A commodity traders' group yesterday protested more than $1.2 million in fees sought by the trustee liquidating Peregrine Financial Group Inc., Dow Jones Daily Bankruptcy Review reported today. The Commodity Customer Coalition Inc. called on a bankruptcy court judge to rein in the compensation request to help ensure clients and creditors of Peregrine recoup as much money as possible.
Bond insurer Assured Guaranty Municipal Corp. was blocked by a judge from proceeding with a lawsuit against JPMorgan Chase & Co. on the grounds that it would interfere with the reorganization of Jefferson County, Alabama, the biggest U.S. municipal bankruptcy to date, Bloomberg News reported today. Bankruptcy Judge Thomas B. Bennett found that the case Assured has against JPMorgan in New York state court involves the same facts, circumstances and lawyers as a similar case in which Syncora Guarantee Inc. sued Jefferson County. Because Assured had not named the county in its case, the insurer argued that its lawsuit should proceed. "The degree of sameness between the Assured action and the Syncora action requires equality of treatment," Bennett ruled. In 2011, Jefferson County filed for bankruptcy protection from its creditors, blaming the loss of a business-related tax and more than $3 billion in warrants that the sewage system could not repay. Syncora and Assured insured some of the sewer warrants. They argued in their lawsuits that the insurance policies were only written because the county and JPMorgan, the underwriter for the warrants, committed fraud.
Citigroup Inc., the third-biggest U.S. bank, said that expenses at a unit holding some of its most toxic assets surged as legal costs mounted, Bloomberg News reported yesterday. The Special Asset Pool (SAP) had operating expenses of $572 million for the three months through March, compared with $63 million in last year’s first quarter, according to data released today by the New York-based bank. SAP, which manages a portfolio of securities that Citigroup seeks to divest, had total expenses of $619 million for all of 2011 and 2012 combined, filings show. The increase helped boost Citigroup's total expenses by 1 percent to $12.4 billion, showing that debris left over from the 2008 credit crisis can still put a surprise drag on profit.
U.S. District Judge Berle Schiller ruled that Bank of America Corp., the second- largest U.S. lender by assets, must face claims by homeowners that it took kickbacks from private insurers, Bloomberg News reported yesterday. Judge Schiller denied the bank’s request to toss the lawsuit because the statute of limitations had expired on the claims. Homeowners who sued should have the opportunity to develop their argument that the claims should be allowed because the bank intentionally concealed its behavior, Schiller said. "Plaintiffs' allegations that defendants dressed up an illegal scheme to appear as a legitimate transaction is sufficient to deny defendants' motion to dismiss," Schiller said.
Lawyers for plaintiffs in a Visa Inc. and MasterCard Inc. antitrust case over interchange fees asked for final approval of a settlement along with $720 million in legal fees and $27 million in expenses, Bloomberg News reported on Friday. The attorneys, representing a class of more than 7 million merchants, filed papers in court on Thursday seeking a final blessing for the accord from U.S. District Judge John Gleeson. The settlement, estimated to be the largest ever in an antitrust case, would provide for about $7.25 billion in cash payouts, according to a memorandum filed by Robbins Geller Rudman & Dowd LLP, one of the lead law firms in the case. Merchant trade groups and some large retailers including Target Corp., Wal-Mart Stores Inc., Home Depot Inc. spoke out against the accord, claiming it is not large enough and gives card companies too much leeway to raise fees in the future. The lawsuit alleged that the card companies and some of the country’s largest banks conspired to fix prices of fees paid by merchants when customers pay with plastic.
Residential Capital LLC's creditors want the right to sue ResCap parent Ally Financial Inc. over dealings between the entities before and since ResCap's bankruptcy filing, which, if successful, could put government-controlled Ally on the hook for all $20 billion to $25 billion in ResCap's liabilities, Dow Jones Daily Bankruptcy Review reported today. In a court filing on Thursday, ResCap's unsecured creditors' committee said that its investigation into the relationship between the two companies "paints a stark picture" of Ally's "domination, control, and abuse" of ResCap. A hearing on whether the creditors can sue over the matter is set for April 30.
Kareem Serageldin, the ex-global head of Credit Suisse Group AG's structured credit trading business, pleaded guilty to conspiracy, saying that when he discovered subordinates falsifying the value of mortgage-backed bonds in late 2007, he joined the scheme rather than trying to stop it, Bloomberg News reported on Friday. Serageldin pleaded guilty today to a single count of conspiracy to falsify Credit Suisse’s books and records, which carries a maximum prison sentence of five years. Serageldin is scheduled to be sentenced Aug. 2. Under a plea agreement with the government, Serageldin agreed to forfeit $1 million as proceeds of the crime.
The Department of Justice is objecting to nearly $1.85 million in professional fees in MF Global's wind-down, including more than $500,000 for the primary law firm that represents bankruptcy trustee Louis Freeh, Reuters reported yesterday. The U.S. Trustee Program, the DOJ's bankruptcy watchdog, filed court papers yesterday criticizing compensation applications from a slew of professionals for incomplete time records, travel expenses and meal charges. In total, eight firms sought about $14 million in interim fees for work done between Oct. 1 and Jan. 31. That includes about $4 million from Morrison & Foerster, the law firm representing Louis Freeh, the former FBI chief and trustee in charge of winding down MF Global's estate.
JPMorgan Chase & Co., the largest U.S. bank by assets and the top investment bank by fees, is questioning the so-called universal bank model's future, Bloomberg News reported yesterday. Top-tier investment banks are "uninvestable at this point with a risk of spinoff from universal banks," JPMorgan analysts led by London-based Kian Abouhossein wrote in a research note today. They cited potential rule changes and curbs on capital and funding.
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