Moody's Whistleblower Wants Cut of $864M Subprime Settlement

Former Moody's executive and whistleblower Ilya Eric Kolchinsky is pressing for compensation, saying the U.S. government is not crediting him with helping it obtain an $864 million settlement over inflated credit ratings on subprime mortgage securities.

The January agreement between Moody's, the federal government, and 21 states and the District of Columbia settled claims under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

Lawyers for Kolchinsky said the facts he asserts against Moody's in a False Claims Act (FCA) case, along with other work he did in exposing problems at the agency, "makes him entitled to a share of the proceeds." But Moody's and the federal government answered back that there is no overlap between his FCA allegations and the government's pursuit of remedy under FIRREA.

Kolchinsky is a former managing director at Moody's who testified before Congress about Moody's practices and filed the FCA lawsuit in the Southern District in 2012, saying Moody's made false claims to the government in connection with allegedly fraudulent credit ratings of residential mortgage-backed securities and collateralized debt obligations. read more »

The biggest players today on Wall Street? Algorithms

They are agnostic on market direction, but ubiquitous in markets. Firms like Goldman Sachs and Morgan Stanley may get the headlines, but algorithms are the real force today on Wall Street.

The mysterious programs were at the center of the so-called "Flash Crash" in May 2010, when the US stock market plunged more than nine percent in a matter of minutes for no discernible reason.

The swoon, which was reversed within a matter of minutes, was sparked by a computerized order to sell a large quantity of S&P 500 futures in a short period. That, in turn, triggered a chain reaction of other computerized orders by high-frequency traders.

The quickfire crash and recovery underscored the pivotal role of algorithms, which execute automated trades after taking instantaneous readings of inputs that can include news events, economic data and stock price movements. read more »

Brazil’s huge corruption scandal is spreading to the rest of Latin America

For more than two years the “Car Wash” corruption mega-scandal engulfing Odebrecht, Latin America’s largest construction company, has roiled Brazil.

It contributed to the drive to impeach President Dilma Rousseff, landed numerous powerful people behind bars, helped stall the world’s ninth-largest economy, and led to a $3.5 billion corporate fine — a world record in a graft case.

Now the scandal is metastasizing across Latin America, where Odebrecht had numerous contracts to build huge public infrastructure projects in 10 countries from Argentina to Mexico. read more »

U.S. SEC charges Chinese exec with DreamWorks insider trading

A Chinese private equity executive has been charged by the U.S. Securities and Exchange Commission with reaping $29.05 million of illegal profit from insider trading ahead of Comcast Corp's purchase of DreamWorks Animation SKG Inc.

The SEC said it also obtained a court order freezing five brokerage accounts controlled by Shaohua "Michael" Yin, 44, a partner at Hong Kong-based Summitview Capital Management Ltd and graduate of the University of Pennsylvania's Wharton School.

Yin was accused of trading illegally in DreamWorks stock before the $3.8 billion takeover was announced, through Interactive Brokers accounts held in the names of five other Chinese nationals, including his septuagenarian parents. read more »

Justice Department ends FCPA investigation into Houston energy co.'s Angolan operations

The U.S. Department of Justice recently closed an investigation into Houston-based Cobalt International Energy Inc. (NYSE: CIE), the company and its law firm, Houston-based Baker Botts LLP, announced Feb. 9.

The DOJ was conducting a Foreign Corrupt Practices Act investigation into Cobalt’s operations in Angola. It was the only remaining FCPA investigation into the operations, and no regulatory action has been taken against the company. The U.S. Securities and Exchange Commission concluded its investigation in January 2015. read more »

ZeekRewards founder Burks learns prison term Monday

Paul Burks, the mastermind of defunct Ponzi scheme ZeekRewards.com, will learn his legal and financial fates today.

A sentencing hearing is set for 9:30 a.m. in federal court in Charlotte — nearly 4½ years after federal regulators shut down the Lexington online companies.

ZeekRewards was one of the largest Ponzi schemes in U.S. history at $939 million, according to federal regulatory officials and prosecutors. The companies, which debuted in January 2011, were shut down and their assets frozen in August 2012. read more »

Ex-AIG chief Greenberg settles accounting fraud lawsuit

Former American International Group Inc Chief Executive Maurice "Hank" Greenberg on Friday settled a 12-year old lawsuit brought by the New York attorney general that accused him of orchestrating sham transactions at the insurer to hide its true financial condition.

"After over a decade of delays, deflections, and denials by Mr. Greenberg, we are pleased that Mr. Greenberg has finally admitted to his role in these fraudulent transactions and will personally pay $9 million the State of New York," New York Attorney General Eric Schneiderman said in a statement. read more »

Hain Celestial Plunges After Disclosing SEC Accounting Probe

Hain Celestial Group Inc., the natural-food supplier that began a probe of its accounting practices last year, fell as much 15 percent after saying the U.S. Securities and Exchange Commission has opened a formal investigation into the matter.

Hain alerted the SEC in August that it was delaying financial statements because of its own review, according to a filing on Friday. The regulators then issued a subpoena seeking relevant documents. The Lake Success, New York-based company, which supplies Whole Foods Market Inc. and other grocers, said it “intends to cooperate fully with the SEC.” read more »

Trial Set Over Bitcoin Exchange Linked to J.P. Morgan Hack Probe

A Florida software engineer and a New Jersey pastor are expected on Monday to face trial in a case stemming from an investigation into a bitcoin exchange and a data breach at J.P. Morgan Chase.

Jury selection is set to begin in Manhattan federal court in the case of Yuri Lebedev, who authorities call the architect of bitcoin exchange Coin.mx's electronic platform, and Trevon Gross, a pastor and ex-chairman of a now-defunct credit union.

Prosecutors contend Lebedev schemed to deceive financial institutions into processing transactions for the unlicensed Coin.mx. They say he also participated in bribing Gross to gain control over the credit union to facilitate the virtual currency business. read more »