High-speed traders may no longer be able to count on Warren Buffett’s Business Wire for direct feeds to market-moving information. But that doesn’t mean the problem of trades taking place with after-market press releases but before the US market is officially closed has been solved.
Take the case of Acacia Research Corp, which trades as ACTG. According to Nanex, the market data company, a batch of suspicious trades began to take place 127 milliseconds after 4pm on Thursday. Those trades are highlighted in yellow here. Click to enlarge. Read more
Business Wire, part of the Berkshire Hathaway empire, has decided that it has been doing nothing wrong but will stop sending corporate press releases direct to the machines of high frequency trading houses.
Another win for cage rattling by Eric Schneiderman, New York attorney-general, but a line from the FT story jumps out: Read more
The NYT says Eric Schneiderman, the attorney general of New York, has come under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices, citing people briefed on discussions about the deal. Mr Schneiderman and top prosecutors in some other states objected to the proposed settlement with major banks, saying it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities. The WSJ says tensions over resolving the long-running foreclosure investigation centres on several of the banks seeking broad immunity from state officials for mortgage-related claims. Bank of America and JP Morgan are among the banks pushing for a for a deal to resolve the issue.
New York’s attorney-general has moved to block an $8.5bn settlement between Bank of America and investors in mortgage securities that plunged in value during the financial crisis, the FT reports. Eric Schneiderman, New York AG, filed court papers on Thursday that accuse Bank of New York Mellon, one of the parties to the disputed settlement, of having “engaged in repeated fraud and illegality” in its role as trustee to investors in hundreds of billions of dollars of mortgage securities. BofA had proposed to pay $8.5bn to investors to settle claims related to its mortgage procedures and the activities of Countrywide, which it bought in 2008. The New York AG said BNY Mellon had a conflict of interest in agreeing to the settlement as it would be indemnified by BofA for related legal action. BNY Mellon said: “The allegations by the New York Attorney General are outrageous, baseless, unsupported by fact and law and we will fight them if necessary in court.”
The New York state attorney-general’s probe into mortgage practices at large banks has widened to include Royal Bank of Scotland, UBS, JPMorgan Chase and Deutsche Bank, bringing the number of banks under scrutiny to seven, reports the FT, citing people close to the matter. Eric Schneiderman, the state’s top lawyer, has sought informal meetings with executives from the four banks as part of his investigation into the securitisation and marketing of mortgage securities. The meetings are expected to take place over the next few weeks. Previously the state investigators had requested meetings with Morgan Stanley, Goldman Sachs and Bank of America. Morgan Stanley executives visited the attorney-general’s office last week, and other meetings are underway, the sources said. Schneiderman succeeded Andrew Cuomo as the state’s attorney-general this year. His probe into mortgage practices is separate from the effort by 50 state attorneys-general to try to negotiate settlements with banks over their foreclosure practices.
New York’s attorney-general has opened an investigation into the way mortgages are securitised and sold to investors, and has requested meetings with at least three US banks to discuss the industry’s practices, the FT reports. Eric Schneiderman, who succeeded Andrew Cuomo as the state’s top lawyer earlier this year, has sought to meet executives from Bank of America, Goldman Sachs and Morgan Stanley, people familiar with the matter said. A full-blown inquiry would mark Mr Schneiderman’s debut as Wall Street enforcer, a role at times relished by his predecessors, Eliot Spitzer and Mr Cuomo. It may also emerge as yet another headache for large banks already facing numerous legal and regulatory skirmishes stemming from their mortgage units’ actions before and during the financial crisis.
Moody’s, the credit rating agency, has warned that JPMorgan Chase’s $20bn bridge loan to finance AT&T’s acquisition of T-Mobile USA is a “credit negative” that might encourage banks to take on outsized risks to win underwriting fees, reports the FT. Moody’s said similar risks had surfaced in the second half of 2007, after the leveraged-loan market had seized up and turmoil set into the financial services industry. While AT&T is an A2-rated company, there is a chance JPMorgan will not find buyers for the loan, Moody’s said in a Monday note, adding that the “tail risk” was that the loan cannot be sold and becomes non-performing. Meanwhile, says DealJournal, the “sheriff of Wall Street”, NY attorney general Eric Schneiderman, has found a new industry to target.