Showing posts with label legal. Show all posts
Showing posts with label legal. Show all posts

Thursday, August 28, 2014

Beyonce and Jay Z's Cuba trip was legal

Beyonce and Jay Z's Cuba trip declared legal - CNN.comvar cnnCurrTime=new Date(1409058926000),cnnCurrHour=9,cnnCurrMin=15,cnnCurrDay="Tue",cnnIsIntl=true,clickID=212106,cnn_cvpAdpre="edition.",cnnCVPAdSectionT1="edition.cnn.com_entertainment_t1",cnnCVPAdSectionInPage="edition.cnn.com_entertainment_inpage",cnnShareUrl="%2F2014%2F08%2F20%2Fshowbiz%2Fbeyonce-jay-z-cuba%2Findex.html",cnnShareTitle="Beyonce%20and%20Jay%20Z\'s%202013%20Cuba%20trip%20declared%20legal%20",cnnShareDesc="",cnnFirstPub=new Date('Wednesday Aug 20 08:04:23 EDT 2014'),cnnSectionName="entertainment",sectionName="entertainment",cnnSubSectionName="ent : news",cnnPageType="Story",cnnBrandingValue="default";cnnPartnerValue="";cnnOmniBranding="",cnnAuthor="Carolyn Sung, CNN",disqus_category_id=207582,disqus_identifier="/2014/08/20/showbiz/beyonce-jay-z-cuba/index.html",disqus_title="Beyonce and Jay Z\'s 2013 Cuba trip declared legal ",cnn_edtnswtchver="edition",cnnIsStoryPage=true,cnn_metadata = {},cnn_shareconfig = [];cnn_metadata = {section: ["entertainment","ent : news"],friendly_name: "Beyonce and Jay Z\'s 2013 Cuba trip declared legal ",template_type: "content",template_type_content: "gallery",business: {cnn: {page: {author: "Carolyn Sung, CNN",broadcast_franchise: "",video_embed_count: "0",publish_date: "2014/08/20",photo_gallery: "Beyonce and Jay Z\'s 2013 Cuba trip declared legal "},video: {video_player: ""}}},user: {authenticated: "",segment: {age: "",zip: "",gender: ""}}};if (typeof(cnnOmniPartner) !== "undefined") {if (cnn_metadata.template_type_content === "") {cnn_metadata.template_type_content = "partner";}}var photo_gallery = "Beyonce and Jay Z\'s 2013 Cuba trip declared legal ";if(typeof CNN==='undefined'){var CNN=Class.create();}CNN.expandableMap=[''];function _loginOptions(){};var disqus_url=(typeof disqus_identifier!=='undefined') ? 'http://www.cnn.com/2014/08/20/showbiz/beyonce-jay-z-cuba/index.html' : 'http://www.cnn.com'+location.pathname;cnnad_newTileIDGroup(['970x66_top','300x250_rgt','300x250_rgt2','336x280_rgt','336x850_rgt','300x150_rgt','728x90_top','728x90_bot','BG_Skin','120x90_bot1','120x90_bot2','120x90_bot3']);cnnad_newTileIDGroup(['607x95_adlinks','336x280_adlinks']);Skip to main contentCNNEDITION:  INTERNATIONALU.S.MÉXICOARABICTV:  CNNiCNN en EspañolSet edition preferenceSign upLog in//Event.observe(window, 'load', function() {//$('hdr-search-box').focus();//});#hdr-editions a { text-decoration:none; }#cnn_hdr-editionS { text-align:left;clear:both; }#cnn_hdr-editionS a { text-decoration:none;font-size:10px;top:7px;line-height:12px;font-weight:bold; }#hdr-prompt-text b { display:inline-block;margin:0 0 0 20px; }#hdr-editions li { padding:0 10px; }#hdr-editions ul li.no-pad-left span { font-size:12px; }.hdr-arrow-intl, .hdr-arrow-us, .hdr-arrow-us2 { left:148px; }.hdr-arrow-us2 { left:180px; }HomeVideoWorldU.S.AfricaAsiaEuropeLatin AmericaMiddle EastBusinessWorld SportEntertainmentTechTraveliReportSHARE THISPrintEmailMore sharingRedditStumbleUponDelicious/* push in config for this share instance */cnn_shareconfig.push({"id" : "cnn_sharebar1","url" : "http://www.cnn.com/2014/08/20/showbiz/beyonce-jay-z-cuba/index.html","title" : "Beyonce and Jay Z\'s 2013 Cuba trip declared legal "});Beyonce and Jay Z's 2013 Cuba trip declared legal By Carolyn Sung, CNNAugust 21, 2014 -- Updated 0004 GMT (0804 HKT)window.CNN = window.CNN || {};(function setupContentMeta(ns) {ns.ContentMetadata = ns.ContentMetadata || {};ns.ContentMetadata.pageTopGallery = {};}(CNN));if (typeof cnnArticleGallery=="undefined"){var cnnArticleGallery={};if(typeof cnnArticleGallery.currentImageList=="undefined"){cnnArticleGallery.currentImageList=[];}}var expGalleryPT00=new ArticleExpandableGallery();expGalleryPT00.setImageCount(15);expGalleryPT00.setAdsRefreshCount(3);//cnn_adbptrackpgalimg("Celebrity power couples ", 1);.cnn_html_slideshow_metadata > .cnn_html_media_utility::before{color:red;content:'>>';font-size:9px;line-height:12px;padding-right:1px}.cnnstrylccimg640{margin:0 27px 14px 0}.captionText{filter:alpha(opacity=100);opacity:1}.cnn_html_slideshow_media_caption a,.cnn_html_slideshow_media_caption a:visited,.cnn_html_slideshow_media_caption a:link,.captionText a,.captionText a:visited,.captiontext a:link{color:#004276;outline:medium none}.cnnVerticalGalleryPhoto{margin:0 auto;padding-right:68px;width:270px}Rumors may<a href='http://www.people.com/article/beyonce-jay-z-responds-breakup-rumors-instagram-photos' target='_blank'> dog</a> Jay Z and Beyonce, but for now, they remain untouchable. Whether they're raking in cash as <a href='http://www.forbes.com/sites/dorothypomerantz/2013/09/19/jay-z-and-beyonce-top-our-list-of-the-highest-earning-celebrity-couples/' target='_blank'>Hollywood's highest-paid couple </a>or being cleared by the government for their 2013 trip to Cuba, Mr. and Mrs. Carter have some serious clout. Click through the gallery to see which other famous couples are running Hollywood: Rumors may dog Jay Z and Beyonce, but for now, they remain untouchable. Whether they're raking in cash as Hollywood's highest-paid couple or being cleared by the government for their 2013 trip to Cuba, Mr. and Mrs. Carter have some serious clout. Click through the gallery to see which other famous couples are running Hollywood: cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":true,"x":0,"y":0,"pos":1,"title":"Celebrity power couples "}Not even Vogue magazine could deny the influence of Kim Kardashian and Kanye West, putting the #WorldsMostTalkedAboutCouple on the cover of its April 2014 issue. Breaking the confines of Anna Wintour's sacred space? That's power. cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":2,"title":"Celebrity power couples: Kim K. and Kanye West"}Jennifer Aniston reportedly had earned an estimated $20 million as of June 2013, but her writer/director/actor fiancé Justin Theroux certainly carries his weight.