Posts tagged 'US Department of Justice'

Barclays’ new investigations

What do you get when you reveal two new regulatory investigations as part of your slightly disappointing quarterly results? Answer: a 4.4 per cent drop in share price, as Barclays is finding out on Wednesday morning.

From the FT (our emphasis):

Barclays has warned investors that it is facing another fine in the US, this time over its conduct in power trading.

It has also disclosed that it is under investigation by the US Department of Justice and the US Securities and Exchange Commission over whether its relationships with certain third parties breached corruption rules.

 Read more

Wegelin charged with aiding tax evasion

US prosecutors have filed criminal charges against Wegelin, a 271-year-old private Swiss bank, for allegedly helping Americans evade paying taxes on $1.2bn in assets, marking the first time US authorities have indicted an overseas bank for aiding tax fraud, the FT reports. The indictment, a dramatic move that is often a death knell for financial institutions, follows Wegelin’s sale of its non-US business last week to Switzerland’s Raiffeisen, a co-operative banking group, for an undisclosed amount. The sale came two weeks after the US Department of Justice announced criminal charges against three Wegelin bankers and implicated senior Wegelin executives in court filings. Wegelin and the bankers are accused of helping more than 100 US account holders evade paying taxes, including persuading several in 2008 and 2009 to transfer accounts from UBS, which was under investigation, and another Swiss bank to further evade detection. The bankers, who worked in the group’s Zurich office, have not been arrested. Wegelin’s lawyer declined to comment. The indictment also puts pressure on the Swiss government to conclude a sweeping settlement with US authorities involving all Swiss banks, a New York lawyer specialising in such cases told the WSJ.

AT&T to take $4bn charge on T-Mobile collapse

AT&T has made what is seen as a tacit admission that its takeover for T-Mobile USA may collapse, with the announcement it will take a charge of $4bn in the current quarter for break fees payable to Deutsche Telekom, the FT reports. Doubts mount over the $39bn takeover amid dwindling chances of regulatory approval. Both the Department of Justice and the US Federal Communications Commission oppose the deal, and Reuters says an unnamed senior FCC official said that the merger would result in a massive loss of US jobs and investment. The pre-tax charge represents $3bn cash and the $1bn book value of spectrum that would have to be handed over to Deutsche Telekom if the deal falls apart.

BNY Mellon sued over currency rates

The city and state of New York and US Department of Justice have filed separate civil lawsuits against Bank of New York Mellon, alleging the world’s largest custody bank defrauded pension funds, US banks and millions of investors nationwide on currency transactions for 10 years, the FT reports. Tuesday’s New York action, which seeks to recover more than $2bn in alleged ill-gotten gains, marks the third lawsuit this year filed by a state legal officer against the bank. In August, Florida and Virginia sued the company for allegedly wrongfully overcharging their local pension funds on foreign-exchange trades. The federal lawsuit also represents one of the few actions brought against a Wall Street bank by the Obama administration, which has had to defend itself against accusations that it has taken a soft line against financial fraud. The bank said it would fight the claims vigorously.

Accounts probe dents Chinese stocks in US

The US Justice Department is investigating accounting irregularities at Chinese companies listed on US stock exchanges, suggesting criminal charges may be brought in addition to civil proceedings, Reuters reports. Robert Khuzami, director of enforcement at the SEC, told the news agency parts of the department were “actively engaged in this area”. He added that a number of federal prosecutors around the United States were taking part in the investigation, but declined to name them. Prices of US-listed Chinese stocks fell after the report, the FT says, with internet stocks hit hardest. Baidu, the search engine company, fell 9.2 per cent to $110.29 and e-commerce site Sina was down 9.7 per cent to $73.23 on Thursday. The recently listed video streaming site Youku fell 18.3 per cent to $16.24. Meanwhile the WSJ reports the SEC is shifting its enforcement strategy to focus more on civil cases in which defendents are charged with negligence, as it is easier to prove than international wrongdoing or recklessness.

New line of inquiry for News Corp in US

US prosecutors are examining whether News Corp employees tried to access the voicemails of 9-11 victims, broke antitrust or related laws and, bribed UK police for information, Bloomberg reports, citing a person familiar with the probe. The third line of inquiry was disclosed on Tuesday with news of a US letter to the company requesting information on any bribes paid by its News of the World unit, said the person, who declined to be identified because the matter isn’t public. The letter is part of a Justice Department effort to determine whether News Corp violated the Foreign Corrupt Practices Act, the person said. The WSJ, citing people familiar with the matter on the subject of the letter, says legal experts believe the fact the decision to issue a “letter of request” rather than a criminal subpoena suggests the department has opted for a less confrontational approach to the matter.

