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Whistleblower News: Wall Street, Qui Tam Case, False Claims

by HB Whistleblower Legal Team


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Wall Street Gets Win as Fed Set to Ease Volcker Trade Limits

Wall Street’s long campaign to chip away at the toughest trading restriction imposed on banks after the financial crisis is finally paying off under President Donald Trump.

The Federal Reserve Board, now led by Trump appointees, on Wednesday took the most concrete step yet to roll back the Volcker Rule, which was key to Washington’s efforts to make the industry safer after the 2008 meltdown. Fed governors voted 3-0 to seek comment on proposed changes, kicking off an administrative process aimed at significantly reducing compliance costs for financial firms such as Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.

The rule is meant to bar banks with federally-backed deposit insurance from suffering out-sized losses by restricting their ability to bet with their own capital. Financial firms have said the rule is unnecessarily complex and almost impossible to adhere to.

Trump-picked regulators have shown a greater willingness to listen to such grievances, and are proposing a revamp that would give banks more leeway to presume their trades comply with the rule. read more »

Inchcape whistleblowers to collect $4.4 million in False Claims Act case

Inchcape Shipping Services Holdings Limited and certain of its subsidiaries have agreed to pay $20,000,000 to resolve allegations that they violated the False Claims Act by knowingly overbilling the U.S. Navy under contracts for ship husbanding services, the Department of Justice announced today.

The lawsuit was brought under the qui tam, or whistleblower, provisions of the False Claims Act by three former employees of Inchcape. Under the act, a private citizen may bring suit on behalf of the United States for false claims and share in any recovery. The government may intervene in the case, as it did here. The False Claims Act allows the government to recover treble damages and penalties from those who violate it. As part of today's resolution, the whistleblowers will receive approximately $4.4 million, 22% of the settlement proceeds. read more »

Deutsche Bank US operations designated to be in 'troubled condition' by the Fed

The Federal Reserve has designated Deutsche Bank's U.S. business as being in "troubled condition," The Wall Street Journal reported Thursday, citing sources familiar with the matter.

The downgrade to one of the lowest designations occurred about a year ago and has not been previously reported, the report said.

The Financial Times also reported Thursday, citing a source, that Deutsche Bank's U.S. subsidiary was added to the Federal Deposit Insurance Corporation's list of "problem banks," or those with weaknesses that threaten their financial survival.

Deutsche Bank shares briefly fell more than 8.5 percent in U.S. trading. As of Wednesday's close, the stock is down 39 percent this year. read more »

Legg Mason Sets Aside $67 Million to Settle U.S. Libya Probe

Legg Mason Inc. has set aside $67 million as part of an expected resolution of a Foreign Corrupt Practices Act investigation into activities of a hedge fund unit that managed money for the Libyan government of Moammar Al Qaddafi.

Negotiations to close investigations of Legg Mason’s Permal Group are expected to be completed “shortly,” the Baltimore-based asset management firm said in a filing on Wednesday.

“The matter does not relate to any of our or our affiliates’ current business activities or client relationships and has focused on the actions of former employees of Permal who left that firm four or more years ago,” the firm said its fiscal year-end filing. It declined to comment beyond the filing. read more »

SEC Charges Long Island Investment Professional in $8 Million Scam

The Securities and Exchange Commission today charged a former registered representative with defrauding long-standing brokerage customers in an $8 million investment scam. 

According to the SEC’s complaint, Steven Pagartanis, who was affiliated with a registered broker-dealer, told some investors – including retirees who had been Pagartanis’s customers for many years – that he would invest their funds in either a publicly-traded or private land development company.  He promised that the funds would be safe and also promised guaranteed monthly interest payments on the investments.  At Pagartanis’s direction, his investors wrote checks payable to a similarly-named entity that was secretly controlled by Pagartanis.  In all, the customers invested approximately $8 million, which Pagartanis used to pay personal expenses and make the guaranteed “interest” payments to his customers.  To conceal the scam, which unraveled earlier this year when Pagartanis stopped making the so-called interest payments to customers, Pagartanis created fictitious account statements reflecting ownership interests in the land development companies.  

The Suffolk County District Attorney’s Office today filed criminal charges against Pagartanis.

“As part of the alleged scam, Pagartanis preyed on his customers’ trust, duping them to write checks payable to his own entity,” said Marc P. Berger, Director of the SEC’s New York Regional Office.  “Regardless of how long investors have worked with their brokers, they should always confirm that recommended investments are approved for sale by their brokerage firm before transferring funds.” read more »