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":3,"title":"Justin Theroux and Jennifer Aniston "}From Gisele Bundchen's modeling, endorsement deals and independent licensing ventures to Tom Brady's generous contract with the New England Patriots, this power couple isn't hurting for influence.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":4,"title":"Tom Brady and Gisele Bundchen"}Miranda Lambert and Blake Shelton are country music's winning pair as they continue to dominate Billboard charts, rake up trophies at awards shows and reach a broader audience through Shelton's seat at NBC's Miranda Lambert and Blake Shelton are country music's winning pair as they continue to dominate Billboard charts, rake up trophies at awards shows and reach a broader audience through Shelton's seat at NBC's "The Voice." cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":5,"title":"Blake Shelton and Miranda Lambert"}Together, Angelina Jolie and Brad Pitt have six children, two Academy Awards and roughly $50 million earned in 2013, according to Forbes.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":6,"title":"Angelina Jolie and Brad Pitt"}With Calista Flockhart focusing on TV and Harrison Ford starring on the big screen, the couple, who wed in 2010, have been power players for years.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":7,"title":"Calista Flockhart and Harrison Ford"}Between the two of them, Will Smith and Jada Pinkett Smith have had a major influence across entertainment, from TV to music to film. And they're even more of a power couple -- or family -- when you factor in their famous offspring, Jaden and Willow.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":8,"title":"Will Smith and Jada Pinkett Smith"}Speaking of powerful families, Judd Apatow and Leslie Mann also have had their children, Maude and Iris, appear in three comedies directed by Apatow and starring Mann. It seems the couple that works together on hilarious movies stays together.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":9,"title":"Leslie Mann and Judd Apatow"}Newly engaged couple Ashton Kutcher and Mila Kunis have a long history of working together, and in 2013 earned an estimated $35 million. The pair are now expecting their first child. cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":10,"title":" Ashton Kutcher and Mila Kunis"}Together, soccer player David Beckham and his wife, Victoria (the fashion designer formerly known as Posh Spice), earn $54 million annually, according to Forbes.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":11,"title":"David and Victoria Beckham"}Soccer star Gerard Pique brings his athleticism, while singer Shakira brings global pop stardom to this high-profile relationship. cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":12,"title":"Gerard Pique and Shakira"}As long as As long as "American Idol" judge Mariah Carey continues making music and Nick Cannon keeps acting and writing/producing/directing TV programs, this power couple isn't going anywhere.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":13,"title":"Mariah Carey and Nick Cannon "}David Bowie and Iman married in 1992. His musical legacy coupled with her modeling career and cosmetics company makes this pair a force with which to be reckoned.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":14,"title":"David Bowie and Iman"}Ellen DeGeneres has gained even more regular fans for her show with Ellen DeGeneres has gained even more regular fans for her show with "The Oprah Winfrey Show" no longer on the air. Alone, DeGeneres rakes in $53 million annually, according to Forbes. Add in what her wife, actress Portia de Rossi, earns, and you've got yourself a power couple.cnnArticleGallery.currentImageList[cnnArticleGallery.currentImageList.length]={"currentPicture":false,"x":0,"y":0,"pos":15,"title":"Ellen DeGeneres and Portia De Rossi"}HIDE CAPTIONCelebrity power couples Celebrity power couples: Kim K. and Kanye WestJustin Theroux and Jennifer Aniston Tom Brady and Gisele BundchenBlake Shelton and Miranda LambertAngelina Jolie and Brad PittCalista Flockhart and Harrison FordWill Smith and Jada Pinkett SmithLeslie Mann and Judd Apatow Ashton Kutcher and Mila KunisDavid and Victoria BeckhamGerard Pique and ShakiraMariah Carey and Nick Cannon David Bowie and ImanEllen DeGeneres and Portia De Rossi<<<123456789101112131415>>>Event.observe(window,'load',function(){if(typeof(cnn_adbptrackpgalimg) == 'function' && typeof(cnnArticleGallery) != 'undefined'){cnn_adbptrackpgalimg(cnnArticleGallery.currentImageList[0].image,"Beyonce and Jay Z's 2013 Cuba trip declared legal ");}});STORY HIGHLIGHTSThere had been rumblings that the couple's 2013 trip violated U.S. sanctionsJay Z previously responded to critics with an open letter and a new songThe Treasury Department declared the trip legal and in compliance

