Wells Fargo to pay more than $6.5 million to settle SEC charges

WASHINGTON, Tue Aug 14, 2012 – Wells Fargo & Co. will pay a penalty of more than $6.5 million to settle civil charges alleging it sold complex mortgage-backed instruments to municipalities and non-profits during the financial crisis without fully disclosing the risks.

The Securities and Exchange Commission said on Tuesday that the bank has agreed to settle without admitting or denying the charges, and the money will be placed into a fund to help harmed investors.

The SEC also charged a former Wells Fargo vice president, Shawn McMurtry, for his role in selling the products. He settled the charges without admitting or denying them. He will pay a $25,000 penalty and will also be suspended from the industry for six months.

Morgan Stanley to pay $5 million to settle CFTC case

WASHINGTON, Tue Jun 5, 2012 – Morgan Stanley agreed to pay $5 million to settle charges brought by the Commodity Futures Trading Commission that it executed unlawful noncompetitive trades, the agency said on Tuesday.

The bank executed, processed and reported off-exchange futures trades to the Chicago Mercantile Exchange and Chicago Board of Trade as exchanges for related positions over an 18-month period from 2008 to 2009, according to the CFTC.

The EFRPs constituted “fictitious sales” because the futures trades were executed noncompetitively and not in accordance with exchange rules, the CFTC said.

“The laws requiring that futures trades be executed on an exchange serve important price discovery and transparency principles,” said CFTC enforcement director David Meister.

“When a (broker) reports that it properly conducted an off-exchange futures trade as part of an EFRP, that report had better be accurate.”

A spokeswoman for Morgan Stanley said that bank was pleased to settle the charges.

“Morgan Stanley cooperated fully with exchange staff in the matter,” Mary Claire Delaney said in an email, noting that the order did not find any to customers.

She also said the settlement relates to trades initiated by a single former salesperson.

In the order, the CFTC said the bank “failed to supervise diligently its employees’ handling of the trades at issue.”

Time Warner posts lower quarterly profit due to impairment charges

NEW YORK, Wed May 2, 2012 – Time Warner Inc. on Wednesday said its revenue rose 4 percent from a year ago but impairment charges kept the media company from recording a higher profit in the first quarter.

Net income for the company, which owns a host of cable networks, premium TV service HBO, magazines and a movie studio, was $581 million, or 59 cents a share, compared with $681 million, or 59 cents a share, a year before. Time Warner bought back about 24 million shares from Jan. 1 through April 27, 2012.

Adjusted for impairment charges, including a $35 million charge related to the cancellation of the HBO series “Luck,” and a $52 million charge for shutting down a network in India, the company reported EPS of 67 cents per share. This came in 3 cents above Wall Street analysts’ average estimates.

Revenue rose 4.4 percent to $6.98 billion. Analysts were expecting revenue of $6.8 billion, according to Thomson Reuters I/B/E/S.

Its shares were flat in premarket trading.

Citigroup to pay $285 million to settle charges in SEC CDO fraud case

NEW YORK ― Citigroup Inc. will pay $285 million to settle charges that it defrauded investors who bought toxic housing-related debt that the bank bet would fail, the U.S. Securities and Exchange Commission said on Wednesday.

The SEC said the bank’s Citigroup Global Markets unit misled investors about a $1 billion collateralized debt obligation by failing to reveal it had “significant influence” over the selection of $500 million of underlying assets, and that it took a short position against those assets.

It said one experienced CDO trader called the portfolio “possibly the best short EVER!” while an experienced collateral manager said “the portfolio is horrible.”

According to the regulator, the CDO, Class V Funding III, defaulted in November 2007, fewer than nine months after it closed, leaving investors with losses even as Citigroup made $160 million of fees and profits.

“The securities laws demand that investors receive more care and candor than Citigroup provided,” SEC enforcement chief Robert Khuzami said in a statement.

Citigroup settled with the SEC without admitting wrongdoing. The SEC also filed charges against Brian Stoker, who it said was the Citigroup employee primarily responsible for structuring the transaction.

Neither Citigroup nor a lawyer for Stoker were immediately available to comment.

The SEC said it settled separate charges against Credit Suisse Group AG’s asset management unit, which was the collateral manager for the CDO, as well as Samir Bhatt, the Credit Suisse portfolio manager mainly responsible for it.

Credit Suisse will pay $2.5 million to settle, while Bhatt agreed to a six-month suspension from associating with an investment adviser, the SEC said. Neither admitted wrongdoing.

The settlement is the third by the SEC against a major bank it accused of marketing a CDO, and then betting against it or allowing others to do so.

In June, JPMorgan Chase & Co. agreed to a $153.6 million settlement over the Squared CDO 2007-1, while Goldman Sachs Group Inc. in July 2010 accepted a $550 million accord over the Abacus 2007-AC1 CDO.

As part of the settlement, Citigroup will give up the $160 million of alleged improper fees and profits plus $30 million of interest, and pay a $95 million fine.

The settlement requires court approval. The case was assigned to U.S. District Judge Jed Rakoff in Manhattan, who chastised the SEC and ultimately rejected its proposed $33 million settlement in 2009 with Bank of America Corp over that bank’s purchase of Merrill Lynch & Co. He later grudgingly approved a revised $150 million accord.