Receiving Wide Coverage ...
S&P vs. DOJ, Retaliation Edition: Well, this is an interesting tactic. Standard & Poor's is arguing that the federal government is suing the firm in retaliation for stripping the U.S. of its AAA credit rating back in 2011. Per S&P's latest court filing, "the government's 'impermissibly selective, punitive and meritless' lawsuit was brought 'in retaliation for defendants' exercise of their free-speech rights with respect to the creditworthiness of the United States of America,'" the Times reports. Scan readers will recall that the U.S. Department of Justice filed civil charges against the credit rating agency back in February for allegedly ignoring their own standards and rating mortgage investments much higher than they should have been in years leading up to the financial crisis. A spokeswoman for the DOJ told the Journal the retaliation allegation was preposterous. Lawyers tell the paper making the claim stick will be "an uphill battle" as S&P would need "to prove that there was direct communication between different government agencies and to indicate any such goal, as of the alleged retaliation by the government." The FT reports that S&P's lawyers "have demanded, and been granted, permission to collect documents and emails from government departments and agencies relating to the DOJ's decision to launch the lawsuit." Tuesday's court filing cites a total of 19 defenses to the government's allegations. Among them, S&P argued that even Federal Reserve Chairman Ben Bernanke (who has previously been attached to civil crisis-related cases) and then-Treasury Secretary Hank Paulson didn't anticipate how serious the crisis was, prior to it actually happening. S&P has argued in previous court filings that certain assurances it made about the objectivity of its ratings process constitute "classic puffery" the vague and overblown language that businesses often use to describe the virtues of their products and services which is also an interesting tactic, given the firm's business model.
Wall Street Journal
The European Union is proposing strict rules on money market funds that go further than the ones put forth by the Securities and Exchange Commission in June. The new rules would require all Europe-based funds "either to value their assets daily or build up capital buffers worth at least 3% of the assets they manage to absorb potential losses." They also set minimum requirements for liquid assets and limit the types of investments that funds can engage in. Some EU states have already voiced opposition to the proposal.
New York Times
A federal judge has dismissed a civil lawsuit Bank of America filed against Ralph Cioffi and Matthew Tannin, two former Bear Stearns executives the bank had accused of lying about the health of their hedge funds. The case was dismissed after the judge ruled B of A had failed to prove damages tied to the conduct of the pair. Cioffi and Tannin were acquitted of charges of securities fraud violations back in November 2009 in "the first major criminal trial connected with the financial crisis."
Vikram Pandit, former Citigroup CEO, is investing in "CommonBond, a Brooklyn-based start-up that lends to MBA students and refinances existing debt." Scan readers will recall Pandit made some headlines back in June after investing in Indian financial services group JM Financial. Dealbook notes "the two investments fit under a broader thesis that the business of providing credit is changing, as traditional banks pull back" and reports that Pandit is expected to "make more investments along these lines."
Another day, another "Nepotism: Every firm is doing it" article. This one comes courtesy of Dealbook columnist Peter J. Henning who notes the government's investigation into JPM's Chinese hiring practices will "test how broadly the [Foreign Corrupt Practices Act] applies to almost commonplace conduct by firms seeking any small advantage over rivals to win business from foreign governments."