MF Global trustee sees possible claims vs Corzine

NEW YORK, Mon Jun 4, 2012 – The trustee liquidating MF Global Holdings Ltd. issued a blistering report on Monday about how former CEO Jon Corzine ran the broker-dealer and said he saw possible civil claims against top executives for breach of duties to customers.

In a written report to the U.S. Bankruptcy Court in Manhattan, trustee James Giddens said liquidity at the commodities firm had been a concern long before MF Global tumbled into bankruptcy last October.

Yet before and throughout Corzine’s tenure as CEO, “systems and tools that would enable accurate real-time monitoring of liquidity were never implemented,” Giddens concluded.

The trustee said he had been in discussions with customers’ lawyers about legal action against former MF Global managers and others. He said his report drew no conclusions about possible criminal liability.

Giddens had earlier said he was mulling filing claims against certain executives, but did not name them. Monday’s report identifies Corzine, as well as former Chief Financial Officer Henri Steenkamp and former Assistant Treasurer Edith O’Brien, as possible targets for civil claims.

A spokesman for Corzine had no immediate comment. Lawyers for Steenkamp and O’Brien were not immediately available.

The report serves as a status update on Giddens’ efforts to recover money for customers who lost funds when MF Global collapsed. Giddens has estimated that about $1.6 billion disappeared from customer accounts when the company improperly mixed client funds with its own money.

Giddens also said he was prepared to litigate against JPMorgan Chase & Co, one of MF Global’s main banks, if unable to reach a settlement within 60 days. That dispute centers on claims over whether the bank played a role in the disappearance of customer funds.

JPMorgan has already returned about $89 million in customer funds and $518 million in general MF Global assets, Giddens’ report said.

Facebook market makers’ losses total at least $100 million

NEW YORK, Fri May 25, 2012 – Claims by four of Wall Street’s main market makers against Nasdaq over Facebook’s botched IPO are likely to exceed $100 million, as they and other traders continue to deal with thousands of problems with customer orders.

A technical glitch delayed the social networking company’s market debut by 30 minutes on Friday and many client orders were delayed, giving some investors and traders significant losses as the stock price dropped. The exchange operator is facing lawsuits from investors and threats of legal action from brokers.

Four of the top market makers in the Facebook IPO – Knight Capital, Citadel Securities, UBS AG and Citi’s Automated Trading Desk – collectively have probably lost more than $100 million from problems arising from the deal, said a senior executive at one of the firms.

Knight and Citadel are each claiming losses of $30 million to $35 million, potentially overwhelming a $13 million fund the exchange set up to deal with potential claims.

Nasdaq also has to contend with the outside prospect that it could lose the Facebook listing entirely after having just obtained it.

Jobless claims for last week hold steady at 370,000

WASHINGTON, Thu May 17, 2012 – New claims for unemployment benefits were unchanged last week, according to government data on Thursday that will do little to ease concerns about a recent slowdown in jobs growth.

Initial claims for state unemployment benefits held steady at a seasonally adjusted 370,000, the Labor Department said.

The prior week’s figure was revised up to 370,000 from the previously reported 367,000.

Economists polled by Reuters had forecast claims falling to 365,000 last week. The four-week moving average for new claims, considered a better measure of labor market trends, fell 4,750 to 375,000.

The data comes on the heels of three straight months of slowing employment gains. Companies added 115,000 new jobs to their payrolls in April, the fewest in six months.

Thursday’s report on claims covered the week for May’s payrolls survey. The four-week average of new applications fell marginally between the April and May survey periods, suggesting not much change in labor market conditions.

Still, many economists think the April report gave an overly dim view of the economy, and pin the pull-back in job creation as payback for a mild winter that boosted gains in prior months.

The U.S. Federal Reserve appears disinclined to ramp up its support for the economy anytime soon unless the recovery stumbles. Minutes from the Fed’s April meeting released on Wednesday supported that view.

A Labor Department official said there was nothing unusual in the state-level claims data and no states had been estimated.

Madoff trustee now seeks $255 million from family

NEW YORK, Mon May 7, 2012 – Members of Bernard Madoff’s family were hit with an expanded $255.3 million lawsuit, saying they should have caught the patriarch’s Ponzi scheme and must return the benefits to victims.

