Source: https://manifestinjustice.wordpress.com/tag/banksters/
Timestamp: 2019-04-26 02:55:28+00:00

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2nd Circuit Upholds Insider Trading Conviction of Ex-Goldman Sachs Director The panel’s decision represented the latest retreat from the appellate court’s holding in 2014’s “U.S. v. Newman,” which narrowed prosecutors’ ability to prove insider trading.
For the second time in as many months the U.S. Court of Appeals for the Second Circuit has declined to reverse an insider trading secured by federal prosecutors before the circuit court’s ruling in United States v. Newman and the sequence of decisions it spawned.
On Monday, the panel, composed of Circuit Judges Amalya Kearse, Richard Wesley and Christopher Droney, denied former Goldman Sachs director Rajat Gupta’s second attempt to have his insider trading conviction overturned. The Second Circuit had previously in 2014 denied Gupta’s argument that the trial court erred in admitting some evidence, while excluding other evidence offered by the defense ahead of his 2012 conviction. He ultimately served 19 months in prison, and was released in 2016.
The current appeal came after U.S. District Judge Jed Rakoff of the Southern District of New York denied Gupta’s motion to vacate his conviction in the wake of the Second Circuit’s 2014 decision in Newman, which substantially narrowed the “personal benefit” requirements of an insider trading relationship. Gupta argued before Rakoff that the jury instructions in his case were legally invalid under Newman.
On appeal, the panel reviewed Gupta’s challenge based on a cause-and-prejudice standard. It agreed with Rakoff’s argument that nothing stopped Gupta from arguing that the jury instructions were faulty on direct appeal from his conviction, since they were made during trial.
The panel observed that its November 2018 decision in Whitman v. United States tracks closely with the dynamics of Gupta’s case, as jury instructions were objected to at trial but weren’t pursued on appeal. Other insider trading cases pursued the line on appeal before Newman, the panel noted, making the claims in Whitman—and therefore Gupta’s case—insufficient to show cause.
While the panel, having found Gupta failing the cause standard, could arguably have ended its findings there, it proceeded to address the issue of prejudice, and, in doing so, waded directly back in to the circuit’s muddied law on insider trading.
That last clause proved critical for the panel, who argued it squared with requirements under precedent, but not the Second Circuit’s most recent double take in United States v. Martoma, which is mentioned briefly later. Instead, the panel opted to return to the insider trading Ur-precedent from the Supreme Court’s 1983 decision in Dirks v. SEC.
In fact, the panel’s acknowledgment that Dirks highlighting the ability for a quid pro quo relationship despite “the lack of need for proof of the tipper’s financial or tangible gain” appeared to potentially undercut a portion of the court’s holding in Newman, continuing the erosion that began with the Supreme Court’s findings in Salman v. United States and continued through the two versions of the Second Circuit’s Martoma decision.
The fact that Newman‘s requirement for proof of a tipper’s pecuniary or other tangible gain has been rejected by the Supreme Court disposes of Gupta’s contention that Newman meant the trial court’s instruction that proof of pecuniary or tangible benefit was not necessary caused him to be convicted of a crime for ‘conduct that is not criminal,’” the panel said, quoting from Gupta’s brief on appeal.
A spokesman for the U.S. Attorney’s Office for the Southern District of New York, which secured Gupta’s original conviction and handled the appeal, declined to comment.
Kramer Levin Naftalis & Frankel name attorney Gary Naftalis handled Gupta’s appeal. He did not respond to a request for comment.
Evan Vucci/APGoldman Sachs CEO Lloyd Blankfein.
We now know more about the $5 billion settlement Goldman Sachs has agreed to pay related to residential mortgage-backed securities it sold between 2005 and 2007.
Regulators announced details of the settlement on Monday.
Goldman initially announced the settlement in January. That nearly wiped out fourth-quarter earnings for the firm.
