Whistleblower News: Och-Ziff Hedge Fund Settles FCPA Charges, How Goldman Sachs Lost $1.2B of Libya's Money, RBS to pay $1.1B, JPMorgan Chase fined, bank engaged in bribery at its offices in Hong Kong & China, The mystery of HFT

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Och-Ziff Hedge Fund Settles FCPA Charges

The Securities and Exchange Commission today announced that Och-Ziff Capital Management Group has agreed to pay nearly $200 million to the SEC to settle civil charges of violating the Foreign Corrupt Practices Act.

Och-Ziff CEO Daniel S. Och agreed to pay nearly $2.2 million to settle SEC charges that he caused certain violations along with CFO Joel M. Frank, who also agreed to settle the charges.

The SEC detected the misconduct while proactively scrutinizing the way that financial services firms were obtaining investments from sovereign wealth funds overseas. The SEC’s subsequent investigation of Och-Ziff found that the fund used intermediaries, agents, and business partners to pay bribes to high-level government officials in Africa.

According to the SEC’s order, the illicit payments induced the Libyan Investment Authority sovereign wealth fund to invest in Och-Ziff managed funds. read more »

Hot Mess: How Goldman Sachs Lost $1.2 Billion of Libya’s Money

When Wall Street’s most aggressive bank took on the world’s most incendiary client, someone was going to make a killing.

The reemergence of Libya, and its vast oil wealth, coincided with an era of nearly unbridled avarice on Wall Street—and nowhere more so than at Goldman Sachs. The same year that Qaddafi established the LIA, Goldman posted the largest profit in Wall Street history. The bank paid employees an average of $622,000, with many times that amount available for bankers who nailed down the biggest deals. A stupendously wealthy petro state desperate to buy into a bull market was a dream client—the kind of “elephant,” in Goldman argot, that could make careers. read more »

RBS to pay $1.1 bln to resolve U.S. regulator's mortgage cases

Royal Bank of Scotland Group Plc will pay $1.1 billion to resolve claims that it sold toxic mortgage-backed securities to credit unions that later failed, the U.S. National Credit Union Administration (NCUA) said on Tuesday.

The settlement with RBS brings the U.S. regulator's recoveries against various banks to $4.3 billion in lawsuits over their sale of mortgage-backed securities before the 2008 financial crisis.

NCUA Board Chairman Rick Metsger said the regulator was pleased with the settlement and plans to continue "to purbsue recoveries against financial firms that we maintain contributed to the corporate crisis." read more »

JPMorgan Chase fined due to illegal hiring practices

JPMorgan Chase has been under investigation for the past 3 years, by Federal authorities in the USA, to ascertain whether the bank engaged in bribery at its offices in Hong Kong and China.

More specifically, the issue at hand, was whether the bank hired children of powerful people/officials, in order to win business/deals.

Some examples include:

Hiring the son of the Chairman at China Everbright Group, a government controlled conglomerate, after which JPMorgan Chase won several big deals from the organisation.

The daughter of a senior railway official being hired in JPMorgan’s Hong Kong office. Around that time, the bank was selected to take China Railway public and raise over $5 billion.

The Federal Reserve and the Office of the Comptroller of Currency, have reached the conclusion that JPMorgan Chase violated the Foreign Corrupt Practices Act, which makes it illegal to bribe a foreign government official. read more »

The mystery of high-frequency trading

How can you put a speed limit on something you can’t track?

Something mysterious rattled one of the world’s most stable financial markets for 12 harrowing minutes on Oct. 15, 2014.

During that brief window, the yield on the 10-year Treasury note—a benchmark security critical to funding the federal government—dropped dramatically and then surged, and no one could tell why. It was, said JPMorgan Chase CEO Jamie Dimon, “an event that is supposed to happen only once in every 3 billion years.”