US accused of unfair antitrust tactic

US authorities are using a little-known immigration provision to secure guilty pleas by foreign businessmen in antitrust cases, a move defence lawyers say unfairly presses non-US executives into co-operating with investigations, the FT reports. The tactic is likely to be brought to bear in the ongoing US and UK investigation into alleged collusion in the setting of the  Libor and Tibor markets. The US’s leverage is a 1996 memorandum of understanding between the DoJ and US immigration officials, unique to antitrust cases. Lawyers say the MoU is included in nearly every plea agreement. The net result is that in exchange for co-operation and a guilty plea, the US government will grant exemptions from travel restrictions to foreign executives. The DoJ has sent 50 foreign businessmen to prison for antitrust offenses since 1999. Only one has gone to trial, defence lawyers say.

US looks at Israeli banks over tax evasion

US authorities are scrutinising three of Israel’s largest banks over suspicions their Swiss outposts helped American clients evade taxes, Reuters reports, citing people briefed on the matter. The banks said to be under scrutiny by the US Department of Justice’s criminal tax division are Bank Hapoalim, Bank Leumi le-Israel BM, and Mizrahi-Tefahot. The scrutiny comes during a wide-ranging campaign by the Justice Department to force nearly a dozen Swiss banks now under scrutiny to pay collectively billions of dollars in fines and admit to criminal wrongdoing.

SAP to pay $20m in Oracle criminal case

SAP has agreed to pay $20m to resolve a criminal probe into allegations that it downloaded millions of files from rival Oracle, says Reuters, citing a source familiar with the matter.US Department of Justice prosecutors last week charged SAP’s defunct TomorrowNow unit with 12 criminal counts in connection with illegal downloads of Oracle software files, and SAP agreed to settle the case last week. The plea deal, scheduled to be formalised at a court hearing on Wednesday, comes as Oracle seeks to appeal a recent ruling that slashed a civil jury verdict against SAP over the same conduct from $1.3bn to $272m.

Libor inquiry focuses on criminal angle

The US investigation into alleged manipulation of interbank lending rates is focusing on possible violations of a commodities law that has previously been used to send financial executives to prison. The FT, citing people familiar with the probe into the setting of Libor and Tibor, says US authorities are modelling their investigation on an earlier prosecution of three energy companies for violations of the Commodity Exchange Act, which resulted in criminal settlements and prison terms of up to 14 years. Under the act, it is illegal to transmit a false report that would affect the price of a commodity. The interbank lending probe, led by the CFTC and the Department of Justice, is examining possible collusion between traders and bank treasury departments in 2007 and 2008. It has also drawn in investigators from the UK, Japan and the EU to examine whether Libor and Tibor were rigged at the height of the financial crisis.

Where now for AT&T and T-Mobile?

Wherein John McDermott and Cardiff Garcia try to understand the deal of the day and realise they should’ve gone to law school and become antitrust attorneys.

What just happened? Read more

US government: not so fast, AT&T&T-mobile

Breaking: regulator grows a Bachmann-like titanium spine, markets caught by surprise.

Report from BloombergRead more

Google reaches $500m deal over drug ads

Google has reached a $500m settlement with US prosecutors to resolve a criminal investigation into its accepting advertisements from companies selling unlicensed pharmaceuticals, the FT reports. The payment is one of the largest forfeitures imposed in the US, according to federal authorities, and is a severe dent to the comany’s reputation.  The internet search company was aware as long ago as 2003 that it was illegal in most cases for pharmacies based in Canada to ship prescription drugs into the US, according to an agreement between prosecutors and Google that was made public on Wednesday, but continued to accept the adverts on its AdWords search advertising system, and advised pharmacies on how to make messages more effective, until it learnt of the criminal inquiry in 2009, the agreement added. The $500m payment represents the revenues Google made from selling the adverts and the estimated revenues generated by the pharmacies from their sales to US consumers.

 

Deutsche ‘knew’ of mortgage company problems

The US justice department says Deutsche Bank knew in 2006 that a mortgage company it was preparing to buy lied to the US government about its mortgages, Reuters reports, yet went ahead with the purchase and should be held financially responsible. The department’s amended $1bn complaint filed Monday evening with the US District Court in Manhattan says Deutsche Bank was “on notice of and expressly assumed responsibility” for wrongdoing at MortgageIT, which it bought in 2007. The government first sued Deutsche Bank and MortgageIT in May saying they misled the Federal Housing Administration into believing that mortgages issued by MortgageIT qualified for federal insurance, when the quality was so poor that nearly one in three defaulted.