Irving Picard, the trustee seeking money for Madoff’s victims, said family members who worked at Bernard L. Madoff Investment Securities LLC were “completely derelict” in ensuring that the investment firm’s operations were legal.

The lawsuit adds three former spouses of Madoff’s sons as defendants. Picard said they were unjustly enriched by the scheme through their marriages, and that “equity and good conscience” required that they forfeit money to victims, whom he believes are owed $20 billion overall.

Picard filed his complaint late Friday with the U.S. bankruptcy court in Manhattan, one month after winning court approval to add the spouses. The case has grown from $226.4 million in November, and $198.7 million in October 2009.

The family defendants are Madoff’s brother Peter, who was the Madoff firm’s chief compliance officer; son Andrew, who was co-director of trading; the estate of son Mark, who was also co-director of trading and committed suicide in December 2010; and niece Shana, a compliance officer.

The spouse defendants are Deborah Madoff, who began divorce proceedings against Andrew Madoff in 2008; Stephanie Mack, Mark Madoff’s widow; and Susan Elkin, who divorced Mark Madoff in 2000.

Jobless claims fall to four-year low, suggesting jobs recovery gaining traction

WASHINGTON, Thu Mar 22, 2012 – The number of Americans claiming new unemployment benefits dropped to a four-year low last week, offering further evidence the jobs market recovery was gaining traction.

Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 348,000, the lowest level since February 2008, the Labor Department said on Thursday.

The prior week’s figure was revised up to 353,000 from the previously reported 351,000. Economists polled by Reuters had forecast claims rising to 354,000 last week.

The four-week moving average for new claims, considered a better measure of labor market trends, declined 1,250 to 355,000.

The claims data covered the survey week for March nonfarm payrolls. Claims dropped 5,000 between the February and March survey periods, suggesting another month of solid job gains.

“That’s another indication that the labor market is healing. That’s good news for the March payroll report,” said Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh.

Jobless claims fall to four-year low, manufacturing holds up

WASHINGTON/NEW YORK, Fri Mar 16, 2012 — Economic growth showed signs of becoming more self-sustaining as the number of Americans claiming new jobless benefits fell back to a four-year low last week and manufacturing activity in the Northeast picked up this month.

But the impact of higher oil prices also was starting to be seen in data on Thursday. Producer prices racked up their biggest increase in five months in February, while manufacturers in New York state reported a surge in input costs in March.

The recent gains in oil and gasoline prices have raised concerns the higher costs could start to squeeze businesses and consumers and put a dent in the recovery.

Still, producer prices last month did not rise as much as economists had expected, and underlying inflation pressures were contained.

Thursday’s initial claims data for state unemployment benefits was further evidence of an improving labor market after the jobless rate held at a three-year low of 8.3 percent in February.

“This suggests that the recovery is firmly on track,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

The Federal Reserve earlier this week acknowledged the recent improvement in the labor market, but remained concerned with the still-high unemployment rate. The central bank also reiterated its expectation it will keep interest rates at ultra-low levels through late-2014 as part of its efforts to support the economy.

Making sense of employee exemption misclassification claims

Elise R. Vasquez, Partner, Ropers Majeski Kohn & Bentley PC

Employers and employees alike commonly assume that if an employee is paid an agreed-upon annual salary rather than an hourly wage, that employee is exempt from the strict wage hour laws here in California. For example, employers believe salaried employees are not entitled to overtime pay and meal and break periods. However, that’s not necessarily the case.

“Specific to the white-collar universe, there are exemptions — there’s an executive exemption, an administrative exemption, a computer analyst exemption, a professional exemption — and that means if you meet a salary requirement and you meet duties requirements governed by the statute, then you are classified as exempt and therefore are not entitled to overtime,” says Elise R. Vasquez, partner at Ropers Majeski Kohn & Bentley PC. “What we’ve started to see is an up-rise in white-collar exempt misclassification claims.”