“Today’s settlement is yet another acknowledgment by one of our leading financial institutions that it did not live up to the representations it made to investors about the products it was selling,” said one regulator, US Attorney Benjamin B. Wagner of the Eastern District of California, in a statement.
Morgan Stanley announced a similar settlement in February. It agreed to pay $3.2 billion over charges that it misled investors on the quality of mortgage loans it sold.
And on Friday, the US Justice Department announced that Wells Fargo had agreed to pay $1.2 billion to settle “shoddy” mortgage-lending practices.
WASHINGTON — The Justice Department, along with federal and state partners, announced today a $5.06 billion settlement with Goldman Sachs related to Goldman’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. The resolution announced today requires Goldman to pay $2.385 billion in a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and also requires the bank to provide $1.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing. Goldman will also pay $875 million to resolve claims by other federal entities and state claims. Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Goldman between 2005 and 2007.
The $2.385 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. The settlement expressly preserves the government’s ability to bring criminal charges against Goldman, and does not release any individuals from potential criminal or civil liability. In addition, as part of the settlement, Goldman agreed to fully cooperate with any ongoing investigations related to the conduct covered by the agreement.
Of the $875 million Goldman has agreed to pay to settle claims by various other federal and state entities: Goldman will pay $575 million to settle claims by the National Credit Union Administration, $37.5 million to settle claims by the Federal Home Loan Bank of Des Moines as successor to the Federal Home Loan Bank of Seattle, $37.5 million to settle claims by the Federal Home Loan Bank of Chicago, $190 million to settle claims by the state of New York, $25 million to settle claims by the state of Illinois and $10 million to settle claims by the state of California.
Goldman will pay out the remaining $1.8 billion in the form of relief to aid consumers harmed by its unlawful conduct. $1.52 billion of that relief will be paid out pursuant to an agreement with the United States that Goldman will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country, as well as financing for affordable rental and for-sale housing throughout the country. This agreement represents the largest commitment in any RMBS agreement to provide financing for affordable housing—a crucial need following the turmoil of the financial crisis. $280 million will be paid out by Goldman pursuant to an agreement separately negotiated with the state of New York.
Goldman’s Mortgage Capital Committee, which included senior mortgage department personnel and employees from Goldman’s credit and legal departments, was required to approve every RMBS issued by Goldman. Goldman has now acknowledged that “[t]he Mortgage Capital Committee typically received . . . summaries of Goldman’s due diligence results for certain of the loan pools backing the securitization,” but that “[d]espite the high numbers of loans that Goldman had dropped from the loan pools, the Mortgage Capital Committee approved every RMBS that was presented to it between December 2005 and 2007.” As one example, in early 2007, Goldman approved and issued a subprime RMBS backed by loans originated by New Century Mortgage Corporation, after Goldman’s due diligence process found that one of the loan pools to be securitized included loans originated with “[e]xtremely aggressive underwriting,” and where Goldman dropped 25 percent of the loans from the due diligence sample on that pool without reviewing the unsampled 70 percent of the pool to determine whether those loans had similar problems.
Goldman has acknowledged that, for one August 2006 RMBS, the due diligence results for some of the loan pools resulted in an “unusually high” percentage of loans with credit and compliance defects. The Mortgage Capital Committee was presented with a summary of these results and asked “How do we know that we caught everything?” One transaction manager responded “we don’t.” Another transaction manager responded, “Depends on what you mean by everything? Because of the limited sampling . . . we don’t catch everything . . .” Goldman has now acknowledged that the Mortgage Capital Committee approved this RMBS for securitization without requiring any further due diligence.
Goldman made detailed representations to investors about its “counterparty qualification process” for vetting loan originators, and told investors and one rating agency that Goldman would engage in ongoing monitoring of loan sellers. Goldman has now acknowledged, however, that it “received certain negative information regarding the originators’ business practices” and that much of this information was not disclosed to investors.
