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Tag Archives: SEC

Brookstreet CEO Ordered to Pay $10 Million Penalty in SEC Case

Former CEO of Brookstreet Securities Corp. was ordered by a federal judge to pay a maximum $10 million for securities fraud, the Securities and Exchange Commission (SEC) announced Friday in a statement. The SEC charged Stanley C. Brooks and Brookstreet in December 2009 with fraud due to the sale of risky mortgage-backed securities to customers who were not looking to purchase risky investments. The more than thousand customers who bought the risky Collateralized Mortgage Obligations (CMOs) through Brookstreet included seniors and retirees.

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Obama’s New RMBS Investigation Unit Takes Shape

The special mortgage investigation unit announced by President Obama during his State of the Union address Tuesday night has taken shape. The new Residential Mortgage-Backed Securities (RMBS) Working Group will operate within the Financial Fraud Enforcement Task Force and will consists of at least 55 Department of Justice attorneys and investigators, as well as state attorneys general. The president has tasked the group with uncovering those responsible for pooling and selling mortgage bonds that contributed to the financial crisis.

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BankAtlantic, CEO Charged With Misleading Investors on Loan Losses

The Securities and Exchange Commission (SEC) on Wednesday charged the holding company for one of Florida's largest banks and its top executive with misleading investors about growing problems with the company's loan portfolio early in the financial crisis. The SEC alleges that BankAtlantic Bancorp and its CEO and chairman Alan Levan made false statements in public filings and earnings calls in order to hide the deteriorating state of its commercial residential real estate land acquisition and development loans.

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Lawmaker Presses for Criminal Investigation of GSEs

Sen. Scott Brown of Massachusetts says the civil lawsuit filed by the Securities and Exchange Commission (SEC) last week against six former executives of Fannie Mae and Freddie Mac ""does not go nearly far enough."" Brown is pressing the Department of Justice and the SEC to immediately open criminal investigations into Fannie and Freddie. The senator says authorities need to take a closer look at the GSEs' business dealings prior to the housing collapse and their disclosure of subprime mortgage holdings.

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GSEs Held $2 Trillion in Subprime Loans at Height of Financial Crisis

At the height of the financial crisis in 2008, Fannie Mae and Freddie Mac held $2 trillion in high-risk subprime loans, amounting to 42 percent of their single-family portfolios, according to Edward Pinto of the American Enterprise Institute. Pinto, who served as chief credit officer for Fannie Mae until the late 1980s, arrived at this number by relying on data from the Securities and Exchange Commission (SEC), which filed a lawsuit against six former GSE executives for fraud.

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SEC Charges Former GSE Execs with Securities Fraud

Six former executives at Fannie Mae and Freddie Mac are now facing securities fraud charges for making misleading statements about the companies' holdings of subprime loans between March 2007 and August 2008. The Securities and Exchange Commission (SEC) alleges they fed the markets false information about the amount of risk on each company's books. Both GSEs entered into non-prosecution agreements with the SEC and have agreed to cooperate in the litigation against their former executives.

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New York Judge Denies Citigroup Settlement

A New York federal judge ruled Monday against the proposed $285 million settlement agreed to by Citigroup and the Securities and Exchange Commission (SEC) in October. Judge Jed Rakoff said he has ""regretfully"" concluded that the agreement is neither reasonable nor in the public interest. Rakoff's opposition is rooted in the lack of evidence needed to determine whether the settlement is sufficient and the fact that Citigroup did not admit fault. He has set a trial date of July 16 for the issue to be aired in public.

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Judge Criticizes SEC for Being Soft on Citigroup

U.S. District Judge Jed S. Rakoff criticized the Securities and Exchange Commission's (SEC) $285 million proposal to Citigroup to settle allegations related to its mortgage trading, and said he will need time to consider the deal. Rakoff questioned several of the settlement's terms, including the agreed-upon monetary penalty. Rakoff is particularly leery of this condition because the SEC has reportedly reached settlements with Citigroup in the past after which the bank allegedly broke the agreements through security law violations.

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Citigroup Settles with SEC over Collateralized Debt Obligation

Citigroup has agreed to a $285 million settlement with the Securities and Exchange Commission (SEC) after accusations that it misled investors about a collateralized debt obligation (CDO) that defaulted after the housing market began showing signs of distress. The SEC alleges that a Citigroup subsidiary selected $500 million of the $1 billion CDO portfolio and then took a proprietary short position against the investments. But Citi says while the company did subsequently realize gains on its short positions, other affiliates also retained over $100 million of the notes issued and ultimately sustained losses.

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Execs of TARP-Supported Bank Charged with Hiding Millions in Losses

A federal grand jury in San Francisco has indicted two former bank executives of the now-defunct United Commercial Bank for using fraudulent accounting maneuvers to misrepresent loan losses to federal agencies as the bank took money from taxpayers through the Troubled Asset Relief Program (TARP). The Securities and Exchange Commission has filed separate civil charges accusing the same two executives and the former CEO of misleading investors about the bank's mounting loan losses, to the tune of $65 million.

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