Under the Obama administration, funds have been funneled to labor board investigators meant to probe wage-hour claims to determine whether or not employers are in violation of the wage hour requirement and employees are misclassified as exempt. In the past, many such claims came primarily from blue-collar jobs, such as the restaurant industry. We are seeing more claims from employees for unpaid overtime that they were entitled to, because they were misclassified as exempt based on the job description and duties performed.

Smart Business spoke with Vasquez to find out more about misclassification lawsuits, and what an employer can do in the event a claim is made.

What establishes an employee as exempt or non-exempt?

The list of qualifiers is comprehensive and very specific for each exemption.  Basically, there is a salary requirement and a duties requirement that need to be met for an employee to be exempt. Unfortunately, employers have been relying on the assumption that if they hire a computer analyst, for example, and they pay them the requisite salary, they must be exempt. In reality, that may not be the case. Specific day-to-day duties that they perform may not fall under an exemption. As such, while an employer may meet the salary requirement for a computer analyst, because he or she performs non-exempt duties more than 50 percent of the time, the person is entitled to overtime pay and meal and break periods.

How can employers ensure they are classifying their employees correctly?

The job title and salary requirement are not enough, and each exemption has different requirements. Employers should enlist the counsel of their labor and employment lawyer to perform an audit to make sure each employee falls under the correct exemption.

Their labor and employment lawyer can perform the audit by taking a look at the job description the employer claims is an exempt position, interview the employees in that position, and  determine if in fact they perform exempt duties more than 50 percent of the time.

Prior to hiring an employee, employers should be clear about the job duties and what the employee will be doing. When interviewing a candidate, focus specifically on those duties. After hiring, it becomes an upper management issue, where each employee will have a reporting manager who will be responsible for checking with HR and ensuring employees are performing the correct duties for that position more than 50 percent of the time. Educating upper management and HR as to exempt duties will allow for these checks to be in place.

What should an employer do in the event that a claim is filed?

If a company does not have a labor and employment lawyer in place, it should look to hire one with a level of expertise in misclassification lawsuits, both with class actions and individual cases. The lawyer will get the job descriptions of all employees and/or former employees involved in the claim, talk to the reporting managers to see whether or not they did the exempt duties more than 50 percent of the time, look at payroll records and do a risk benefit analysis. This analysis will determine the company’s potential exposure. If in fact there is potential exposure, the exposure can be calculated with reasonable certainty.

If there is liability, most companies will want to avoid trial and resolve any matter early. Hence the importance of hiring a lawyer who understands each and every one of the exemptions as well as which exemptions the employee(s) fall into.

What if the employer loses the case?

In addition to the employer owing an employee or a class of employees any unpaid wages, the employer is exposed to penalties. For every employee who is no longer working for the company, there will be penalties for not paying them what they are owed. There are also other penalties under various statutes an employer could be subject to for various payroll violations. In addition, all employees who prevail on wage-hour claims are entitled to attorneys’ fees and costs.

Because exposure can usually be calculated with reasonable certainty, a lot of these cases do not go to trial, unless the case for the employer is particularly strong. If the employer is correct and can prove the employee(s) filed a meritless claim, the employer can seek fees from the employee(s). The reality, however, is it is highly unlikely an employee will have the means to pay for the employer’s attorneys’ fees.

Elise R. Vasquez is a partner with Ropers Majeski Kohn & Bentley PC. Contact her at (650) 780-1631 or [email protected]


New unemployment benefits claims fall 15,000 last week

WASHINGTON ― New claims for unemployment benefits fell by 15,000 last week in the latest sign the labor market was improving and could help the country resist the effects of a likely euro zone recession.

Initial claims for state unemployment benefits dropped to a seasonally adjusted 372,000, the Labor Department said on Thursday. The prior week’s claims data was revised up to 387,000 from the previously reported 381,000.

Economists polled by Reuters had forecast claims falling to 375,000. A Labor Department official said there was nothing unusual in the data, although the figures for three states, including California and Virginia, had been estimated.

Claims have now fallen in four of the last five weeks, and the four-week moving average ― a better measure of trends – fell 3,250 to 376,500, the lowest level since June 2008.

Economists at Goldman Sachs said in December that weekly claims below 435,000 pointed to net monthly gains in jobs.