(CNN) -- Beyonce and Jay Z don't have to be "On the Run" anymore.

A nine-page report released on Wednesday by the Treasury Department's Office of Inspector General states that the power couple, whose legal names are Beyonce Knowles-Carter and Shawn Carter, did not violate any U.S. sanctions laws during their visit to Cuba last year.

Their April 2013 trip, around the time of their fifth wedding anniversary, was highly criticized. It sparked discussion that the two might have engaged in tourist activities that are illegal under the U.S. embargo against Cuba. Under current law and regulation, travel to the island nation is only permitted under license.

The report states that the couple's trip to Cuba was properly licensed by the Office of Foreign Assets Control under the "people-to-people" educational exchange program. The license was issued to a nonprofit organization that has a mission to promote education in the fields of art, architecture and the decorative arts.

There were concerns that the two might have abused the terms of the license by engaging in too many tourist activities such as a welcome dinner, a walking tour of various Cuban neighborhoods and visits to see student artwork and theater performances. But, the report concludes that all activities followed the terms of the license.

"We believe OFAC's determination that there was no apparent violation of U.S. sanctions with respect to Jay Z and Beyonce's trip to Cuba," the report states.

The criticism following the couple's trip prompted Jay Z to respond to detractors with an open letter.

The rapper also recorded a song called "Open Letter" that slammed critics who suggested the couple's clearance came from their pal President Barack Obama in the White House rather than the Treasury Department.

