June 25, 2018
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7 charged in $78M record-setting inside trade case

By From wire service reports

NEW YORK — Greed on Wall Street set a new record, federal authorities said Wednesday as they unveiled a massive insider trading case charging a hedge fund co-founder with engineering a trade that earned a staggering $53 million in profits.

The illegal trade — the largest transaction ever prosecuted in Manhattan — was part of a $78 million scheme involving at least seven financial industry professionals, U.S. Attorney Preet Bharara told a news conference.

“Today’s charges illustrate something that should disturb all of us: They show that insider trading activity in recent times has, indeed, been rampant and routine and that this criminal behavior was known, encouraged and exploited by authority figures in several investment funds,” Bharara said.

Of the $78 million, nearly $62 million was earned through tips provided by a Dell Inc. employee to a former Dell worker who spread the information among his friends at at least five investment houses, including three hedge funds. Bharara called it “a stunning portrait of organized corruption on a broad scale” and said it raised to 63 the number of people arrested in a government crackd own on insider trading. So far, there have been 56 convictions.

“Each wave of charges and arrests seems to produce leads to lead us to the next phase,” said FBI Assistant Director-in-Charge Janice K. Fedarcyk.

She said the arrests were not the last in a 4-year-old probe dubbed Operation Perfect Hedge.

Mortgage settlement between banks, states ‘close’

WASHINGTON — A $25 billion settlement between the nation’s major banks and all 50 states over deceptive foreclosure practices during the housing crisis is nearing completion.

Five major banks — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC) — and U.S. states are “very close,” Housing and Urban Development Secretary Shaun Donovan said Wednesday.

Separately, two officials briefed on internal discussions say a proposed deal could be announced within weeks. Negotiators are finalizing a draft of the agreement, which must be reviewed by state attorneys general. Under the deal, banks would pay states and the federal government, which would fund programs to compensate homeowners.

The two officials asked to remain anonymous because they were not authorized to speak publicly about the deal.

Big banks must show break-up plans under new rule

WASHINGTON — The largest banks must show how they would break up their assets if they were in danger of failing, under a rule approved Tuesday.

The Federal Deposit Insurance Corp. voted to require banks with $50 billion or more in assets to submit so-called living wills. Banks with more than $250 billion in assets would have to show their plans by July. The rest of the 37 banks affected by the rule would have until 2013.

The FDIC also proposed that banks with more than $10 billion in assets conduct annual stress tests to show how they would handle worsening economic conditions. Stress tests subject banks’ balance sheets to scenarios such as increasing unemployment and falling home prices.

Both rules were required by the 2010 financial overhaul.

NY employee accused of taking Federal Reserve code

NEW YORK — A computer programmer who worked at the Federal Reserve Bank of New York has been accused of stealing computer code used to track government finances.

Bo Zhang was arrested Wednesday. Authorities say he stole the code last summer while working on it as a contract government employee.

The 32-year-old Queens resident could face up to 10 years in prison if convicted.

The Federal Reserve Bank of New York is part of a system that helps operate the nation’s payment systems and protects consumers dealing with banks.

A criminal complaint says Zhang admitted copying the code for use on his private office computer, home computer and laptop. The complaint says he used the code in connection with a private business he ran training people in computer programming.

A defense lawyer has declined to comment.

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