The Survive and Thrive Boomer Guide

New York sues Exxon Mobile for misleading investors on climate change costs

 

Photo: Ben P L

Exxon Mobile Corp. is being sued by the state of New York for allegedly misleading investors on the risk that climate change regulations posed to its finances.

For years, Exxon told investors that it was accounting for the likelihood of stronger regulation by applying an increasing cost of emissions to its business planning and investment decisions, according to the lawsuit. However, Exxon did less than it claimed, deceiving investors on the company’s true financial exposure to climate change regulations.

Exxon marketed the company as a secure long-term investment and sought long-term investors such as life insurance companies and pension funds.

Attorneys generals intervene in lawsuit to protect retirees from dishonest financial advisors

Three attorneys general have filed a motion to intervene in Chamber of Commerce of the USA, et al. v. U.S. Department of Labor, et al. to defend regulations that require retirement investment advisors to put the interests of their clients above their own financial gain.

The regulations, known as the Fiduciary Rule, were proposed under the Obama administration and put into federal law standards for professionals who give investment advice to people saving for retirement. The New York, California, and Oregon attorneys general are intervening in the case to ensure that the rule is carried out.

“It’s common sense: financial advisors should act in their client’s best interest, not their own,” said New York Attorney General Eric Schneiderman. “The Fiduciary Rule is vital to protecting families in New York and across the country who are saving for their retirement.”

Barclays agrees to pay $2 billion to settle fraud charges related to the sale of mortgage securities prior to the Great Recession

Photo: Secretlondon

Barclays Capital Inc. and several of its affiliates agreed Thursday to settle charges of fraudulent conduct related to Barclays’ issuance of residential mortgage-backed securities between 2005 and 2007, according to the U.S. Department of Justice. Barclays, a huge British bank, will pay $2 billion in civil penalties in exchange for dismissal of the lawsuit.

The settlement is about $3 billion less than what the department originally asked for, according to a Consumer Affairs article. Barclays refused to pay $5 billion, causing the department to file a lawsuit in 2016. From the beginning, Barclays said it would refuse to pay more than $2 billion.

The department’s lawsuit alleged that Barclays caused billions of dollars in losses to investors by engaging in a fraudulent scheme to sell 36 RMBS deals, and that it misled investors about the quality of the mortgage loans backing those deals.

SEC settlement strips CEO Elizabeth Holmes of her control of blood-testing startup Theranos

Photo: Max Morse for TechCrunch

Silicon Valley-based Theranos Inc., its founder and CEO Elizabeth Holmes, and its former President Ramesh “Sunny” Balwani are being charged with raising more than $700 million from investors through an elaborate, years-long fraud in which they made false statements about the company’s technology, business, and financial performance.

Theranos and Holmes have agreed to resolve the charges against them, the Securities and Exchange Commission said Wednesday. In addition to a $500,000 penalty, Holmes has agreed to give up majority voting control over the company, as well as to a reduction of her shares which, combined with shares she previously returned, reduces her stake in the company.

The lawsuits allege that Theranos, Holmes, and Balwani made false and misleading statements in investor presentations, product demonstrations, and media articles in which they deceived investors into believing that its key product – a portable blood analyzer – could conduct comprehensive blood tests from finger drops of blood, revolutionizing the blood testing industry.

Three European banks to pay $46.6 million for ‘spoofing’ and manipulation

© Raimond Spekking/CC BY-SA 4.0 via Wikimedia Commons

Three banks and eight former traders, some of whom worked for the banks, are being charged following an investigation of manipulating precious metals futures market trading.

In addition, eight people who allegedly took part in precious metals market manipulation were charged with federal crimes, according to the U.S. Department of Justice. Five of the traders worked for global financial companies, two worked for commodities trading firms, and one owned a technology consulting firm.

Conspiracy, wire fraud, commodities fraud, and spoofing were included in the charges.

Feds sue Barclays Bank, two former executives for fraud in the sale of residential mortgage-backed securities

 

Photo: Secretlondon

Barclays Bank and several of its U.S. affiliates are being charged with taking part in a fraudulent scheme to sell residential mortgage-backed securities supported by defective and misrepresented mortgage loans.