In the song, Jay Z raps, "Obama said, 'chill you gon' get me impeached. You don't need this s**t anyway. Chill with me on the beach.' "

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Thursday, April 5, 2012

Judge's Obama rebuke questioned by legal experts

The Supreme Court. (AP Photo/Charles Dharapak)In what some are calling a partisan ploy, a federal judge issued a demand on Tuesday that Justice Department attorneys submit a three-page letter explaining whether they believe courts have the right to strike down laws. Judge Jerry Smith, a Reagan appointee who sits on the 5th Circuit Court, said some unspecified people were troubled that President Obama told reporters earlier this week that it would be "unprecedented" for the "unelected" Supreme Court to strike down the Affordable Care Act. But many Supreme Court experts expressed surprise at Smith's overtly political rebuke of the president.

"We respect the decisions made by the courts since Marbury v. Madison," Attorney General Eric Holder said Wednesday, referencing the 1803 Supreme Court case that established the courts' rights to strike down laws. "Courts have final say." Holder told reporters that the Justice Department will submit the letter to the 5th Circuit on Thursday.

With his comments this week, Obama became the first president to weigh in on a major Supreme Court case after oral arguments wrapped up but before a decision was actually issued, according to University of Texas Supreme Court historian Lucas Powe. He says this is an unprecedented move largely because previous presidents didn't have the opportunity to do the same thing. Franklin D. Roosevelt hung back while judges were deliberating his cases--though he criticized them after they ruled—for fear of being labeled a dictator. (Roosevelt eventually threatened to get Congress to pass a court-packing law, and two justices became friendlier to his laws.) And Chief Justice Fred Vinson (falsely) assured Harry Truman that the Court would not strike down his seizure of the steel industry, convincing the president not to pursue any public arm-twisting.

Smith told Justice Department attorneys on Tuesday that Obama's comments "troubled a number of people who have read it as somehow a challenge to the federal courts or to their authority or to the appropriateness of the concept of judicial review. And that's not a small matter," he said. The Justice Department lawyer, Dana Kaersvang, replied that Marbury v. Madison is law, but Smith was not deterred.

John Jeffries, the former dean of the University of Virginia School of Law and constitutional law professor, told Yahoo News in an email that he finds Smith's behavior "odd."

"I know and respect Judge Smith...But I am surprised to see a request to the Justice Department asking them to explain their views on judicial review," said Jeffries, a former clerk to Supreme Court Justice Lewis Powell. "My position would be that judicial review is judicial review, whether you like it or not."

Other scholars concurred. University of Chicago Professor Geoffrey Stone told Yahoo News in an email that Obama wasn't actually questioning judicial review, but was cautioning the judges to remember the other branches of government. "Judge Smith's response was, in my view, quite inappropriate," he said. "It was an unmistakably political act that was well beyond the proper bounds of the judicial role."

And Vanderbilt Law Professor Brian Fitzpatrick, a former clerk to Justice Antonin Scalia, told Talking Points Memo that though he doesn't think Obama's bellicose statements are particularly accurate, "the president is a politician. He's allowed to be cute. Federal judges are supposed to be above that."

But the attorney general under George W. Bush, Michael Mukasey, defended Smith on Fox News Wednesday. "When the president calls [judicial review] into question, the court has, it seems to me, every obligation to sit up and take notice," Mukasey said, according to the Hill.

Several Republican senators have called Obama's initial comments "intimidating" to the Court. The president, a former constitutional law professor, later clarified his statement, saying he didn't mean that it would be unprecedented for the Supreme Court to strike down a law it finds unconstitutional. "The point I was making is that the Supreme Court is the final say on our Constitution and our laws, and all of us have to respect it, but it's precisely because of that extraordinary power that the Court has traditionally exercised significant restraint and deference to our duly elected legislature," he said. Obama mentioned that the Supreme Court has deferred to Congress on national economic regulation for 80 years.

According to Jeffries, it's not unusual for a president to rail against the court. "I am sure that many presidents have inveighed against judicial actions, and some of them meant it," he said. "Think of Andrew Jackson. In general, such remarks are of no consequence to life-tenured judges. That's why they have life tenure."

What's more unusual, according to Powe, is for a federal judge to actually take the bait.

Of course, Obama's relationship with the Supreme Court has been unusually tense. In his 2010 State of the Union, he publicly and unprecedentedly rebuked the Justices--who were sitting uncomfortably in the audience--for their ruling on Citizens United. Justice Samuel Alito mouthed "not true" when Obama said the ruling would allow foreign corporations to spend in American elections.

And so the clash continues, only now it's a circuit court judge issuing a reprimand.

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Saturday, October 1, 2011

Possible SEC move vs. S&P may be first legal shot (AP)

WASHINGTON – The Securities and Exchange Commission is considering taking civil action against Standard & Poor's for its rating of a 2007 mortgage debt offering. Such action could be just the first shot in a legal assault against the major credit rating agencies.