Like other market surprises, including a May 2010 “flash crash” in stocks and futures, it triggered an investigation. Government agencies spent months dissecting millions of data points from the Treasury market to find out just what had happened that day. Their conclusion was unsettling: They still had no idea what had caused it. read more »


Wells Fargo CEO forfeits millions as board orders review

Wells Fargo & Co said on Tuesday that Chief Executive Officer John Stumpf will forfeit unvested equity awards worth about $41 million and will not get a salary while the company's board investigates the bank's sales practices.

Carrie Tolstedt, the former head of the retail division at the center of a burgeoning sales scandal, has left the company ahead of her planned Dec. 31 retirement date, will get no severance and has forfeited unvested equity awards worth about $19 million, the bank said. Stumpf and Tolstedt will also not receive bonuses for 2016. read more »

Ex-AIG chief Hank Greenberg, 91, testifies in fraud case

More than a decade after he was sued over accounting fraud, former American International Group Inc Chairman Maurice "Hank" Greenberg on Tuesday took the witness stand to defend himself, repeatedly describing one claim against him as "only a small part" of the insurer's business.

Greenberg, 91, is on trial on civil charges brought in 2005 by then-New York Attorney General Eliot Spitzer. He is accused of orchestrating sham transactions at the insurer to conceal financial difficulties from shareholders. The case did not go to trial for more than a decade because of legal wrangling. read more »

Vibra Healthcare to Pay $32.7 Million to Resolve Claims for Medically Unnecessary Services

Vibra Healthcare LLC (Vibra), a national hospital chain headquartered in Mechanicsburg, Pennsylvania, has agreed to $32.7 million, plus interest, to resolve claims that Vibra violated the False Claims Act by billing Medicare for medically unnecessary services, the Department of Justice announced today.

Medicare beneficiaries are entitled to receive care that is determined by their clinical needs and not the financial interests of healthcare providers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “All providers of taxpayer-funded federal healthcare services, whether contractors or direct billers, will be held accountable when their actions cause false claims for medically unnecessary services to be submitted.” read more »

SEC Charges Anheuser-Busch InBev With Violating FCPA and Whistleblower Protection Laws

The Securities and Exchange Commission today announced that Anheuser-Busch InBev has agreed to pay $6 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) and chilled a whistleblower who reported the misconduct.

An SEC investigation found that the company used third-party sales promoters to make improper payments to government officials in India to increase the sales and production of Anheuser-Busch products in that country. Despite repeated complaints from employees, Anheuser-Busch had inadequate internal accounting controls to detect and prevent the improper payments, and the company failed to ensure that transactions involving the promoters were recorded properly in its books and records. read more »

SEC Charges UBS With Supervisory Failures in Sale of Complex Products to Retail Investors

The Securities and Exchange Commission today announced that UBS Financial Services has agreed to pay more than $15 million to settle charges that it failed to adequately educate and train its sales force about critical aspects of certain complex financial products it sold to retail investors.

The SEC’s order finds that UBS failed to develop and implement policies and procedures reasonably designed to educate and train UBS registered representatives in connection with the sale of reverse convertible notes (RCNs) so that they could form a reasonable basis to make suitable recommendations read more »

Jane Norberg Named Chief of SEC Whistleblower Office

The Securities and Exchange Commission today announced that Jane Norberg has been promoted to chief of the SEC’s Office of the Whistleblower.

Ms. Norberg joined the SEC in 2012 as the first deputy chief of the Office of the Whistleblower and helped establish the office, which intakes and reviews whistleblower tips received by the agency, evaluates whistleblower award claims, and makes recommendations on whether claimants have satisfied eligibility requirements to receive an award. read more »

California treasurer imposes year-long ban on working with Wells Fargo

Discovery that the bank ‘fleeced’ its customers demonstrates ‘at worst, a culture which actively promotes wanton greed’, says state treasurer John Chiang

California’s state treasurer announced on Tuesday that it is imposing a year-long ban on working with Wells Fargo after staff “fleeced” the bank’s customers by creating 2m unauthorized accounts. read more »