From 2005 to 2007, Barclays employees misrepresented the loans backing securities they sold to investors throughout the world, who incurred billions of dollars in losses as a result of the fraudulent scheme, according to a U.S. Justice Department lawsuit filed Thursday.

Also defendants in the lawsuit are two former Barclays executives: Paul K. Menefee, who served as Barclays’ head banker on its subprime RMBS securities, and John T. Carroll, who served as Barclays’ head trader for subprime loan acquisitions.

What to do about the changing retirement

As we all know, retirement is changing for people of all ages.

In Consumer Reports latest look at the topic, “The New Retirement,” it discusses new approaches and reaffirms the need to start early to plan for the future.

The new reality of retirement shows that 401(k) plans are getting better, retirement advice is getting more reliable, savers can essentially design their own pension through an immediate annuity that guarantees cash flow, and those applying for Social Security can get far bigger payments by claiming their benefits the right way, according to Consumer Reports.

Financial predictions for 2017

What’s going to happen financially in 2017?

WalletHub, a financial website, released its “10 Financial Predictions for 2017” report Tuesday to help consumers get information on next year’s economy.

Below are some of Wallethub’s predictions, which are based in part on conversations with a panel of economics and finance specialists:

1. U.S. GDP growth will remain anemic, at 2.1 percent.
2. Unemployment won’t go far, finishing around 5 percent.
3. The S&P 500 won’t do much better than an online savings account.
4. U.S. auto sales will surpass 17 million for the third straight year.
5. Existing home sales will rise to 6 million, despite higher rates.
6. The Fed will raise rates twice, bringing its target to 1.125 percent.
7. Credit card debt will break all-time records, topping $1 trillion owed.
8. Consumer credit scores will peak at 675 in 2017.
9. The Consumer Financial Protection Bureau won’t die.
10. Charge-offs will top $30 billion, limiting credit availability.

Well, that doesn’t seem too bad. Maybe the havoc Donald Trump is going to foist on America won’t begin until 2018, or perhaps he’ll be impeached by then.

Copyright 2016, Rita R. Robison, Consumer Specialist

JPMorgan Chase to pay $264 million to settle charges it bribed foreign officials by hiring their friends and family

Photo: Wikipedia

JPMorgan Chase has agreed to pay more than $130 million to settle Securities and Exchange Commission charges that it won business from clients and corruptly influenced government officials in the Asia-Pacific region by giving jobs and internships to their relatives and friends.

JPMorgan also is expected to pay $72 million to the Justice Department and $61.9 million to the Federal Reserve Board of Governors for a total of more than $264 million in sanctions resulting from the firm’s referral hiring practices.

Investment bankers at JPMorgan’s subsidiary in Asia created a client referral hiring program that bypassed the firm’s normal hiring process and rewarded job candidates referred by client executives and influential government officials with well-paying, career-building JPMorgan employment, according to an SEC order issued Thursday.

Attempts to gut consumer and investor protections under a Trump administration would encourage those who exploit Americans, attorney general says

After reports that the presidential transition team is considering ways to dismantle state consumer and investor protection statutes, known as Blue Sky laws, New York Attorney General Eric T. Schneiderman said in a statement:

I am deeply troubled by reports that the presidential transition team is considering ways to eviscerate some of the most basic consumer and investor protection laws in the country.

Every day, state and local law enforcement effectively utilize Blue Sky laws to root out the worst types of fraud, corruption, and abuse on Wall Street and across major industries. In many cases, these anti-fraud statues are consumers’ and investors’ first line of defense against exploitation, particularly when retail and institutional investor dollars are in the hands of increasingly complex and opaque financial institutions.

In the past few years alone, multi-state fraud investigations into Wall Street’s role into the collapse of the housing market have recovered over $95 billion in fines, penalties, and most important, consumer relief. The investigations and prosecutions made possible by state anti-fraud statutes are among the most effective deterrents of misconduct, and regularly lead to critical updates to federal securities laws and enforcement practices of consumer protection laws.

Any attempt to gut these consumer and investor protections would severely undercut state police powers and only embolden those who seek to defraud and exploit everyday Americans. At a time of regulatory uncertainty at the federal level, it is essential that we maintain the very laws that have helped state and local law enforcement keep consumers and investors safe for over one hundred years.

Copyright 2016, Rita R. Robison, Consumer Specialist