For example, Goldman has now acknowledged that in late 2006 it conducted an internal analysis of the underwriting guidelines of Fremont Investment & Loan (an originator), which found many of Fremont’s guidelines to be “off market” or “at the aggressive end of market standards.” Instead of disclosing its view of Fremont’s underwriting, Goldman has acknowledged that it “[u]ndertook a significant marketing effort” to tell investors about what Goldman called Fremont’s “commitment to loan quality over volume” and “significant enhancements to Fremont underwriting guidelines.” Fremont was shut down by federal regulators within several months of these statements.
Assistant U.S. Attorneys Colleen Kennedy and Kelli Taylor of the Eastern District of California investigated Goldman’s conduct in connection with RMBS, with the support of the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
The settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered tens of billions of dollars on behalf of American consumers and investors for claims against large financial institutions arising from misconduct related to the financial crisis. The RMBS Working Group brings together attorneys, investigators, analysts and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the U.S. Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, SIGTARP, the Federal Reserve Board’s OIG, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country. The RMBS Working Group is led by Director Joshua Wilkenfeld and five co-chairs: Principal Deputy Assistant Attorney General Mizer, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Andrew Ceresney of the SEC’s Division of Enforcement, U.S. Attorney John Walsh of the District of Colorado and New York Attorney General Eric Schneiderman. This settlement is the fifth multibillion-dollar RMBS settlement announced by the working group.
NEW YORK — Attorney General Eric T. Schneiderman today joined members of the state and federal working group he co-chairs to announce a $5 billion settlement with Goldman Sachs over the bank’s deceptive practices leading up to the financial crisis. The settlement includes $670 million—$480 million worth of creditable consumer relief and $190 million in cash—that will be allocated to New York State. The resolution requires Goldman Sachs to provide significant community-level relief to New Yorkers, including resources that will facilitate a significant expansion of the New York State Mortgage Assistance Program enabling distressed homeowners to restructure their debt, as well as first-lien principal forgiveness, and funds to spur the construction of more affordable housing. Additional resources will be dedicated to helping communities transform their code enforcement systems, and invest in land banks and land trusts.
The settlement was negotiated through the Residential Mortgage-Backed Securities Working Group, a joint state and federal working group formed in 2012 to share resources and continue investigating wrongdoing in the mortgage-backed securities market prior to the financial crisis.
New York has now received $5.33 billion in cash and consumer relief from the National Mortgage Settlement (NMS) and all five Residential Mortgage-Backed Securities Working Group settlements (RMBS). The combined $3.2 billion in cash and consumer relief from RMBS settlements is more than any other state.
The settlement includes an agreed-upon statement of facts that describes how Goldman Sachs made multiple representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors, its process for screening out questionable loans, and its process for qualifying loan originators. Contrary to those representations, Goldman Sachs securitized and sold RMBS backed by large numbers of loans from originators whose mortgage loans contained material defects.
In the statement of facts, Goldman Sachs acknowledges that it securitized thousands of Alt-A, and subprime mortgage loans and sold the resulting residential mortgage-backed securities (“RMBS”) to investors for tens of billions of dollars. During the course of its due diligence process, Goldman Sachs received pertinent information indicating that significant percentages of the loans reviewed did not conform to the representations it made to investors. Goldman also received and failed to disclose negative information that it obtained regarding the originators’ business practices. Indeed, Goldman’s due diligence vendors provided Goldman with reports reflecting that the vendors had graded significant numbers and percentages of sampled loans as EV3s, i.e., not in compliance with originator underwriting guidelines. In certain circumstances, Goldman reevaluated loan grades and directed that such loans be waived into the pools to be purchased or securitized.
Even when the percentage of problematic loans in pools sampled by it vendors indicated that the unsampled portions of the pools likely contained additional such loans, Goldman typically did not increase the size of the sample or review the unsampled portions of the pools to identify and eliminate any additional such loans. In many cases, 80 percent or more of the loans in the loan pools Goldman purchased and securitized were not sampled for credit and compliance due diligence. Nevertheless, Goldman approved various offerings for securitization without requiring further due diligence to determine whether the remaining loans in the deal contained defects. A Goldman employee overseeing due diligence for a particular loan pool noted that the pool included loans originated with “[e]xtremely aggressive underwriting” and “large program exceptions made without compensating factors.” Despite this observation, Goldman did not review the remaining portion of the pool, and subsequently securitized thousands of loans from the pool.
