suits

Private equity vs. NYC rent control laws

Fri, 09 May 2008 06:59:54 -0400

The New York Times notes that in the last four years, developers owned by private equity firms have bought almost 75,000 rent-regulated apartments in New York City. That's 6 percent of the city's 1.2 million such units. The big players are Vantage Properties, in partnership with Apollo Real Estate Advisors; the Pinnacle Group, a unit of Praedium Capital; and Normandy Real Estate Partners. Their growth strategy depends on higher rents. Now, some tenants have told the New York Times that they sense a strategy of harassment to get them to leave. The main tactic seems to be suits filed in housing court for various offenses. This is an interesting case of raw capitalism vs. municipal policies. Going to the media may prove to be a good move. We'll see.

For more:
- here's the article

Citigroup agrees to another bias settlement

Mon, 07 Apr 2008 06:59:58 -0400

Citigroup is finding it hard to shake Smith Barney's "boom-boom room" image that has dogged its reputation. The latest: Smith Barney has agreed to pay $33 million to some 2,500 brokers, who alleged discrimination. The settlement also calls for changes in the way it awards bonuses and new accounts and to do more to promote women. A judge in San Francisco still has to approve the deal. While the suit fortunately lacked some of the lurid details of previous suits, it's indicative of some important issues that can determine success. One big issue was how promising accounts are doled out to brokers. It appears that most of the top banks are promoting their diversity effort--if only for PR purposes. Whether this will make any real difference for women and minorities remains to be seen.

For more:
- here's the article from the Independent

Related Articles:
Morgan Stanley puts discrimination cases in the past. Article
UBS accused of racial discrimination. Article
EEOC sues Merrill Lynch. Article

A warning from State Street?

Fri, 04 Jan 2008 06:59:58 -0500

State Street has announced that it will set aside $618 million to cover possible legal costs stemming from its foray into subprime securities. That will result in a $279 million loss. State Street has been sued by clients, alleging that they invested in vehicles that they were told would include less risky bonds. You have to wonder if we'll see a wave of litigation related to suitability, especially regarding money market mutual funds that exposed customers to asset-backed commercial paper. Lehman Brothers has also been sued. The last thing a money market fund investor would want is that kind of volatility. But who could have guessed it would end like this? This is another indication that the credit rating agencies--and really the entire industry--were flying blind to a large extent.

For more:
- here's the AP article
- more suits to come? Article

When Dimon gets involved, JP Morgan gets sued

Fri, 16 Nov 2007 06:59:56 -0500

Portfolio chides Jaime Dimon for his take-charge approach, which has led to two suits recently. The news that Amaranth has sued JP Morgan certainly generated some buzz. The suit argues that JP Morgan interfered with Amaranth's deal to sell some assets to Goldman Sachs, a "devastating" blow. A Citadel deal also fell through. When the Amaranth team gathered for an update, they were surprised to find Dimon leading the call, "telling the Fund and Advisors there was a new trade, this time with Defendants." Recall Dimon found himself in the middle of a spat among Dow directors; two of whom were said to have held unauthorized talks with JP Morgan about an LBO. Dimon was called in by the CEO to explain and was alleged to have given up the names of the two directors holding the unauthorized talks. At least, he's not afraid to get his hands dirty.

For more:
- here's the Portfolio item

Related article:
- Let the Jaime Dimon era commence

Read more on: Jaime Dimon l JPMorgan Chase

More changes to come at ratings agencies?

Thu, 13 Sep 2007 06:59:56 -0400

There has been lots of criticism of credit ratings agencies, and there surely will be more. Regulators on both sides of the pond are taking close looks, and at least one state attorney general is taking action. Many expect a wave of suits, which may or may not materialize. Some think such suits would be very hard to win, as Investment Dealers' Digest notes. But you would be have to be blind not to notice that the industry has a huge PR problem. They have made some changes, but they need to do more--and get word out to the world. They may have to ban employees from moving to clients for a longer period of time. They may need to make clear exactly how they work with banks to assure top ratings. Those sorts of things. Most of all they need to educate the world about what roles they play and do not play. The notion that they provide investment advice is still out there.

For more:
- here's the Investment Dealers' Digest article

Related articles:
-Will credit crunch lead to mini-Sarbox?
-Putting some numbers to the credit crunch
-Credit rating agencies still in harsh spotlight

SPOTLIGHT: Subprime Suits

Thu, 12 Jul 2007 20:01:32 -0400

You can almost hear the baying. Many predict that investors will file waves of suits against banks for their subprime mortgage policies. Defendants so far include Citigroup, HSBC Finance and Washington Mutual. Will such suits eventually make the Enron suits seem small? Article

Banks sue in face of data breaches

Mon, 25 Jun 2007 20:01:36 -0400

About 300 banks, many of them community banks, have filed a class-action lawsuit in U.S. District Court in Boston against TJX, a company from whom 45.7 million credit and debit cardholders were stolen. The banks are making a strong point. They want data brokers and retailers to get as serious about security as they are. These sorts of suits are likely going to become more common. The rationale is understandable, as data breaches can leave banks holding a huge bill. If cards are exposed, the bank will replace them at no charge. If fraud is present, banks return the money. For small banks, this could end up being a significant cost. There are some proposals in Congress that would force retailers to tighten up on information security as well.

For more:
- here's an article from U.S. Banker
- sign up for FierceSarbox

Buyers remorse to hit subprime bond players?

Tue, 01 May 2007 20:01:35 -0400

This may be an ominous sign: Bankers Life Insurance has sued Credit Suisse over subprime mortgage-backed bonds that apparently have soured. The securities of course were investment grade when they were bought. But a subsequent downgrade resulted in the buyer losing up to $800 million. There could be more downgrades in the works. Standard & Poor's has said it may downgrade residential mortgage-backed securities transactions if the environment continues to deteriorate. We may see suits after every downgrade. Such suits would strike many as in the nuisance category. Downgrades after all are a part of Wall Street life--it happens. Of course, Bankers Life is also charging that Credit Suisse withheld material information about the bonds, which, if disclosed, would have resulted in a substantial downgrade of the Moody's rating. Presumably, the buyer would not have bought it then.

For more:
- here's the Financial News Online article

Profile: A different kind of PE firm

Wed, 18 Apr 2007 20:01:38 -0400

Leonard Green & Partners may be one of the more interesting private equity firms you've never heard of. That may be a bit of a simplification. The firm has a solid reputation. But it's not cut from exactly the same clothe as the ones that get all the ink. Since it was founded 18 years ago, the employee ranks have grown to just 20, all of whom work out of one Los Angeles office. But the money keeps on coming. It recently closed on a $5.3 billion fund. The company has heard the criticism that it is slow and methodical lots of times in the past, but caution is a part of the culture. This is not a firm that will rush into deals. It could arguably have risen a lot more. But the size of the funds suits the company just fine. As long as investors are happy, and they seem to be.

For more:
- here's the Investment Dealers' Digest article (For FierceFinance readers)

ALSO NOTED: More on Citigroup's Prince in India; Bear Stearns issues first ETF; and much more...

Mon, 26 Mar 2007 20:01:30 -0400

Company News:
> More on Citigroup's Prince in India. Article
> More on Citigroup's restructuring plans: 26,000 jobs to go. Article
> Bear Stearns issues first ETF. Article
> IBM forms mortgage origination services unit. Article

Regulatory News:
> Supreme Court to rule on shareholders suits. Article
> David Stockman charged with fraud. Article

And Finally... Tips for getting a raise. Article