dealer that includes a markup because the dealer will take the loan to another bank.
Bloomberg: JPMorgan Chase executives have been deposed in the federal investigation into whether the company's asset-management unit steered clients into investments for JPMorgan's own gain, unnamed sources told Bloomberg. The examination into potential biased financial advice may also be expanded by the Securities and Exchange Commission to apply to all financial advisers, such as brokers who handle retirement accounts. Thousands of pages of internal JPMorgan documents have been subpoenaed. The investigators are looking into whether JPMorgan pushed clients into certain investments that generate more fees for the banks, as well as whether it directed clients' money into JPMorgan-managed funds. All of the accusations involve potential violations of the fiduciary standard, which requires advisers to put their clients' financial interests ahead of their own. The investigation started two years ago and is being handled by the SEC and the Office of the Comptroller of the Currency.