BAD BANK

It’s taken six years and $27 billion for RBS to pay for its crisis-era sins

A heavy weight has finally been lifted off the shoulders of Royal Bank of Scotland CEO Ross McEwan. The British bank said today that it agreed to pay $4.9 billion to the US Justice Department to settle an investigation into RBS’s mis-selling of mortgage securities in the run-up to the global financial crisis.

This fine has been looming over the bank for a long time—a year ago, analysts estimated that it could be between $12 billion and $20 billion. A penalty of only $4.9 billion marks a “milestone” for RBS, McEwan said in a statement. “That was a significant legacy issue and the biggest uncertainty that was hanging over this bank,”read more »

Jazz Pharmaceuticals Sets Aside $57 Million to Settle DOJ Probe

Jazz Pharmaceuticals Plc reached a tentative agreement with the Justice Department to settle a probe over its donations to charities that help people afford drugs, part of a long-running U.S. investigation into drugmaker ties to such groups.

In a securities filing Tuesday, the maker of the costly narcolepsy drug Xyrem said it reached an agreement in principle in April for a civil settlement and has set aside $57 million to resolve the probe. The company had previously received multiple subpoenas from the Justice Department over its charitable donations. read more »

McKinsey Hid Conflicts of Interest From Courts, Lawsuit Says

Jay Alix, a prominent restructuring specialist, sued McKinsey & Company on Wednesday, accusing the management-consulting firm of misleading the bankruptcy courts about conflicts of interest.

Mr. Alix, the founder of the consulting firm AlixPartners, filed suit under the federal Racketeering Influenced and Corrupt Organizations Act, saying McKinsey “knowingly and intentionally submitted false and materially misleading declarations under oath” in cases where it had been hired as a bankruptcy consultant.

The declarations allowed McKinsey “to unlawfully conceal its many significant connections to ‘interested parties’” in the bankruptcies, according to the complaint. Had the connections been known, it said, McKinsey would have been precluded from working on those cases.

The complaint also accused McKinsey of offering “pay to play” deals to various bankruptcy lawyers, in which McKinsey would offer “to refer its vast network of consulting clients” to them if in exchange they would refer their bankruptcy clients to McKinsey’s restructuring business. read more »

$2.2 Million for Forex Fraud Scheme

Defendants Cifuentes Fund Management, LLC devised a sham commodity pool trading in off-exchange foreign currency (forex) contracts. To solicit pool participants to transfer funds to them, the Defendants made false statements, fabricated account documents, and established a practice, or “demo,” forex trading account that involved no actual funds and posed no risk of loss. The Defendants posted “profitable” trades from the demo account online and falsely represented them to be the Defendants’ actual trades, without disclosing that the demo account had sustained “losses” exceeding $5 million. read more »