Goldman made statements to investors in offering documents and in certain other marketing materials regarding its process for reviewing and approving originators, yet it failed to disclose to investors negative information it obtained about mortgage loan originators and its practice of securitizing loans from suspended originators.
Attorney General Schneiderman was elected in 2010 and took office in 2011, when the five largest mortgage servicing banks, 49 state attorneys general, and the federal government were on the verge of agreeing to a settlement that would have released the banks—including Bank of America—from liability for virtually all misconduct related to the financial crisis. Attorney General Schneiderman refused to agree to such sweeping immunity for the banks. As a result, Attorney General Schneiderman secured a settlement that preserved a wide range of claims for further investigation and prosecution. In his 2012 State of the Union address, President Obama announced the formation of the RMBS Working Group. The collaboration brought together the Department of Justice (DOJ), other federal entities, and several state law enforcement officials—co-chaired by Attorney General Schneiderman—to investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities.
The National Mortgage Settlement (NMS), reached with the five largest national mortgage servicers, has provided $51 billion in consumer relief and cash nationwide. The combined amount of cash and consumer relief that has been returned to New York as a result of all the RMBS and NMS deals is $1.481 billion in cash and $3.857 in consumer relief, for a total of $5.338 billion. This matter was led by Senior Enforcement Counsel for Economic Justice Steven Glassman and Assistant Attorneys General Desiree Cummings and Kenneth Haim, both of the Investor Protection Bureau.
The fraternity of nuclear scientists… create the impression… their extremely risky projects have been carefully thought out in every detail and are inspired by the spirit of greatest responsibility… A large section of the scientific community… believes [their accident simulations are] about as reliable as tomorrow’s weather forecast [and] that by building nuclear power plants in populated areas, the whole world becomes an experimental laboratory with human beings as guinea pigs.
There is always the possibility of a major disaster. The basic difference between nuclear and other industrial accidents lies in the long-range repercussions… one could forget about the havoc wrought, for example, by the explosion of a gas pipeline or the breaching of a dam… But an accident in a nuclear power plant, such as a reactor getting out of control, is capable of doing more than immediate harm. Examples of the deadly long-term effects of a reactor accident are Chernobyl and Fukushima [which] will linger on for ages to haunt the future generations. Among the survivors there will be many cases of permanent sterility, increase of genetic mutation in our progenies, and a shortened life span as a result of cancer and other radiogenic diseases.
[It’s] irresponsible and misleading to suppress the consequences of radiation…[A]ttempts are made… to blind the people by equating nuclear accidents with more familiar hazards… an unlimited risk is falsely portrayed as a limited one and glossed over in a manner that is not only unconscionable, but also unpardonable. Thesedeceptions are further camouflaged by the way in which they are presented to the public… the far-reaching consequences of lethal radiation are overly simplified. In the post-Chernobyl and post-Fukushima era, these… do not hold water.
The consequences can assume dimensions that do not take second place to the consequences of earthquake… and in a way actually exceeds them.
R/V Marai — Japan Agency for Marine-Earth Science and Technology (JAMSTEC, administered by gov’t of Japan): The great earthquake [and] tsunami with its height of more than 10 m attacked mainly the Pacific coastline of Tohoku district and approximately thirty thousand people were killed, missing or injured. What is worse is that Fukushima No.1 nuclear power plant was seriously damaged… a gigantic radiation has been leaking to the atmosphere, land and ocean. After this record crisis, the Ministry of Education, Culture, Sports, Science and Technology (MEXT) requested JAMSTEC… monitor [the] level of radiation.

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