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Financial Institution Fraud

This archive displays posts tagged as relevant to fraud by or involving financial institutions. You may also be interested in the following pages:

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September 28, 2022

Alabama-based Regions Bank, which operates thousands of branches and ATMs across 16 states, has been ordered to pay $50 million to the CFPB’s victims relief fund and refund at least $141 million to customers, after the CFPB found it charged surprise overdraft fees to customers told they had sufficient funds.  Leadership was also found to have known about the illegal practice long before it ended in 2021, but chose to wait until they could make up the revenue, which made up 17.7% of their non-interest income, in other ways.  CFPB

September 27, 2022

Fifteen broker-dealers and one affiliated investment advisor has been ordered to pay combined penalties of more than $1.1 billion following SEC charges of violating the recordkeeping provision of securities laws.  Barclays, Bank of America (including Merrill Lynch, Pierce, Fenner & Smith), Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, and UBS each paid $125 million, while Jefferies and Nomura each paid $50 million and Cantor Fitzgerald paid $10 million, to settle charges of failing to prevent or preserve communications their employees made via messaging apps on their personal devices.  SEC

September 27, 2022

Eleven financial institutions—including Bank of America, Barclays, Cantor Fitzgerald, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Jefferies, Morgan Stanley, Nomura, and UBS—have been ordered to pay over $710 million total for violating CFTC recordkeeping and supervision requirements.  Each institution was found to have failed to prevent their employees from communicating both internally and externally about firm business using informal means, such as texts, Whatsapp, and Signal, and failed to preserve those communications.  The individual payments ranged from $100 million (Bank of America) to $6 million (Cantor Fitzgerald), with the majority of institutions ordered to pay $75 million.  CFTC

August 10, 2022

Angel Oak Capital Advisors and its portfolio manager Ashish Neghandi will pay $1.75 million and $75,000 respectively to settle charges of misleading investors via their $90 million securitization of home renovation loans. When delinquency rates on their “fix-and-flip” loans increased unexpectedly, rather than accelerating return payments to certain investors, as contractually required, defendants artificially reduced delinquency rates by diverting borrowers’ funds to pay down outstanding loan balances. SEC

July 28, 2022

U.S. Bank will pay a $37.5 million penalty and is required to make harmed customers whole for illegally accessing their credit reports and opening new, unauthorized accounts in these customers’ names. The bank’s actions violated the Consumer Financial Protection Act, the Fair Credit Reporting Act, the Truth in Lending Act, and the Truth in Savings Act. The bank pressured its employees to hit certain sales goals and implemented an incentive-compensation program that financially rewarded employees for selling bank products. As a result, the bank’s customers held unwanted accounts, had negative effects on their credit profiles, and lost control over their personally identifiable information—not to mention the time-consuming hassle of closing unauthorized accounts and resolving other consequences stemming from this practice.  CFPB

July 27, 2022

Three registered broker-dealers have been ordered to pay civil penalties based on SEC findings that each had deficiencies in its programs to prevent customer identity theft, in violation of the SEC’s Identity Theft Red Flags Rule, or Regulation S-ID.  J.P. Morgan Securities LLC will pay $1.2 million, UBS Financial Services Inc. will pay $925,000, and TradeStation Securities, Inc. will pay $425,000.  The SEC found that the broker-dealers’ cybersecurity policies failed to detect identity theft red flags in connection with customer accounts or to incorporate those red flags into their programs, and that the firms failed to adequately train staff, failed to review and update the policies as required, did not include appropriate board oversight, and failed to oversee service provider arrangements.  SEC

July 27, 2022

Trident Mortgage Company entered into a settlement agreement with federal and state agencies to resolve allegations that the non-bank lender intentionally discriminated against minority loan applicants by engaging in a pattern or practice of lending discrimination through “redlining.”  Trident agreed to invest over $20 million to increase credit opportunities in neighborhoods of color in the Philadelphia metropolitan area, and pay a $4 million penalty to the CFPB. DOJ; CFPB; PA; NJ; DE

July 22, 2022

Vanderpoel family members Neal J. II, Eileen, Ryan, and Neal J. IV will pay $1.88 million in penalties, disgorge their ill-gotten gains, and are barred from performing any loan modification, debt adjustment, or mortgage compliance in New Jersey because of their predatory mortgage adjustment services targeting distressed homeowners. The family violated New Jersey’s Consumer Fraud Act and the Debt Adjustment Act, selling worthless loan modification and other adjustment services to borrowers, and charged excessive upfront fees. The entities used in furtherance of the fraud—Financial Services of America, Financial Processing Services, LLC, Tri-State Financial Relief, LLC, and Mortgage Help and Loan Audits of America, LLC—were also shut down. NJ OAG

July 18, 2022

Equitable Financial Life Insurance Company has agreed to pay $50 million to settle charges of providing statements to 1.4 million variable annuity investors, which included public school teachers and staff, that failed to list all fees paid during the period.  In addition to the monetary settlement, Equitable has agreed to cease and desist from future violations and revise how it presents fee information.  SEC

July 14, 2022

Bank of America will pay fines totaling $225 million to following federal investigation into its administration of state unemployment insurance and other public benefit programs, which it provided pursuant to contracts with 12 states to deliver benefits through prepaid debit cards. When demand for benefits surged with the COVID-19 pandemic, the Bank adopted automated fraud detection practices which it the government alleged it knew or should have known would lead to its incorrectly freezing or blocking accounts. The CFPB and OCC found that the Bank imposed unreasonable barriers that made it difficult for people to report fraudulent use of their cards or unfreeze their prepaid debit cards, and failed to establish adequate operational processes, risk management, and internal controls. In addition to the penalties – $100 million imposed by the CFPB and $125 million imposed by the OCC – the Bank was ordered to provide redress to consumers and take corrective action with respect to its oversight over the programs.  CFPB; OCC
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