An improving labor market has boosted the view the economy wrapped up 2011 on better footing, leaving it well positioned to deal with headwinds from Europe’s debt crisis and fiscal tightening at home.

Still, a moribund U.S. housing market and persistently high unemployment threaten the recovery.

In the week ending December 24, the number of people still receiving benefits under regular state programs after an initial week of aid fell 22,000 to 3.595 million. Economists had forecast so-called continuing claims holding about steady at 3.58 million.

As of Dec 17, a total of 7.223 million people were claiming unemployment benefits under all programs, down 8,311 from the prior week.

Data on Wednesday showed U.S. manufacturing growing at its fastest pace in six months during December, capping a late-year upswing.

Fourth-quarter growth is seen topping a 3 percent annual pace, rising from the July-September period’s 1.8 percent rate.

Jobless claims fall to lowest since April 2008, suggesting labor recovery growth

WASHINGTON ― New claims for unemployment benefits dropped last week to its lowest in more than 3-1/2 years, suggesting the labor market recovery was gaining speed.

Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 364,000, the Labor Department said. That was the lowest level since April 2008.

The economy has shown signs it is gaining steam as the year ends, although the recovery still could be derailed by any big flare up in Europe’s debt crisis. The economy also faces risks from the fight in Congress over extending special unemployment benefits and a payroll tax cut.

The prior week’s claims data was revised up to 368,000 from the previously reported 366,000.

Economists polled by Reuters had forecast claims rising to 375,000 last week.

The level of unemployment claims has fallen in recent weeks, and analysts say fewer layoffs means employers are probably more likely to hire.

Economists at Goldman Sachs said earlier in the week that weekly claims below 435,000 pointed to net monthly gains in jobs. Their research was based on figures available through October.

In November, the jobless rate dropped to a 2-1/2 year low of 8.6 percent. The Federal Reserve last week acknowledged an improvement in the jobs market, but said unemployment remained high and left the door open for further measures to help the economy.

A Labor Department official said claims were not estimated for any states, and that there was nothing unusual in the data.

The four-week moving average of claims, considered a better measure of labor market trends than the headline number, fell 8,000 to 380,250 — the lowest since June 2008.

The number of people still receiving benefits under regular state programs after an initial week of aid fell 79,000 to 3.546 million in the week ended Dec. 10.

Economists had forecast so-called continuing claims holding steady at 3.6 million.

As of Dec 3, a total of 7.150 million people were claiming unemployment benefits under all programs, down 299,738 from the prior week.

Jobless claims drop to 3.5 year low; labor market strength seen

WASHINGTON ― New U.S. claims for unemployment benefits dropped to a 3½  year low last week, a government report showed on Thursday, suggesting the labor market recovery was gaining speed.

Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 366,000, the Labor Department said. That was the lowest level since May 2008.

The prior week’s claims data was revised up to 385,000 from the previously reported 381,000.

Economists polled by Reuters had forecast claims rising to 390,000 last week.

The unexpected drop in claims last week pushed them closer to the 350,000 mark that analysts say signals labor market strength.

It offered further evidence of increased momentum in the pace of economic activity, even though retail sales rose modestly in November. This is in sharp contrast to Europe, where t he festering debt crisis has already pushed some economies into recession.

The Federal Reserve on Tuesday acknowledged the improvement in the jobs market, but said unemployment remained high. The jobless rate dropped to a 2-1/2 year low of 8.6 percent in November.

The U.S. central bank said the debt crisis gripping Europe was a big risk to the U.S. economy, which it described as “expanding moderately”.

A Labor Department official said there was nothing unusual in the state level data and noted that only one state had been estimated.

The four-week moving average of claims, considered a better measure of labor market trends, fell 6,500 to 387,750 — the lowest since mid-July 2008.

The number of people still receiving benefits under regular state programs after an initial week of aid edged up 4,000 to 3.6 million in the week ended Dec. 3.

Economists had forecast so-called continuing claims rising to 3.63 million from a previously reported 3.58 million.

The number of Americans on emergency unemployment benefits increased 254,642 to 3.05 million in the week ended Nov. 26, the latest week for which data is available.

A total of 7.45 million people were claiming unemployment benefits during that period under all programs, up 874,670 from the prior week.