Goldman shares fall on Blankfein lawyer report

Goldman Sachs chief executive Lloyd Blankfein has hired high-profile Washington lawyer Reid Weingarten, Reuters says, citing an unnamed government source, as the Justice Department continues to investigate the bank. Goldman Sachs shares fell almost 5 per cent on after the report reignited concerns that the bank’s legal headaches may return, the FT reports. The threat of charges had weighed on Goldman shares since the spring, when the US Senate permanent subcommittee on investigations, which had been probing the causes of the financial crisis, referred evidence concerning the bank’s behaviour to the justice department.

Interbank loan probe widens to yen rates

Regulators probing alleged manipulation of interbank lending rates have expanded their investigation into yen rates in London and a separate rate-setting process in Tokyo, the FT reports. In the fine print of its results announcement on Tuesday, UBS confirmed the investigation’s widened scope by disclosing that it had received “conditional leniency and conditional immunity” from the US Department of Justice for turning over information on the setting of yen rates in London and of the Tokyo interbank offered rate, or Tibor, in Japan. Led by the DoJ, regulators from the European Union, the UK, the US and Japan have been examining whether the Libor was rigged at the height of the financial crisis. Lawyers involved in the case have recently warned their clients, which include the biggest names in banking, to prepare for possible dawn raids by regulators.

Credit Suisse drawn into US tax probe

The outlook for Credit Suisse darkened on Friday after the Swiss bank revealed it had been formally placed under investigation by the US authorities over allegations it helped rich American people evade tax, the FT reports. The move marked a significant escalation in a near four-year battle between the US and Switzerland over the alleged role of some Swiss private banks in helping US clients with undeclared offshore accounts to avoid taxation. The WSJ says the move also shows officials are using information culled from the thousands of Americans who came clean on their hidden foreign accounts by submitting so-called voluntary disclosures. According to Swissinfo, Credit Suisse also added that the “US authorities are conducting a broader industry inquiry.”

DoJ antitrust chief to join top law firm

Christine Varney, head of the US Department of Justice’s antitrust division, is leaving the government to join Cravath, Swaine & Moore, a leading law firm known for its mergers and acquisitions work, the FT reports. Before her departure, Ms Varney had been leading efforts to reinvigorate US antitrust policy and enforcement. The department is examining several high-profile cases, including AT&T’s $39bn deal to buy T-Mobile USA, and was seen by practitioners to be ramping up activity. The timing of her departure – while unexpected in the department – was seen by some Washington insiders as practical because it is generally preferable for officials to leave an administration well before a general election.

WPP arm faces campaign scrutiny

A public affairs firm owned by WPP is facing scrutiny by the Department of Justice after it emerged that fraudulent letters were sent to regulators as part of a campaign to influence a proposed trading rules, the FT reports. The company, Dewey Square, says it had no prior knowledge that forged letters were sent to the Commodity Futures Trading Commission and Securities and Exchange Commission by a subcontractor and that it has not been contacted by federal investigators. Ginny Terzano, a Dewey Square principal who runs the group’s communications practice, said the company had seen the letters at the time they were sent but “had no reason whatsoever to believe that the letters were not authentic and had no knowledge that they were in fact unauthorised”. The incident has shed more light on a practice that is prevalent in Washington but often shrouded in mystery: the creation of grassroots, or “astroturf” campaigns by corporations – sometimes to sway political opinions.

DoJ launches assault on mini-Madoffs

Question — was Operation Broken Trust:

a) An unusually self-referential piece of nomenclature from US government officials; Read more

Blow for Dubai World asset sale

Dubai’s sale of a flagship asset was set back after prospective bidders learnt of a US probe into the business, the FT reports. Dubai World has been seeking to sell Inchcape Shipping Services, a port and shipping agent, as the state-owned conglomerate seeks to raise cash for a restructure of its $23.5bn of debts. But several buy-out groups withdrew after discovering in due diligence what they believe is a US Department of Justice probe into Inchcape’s contract to service the US navy’s Fifth Fleet in the Middle East.

Get Goldman

Goldfellas

Business of protection Read more

Understated Research Headline of the Year

Barclays re-reconsidered

There’s a lot more to be gleaned from Tuesday’s annual results statement from Barclays.

But you have to go to Page 106 of the statement to find it. Emphasis FT Alphaville’s: Read more