SEC Proposes New Rules for Investment Advisers

The SEC has proposed new rules and amendments to existing regulations that would strengthen the agency’s oversight of hedge fund and private-equity fund managers known as “investment advisers.”

The rules are part of the SEC’s ongoing effort to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Before Dodd-Frank, advisers to private funds could avoid registration with the SEC because of an exemption for asset managers with fewer than 15 clients.

The reporting requirements are designed to help identify practices that may harm investors, deter advisers’ fraud and facilitate earlier discovery of potential misconduct.

Mortgage Foreclosure Problems “Inexcusable,” Treasury Official Says

A top Treasury Department official have announced that federal investigators looking into problems with mortgage foreclosures throughout the country have found widespread and “inexcusable” breakdowns in basic controls in the process.

Assistant Treasury Secretary Michael Barr announced the findings to members of the Financial Stability Oversight Council, the newly formed panel of regulators responsible for identifying potential risks to the financial system.

The extensive problems – which range from flawed and fraudulent paperwork to questions about improper or incomplete loan transfers – first surfaced in September when large firms such as Bank of America and Ally Financial abruptly halted foreclosures.

Barr said investigators are expected to complete their field work by the end of the year and report back to the oversight council in January, after which they plan to aggregate their findings and determine what regulatory actions would rectify the problems.

New Forms Released for Whistleblowers Wishing to File

Drafts of new federal forms for blowing the whistle on securities fraud or other wrongdoing, WB-DEC, have been released to the public.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, anyone who provides the SEC with a successful tip stands to receive from 10 percent to 30 percent of any monetary sanctions exceeding $1 million.

Although the reporting form asks for the whistle-blower’s personal information, informants can remain anonymous in the initial stages of the process if they retain legal representation, in which case they submit the information of their attorney.

If a tip leads to a successful enforcement action, a whistle-blower would need to file a second, nearly identical WB-APP form within 60 days of the SEC’s online announcement in order to claim the bounty.

Madoff Ex-Employees Charged with Securities Fraud

Two former staff of Bernard Madoff Investment Securities were charged with conspiracy, securities fraud, falsifying records and evading tax, according to the Department of Justice.

Annette Bongiorno and JoAnn “Jodi” Crupi, both long-time employees of Madoff, were arrested by federal agents for their roles in Madoff’s scheme to defraud investors of billions of dollars.

The two had been arrested yesterday by the FBI — Bongiorno in Boca Raton, Florida, and Crupi in Westfield, New Jersey.

Madoff was sentenced to 150 years in prison last year for his Ponzi scheme.

US Regulators to Investigate Foreclosure Practices

The four major US bank regulators are conducting a joint investigation of foreclosure practices that involves visiting mortgage servicers and reviewing sample loan files.

Officials are looking at the role of Mortgage Electronic Registration Systems, a tracking system for mortgage assignments created by the financial industry – and Lender Processing Services, which tracks mortgage payments and prepares foreclosure documents for numerous big banks.

Investigators are expected to conclude the on-site portion of their review by the end of the year and publicly release a report highlighting their findings early next year.

The Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corp are working together on the probe.

NYC Official Seeks Audits of Foreclosure Practices

The New York City Comptroller has asked four US banks to conduct independent audits of their mortgage and foreclosure practices.

John Liu has asked the audit committees of Bank of America, Wells Fargo, JPMorgan Chase and Citigroup to carry out the reviews and report their results and recommendations by Sept. 30.

The city’s pension funds held $1.77 billion in shares of the lenders through November 16; the largest investment in the four banks is $569 million in JPMorgan.

The pension funds included in the audit request represent New York City employees, teachers, the board of education and police and fire departments.

Wrongful foreclosure investigations on “fast-track”

Iowa’s Attorney General said investigations into wrongful foreclosures on the part of the nation’s largest banks is on a “fast-track” and could involve settlements with homeowners.

AG Tom Miller told Bloomberg News investigations have been launched by all 50 attorneys general across the U.S. Miller heads a wrongful foreclosure task force commenced by his contemporaries.

Miller indicated that a universal settlement is unlikely, and would most likely involve deals with each bank.

The issue is necessary to resolve potentially thousands of wrongful foreclosure documents signed and ordered by a third-party firm which OK’d the evictions and bank take-overs of homes without reviewing documents for accuracy.

Banks temporarily suspended foreclosures last month when the errors of these third-party companies were revealed.

According to Bloomberg, at least 19 states have launched individual investigations into violation of state laws by big banks.

Northern California woman wins back house from WaMu

A northern California woman has won her wrongful foreclosure lawsuit and will soon return home.

According to ABS-CBN News, Corazon Palma asked her home-loan lender Washington Mutual to lower her mortgage payment of $3,900 a month while she fought a cancer diagnosis. The bank agreed but instead, secretly worked to remove the 73-year-old woman from her home in Redwood Shores, Calif.

A year after she thought she’d get a lower mortgage payment, she was greeted at the door by a representative of the realty firm Coldwell Banker who informed her she had to leave the house because it was sold at a Trustee Sale.

Palma contacted an attorney immediately and in January a judge ruled she was wrongfully removed from her home. WaMu, the judge ruled, deceived the homeowner into thinking she’d receive a mortgage modification agreement. The bank worked to sell her home instead.

Palma will learn in early December the ultimate decision. She will either be given the home or be allowed to return and pay a lower, agreed-upon mortgage modification rate.

This case should serve as hope for the thousands of homeowners across the country who’ve wrongfully been evicted from their homes due to a wrongful foreclosure.

JP Morgan Chase faces pair of class-action lawsuits related to wrongful foreclosures

JP Morgan Chase & Co. revealed this week that it is facing a pair of class-action lawsuits alleging the company filed wrongful foreclosure documents in courts across the country.

JP Morgan Chase is the latest home-loan lender to admit it faces hundreds, if not thousands of lawsuits across the country on behalf of homeowners claiming they were unjustly removed from their homes via foreclosure.

Chase, like many other big banks, used a third-party firm to file foreclosure documents in courts across the U.S. where it is a judicial procedure. According to many reports, these documents were often signed without a notary present and without having reviewed them for accuracy.

This has resulted in thousands of wrongful foreclosures, and also prompted the country’s largest lenders to halt foreclosure proceedings across the country, at least temporarily.

Some banks, like Bank of America, have since resumed foreclosure proceedings after claiming to have corrected any errors made by this third-party firm.

Chase said it is facing the class-action suits in California and Illinois.

Ohio court gives lenders 30 days to fix foreclosure filing errors

An Ohio judge overseeing thousands of possible wrongful foreclosure cases in one county says banks have one month to fix their errors or will have their cases dismissed.

According to a report at WCPN.org (NPR affiliate), Cuyahoga County chief Magistrate Stephen Bucha III ordered judges on his watch to give bank lenders 30 days to correct errors they may have made during initial court filings.

Bucha’s move is in response to the scandal which prompted the nation’s largest mortgage lenders to temporarily suspend foreclosures across the country. In recent weeks, we’ve reported that four of the country’s largest banks hired an outside firm to file foreclosure documents across the country.

In thousands of these cases, the firm did not review the information they submitted for accuracy, and in other cases, filed papers without a notary witness.

In Cuyahoga County, this judicial decision affects thousands of possible foreclosures. Bucha said, “The objective of the policy is to make sure that we are not granting a judgment based on one of these faulty affidavits, either now with our pending cases or in the future.”

Lawyers representing lenders in the future must also personally sign affidavits ensuring the information they submit is accurate.