The three major agencies — S&P, Moody's Investors Service and Fitch Ratings — gave high ratings to mortgage investments that turned out to be worthless and contributed to the 2008 financial crisis.

If the SEC charges S&P with violating securities laws, it would mark the first time it's brought an enforcement action against a top rating agency.

New York-based McGraw-Hill Cos., which owns Standard & Poor's Ratings Services, said Monday in a regulatory filing that the SEC staff had told the company it's considering recommending that the agency act. The SEC's staff said it may recommend to the five SEC commissioners that they seek a civil fine and restitution.

The formal notice from the SEC's enforcement staff gives S&P a chance to make a case that there's no basis for charges. S&P said it's been cooperating with the SEC and will continue to do so. It had no further comment.

Regardless of the outcome of the S&P case, the entire rating agency industry may be facing enforcement actions related to the financial crisis.

"It's a dark cloud on the horizon because this could be the first of many," said Anthony Sabino, a law professor at St. John's University in New York.

The SEC has been investigating the actions of big Wall Street players in the run-up to the financial crisis, which plunged the economy into the deepest recession since the 1930s.

The agency already has charged several securities firms over their sales of complex mortgage investments. Last year, Goldman Sachs paid $550 million to settle fraud charges — the largest penalty against a Wall Street firm in SEC history.

Before the financial crisis erupted, the three big rating agencies gave AAA ratings to trillions of dollars in securities linked to high-risk mortgages. Once home-loan delinquencies soared and the housing market went bust, so did those investments. Major banks absorbed tens of billions in losses.

Critics note that the rating agencies face an inherent conflict of interest: They're paid by the institutions whose products they rate. The agencies have been accused of issuing unduly high ratings before the crisis because of pressure from banks whose business they wanted.

New SEC rules mandated by the financial overhaul law passed last year require the agencies to provide more details about how they determine each rating.

The SEC's own reputation has been battered, in part, by its failure to detect Bernard Madoff's Ponzi scheme over the nearly two decades in which it operated. Action against S&P or other rating agencies would allow the SEC to show it's cracking down on contributors to the financial crisis.

The SEC's notice to S&P involves the rating of a 2007 collateralized debt offering, or CDO. CDO's are securities that contain many underlying mortgage loans.

A CDO generally gains in value if borrowers repay. But if they default, a CDO loses value. Soured CDO's have been blamed for deepening the 2008 financial crisis. And the big ratings agencies have been accused of being lax in rating CDOs.

James Cox, a Duke University law professor and securities law expert, said the difficulty in proving the case is showing that the rating agencies believed the investment was poor, and then decided to give it a superior rating.

"It's going to be very difficult to put together all the pieces of the puzzle," Cox said.

In addition to its inflated ratings before the financial crisis, S&P has been under fire since its downgrade of long-term U.S. debt in August. Its president stepped down last month.

The news of possible SEC legal action comes two weeks after McGraw-Hill announced plans to split into two public companies. One would focus on education, the other on financial markets, including the Standard & Poor's unit. The move had been expected, in part because investors have pushed the New York company to boost its stock price, which is off more than 40 percent since 2006.

McGraw-Hill Markets will retain S&P and J.D. Power and Associates, a market research company. It will also include S&P Capital IQ, a provider of data, research, benchmarks and analytics and Platts, a provider of information and data on energy, petrochemicals and metals.

McGraw-Hill shares rose 27 cents, or 0.6 percent, to close Monday at $43.20.


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Friday, September 30, 2011

Possible SEC move vs. S&P may be first legal shot (AP)

WASHINGTON – The Securities and Exchange Commission is considering taking civil action against Standard & Poor's for its rating of a 2007 mortgage debt offering. Such action could be just the first shot in a legal assault against the major credit rating agencies.

The three major agencies — S&P, Moody's Investors Service and Fitch Ratings — gave high ratings to mortgage investments that turned out to be worthless and contributed to the 2008 financial crisis.

If the SEC charges S&P with violating securities laws, it would mark the first time it's brought an enforcement action against a top rating agency.

New York-based McGraw-Hill Cos., which owns Standard & Poor's Ratings Services, said Monday in a regulatory filing that the SEC staff had told the company it's considering recommending that the agency act. The SEC's staff said it may recommend to the five SEC commissioners that they seek a civil fine and restitution.

The formal notice from the SEC's enforcement staff gives S&P a chance to make a case that there's no basis for charges. S&P said it's been cooperating with the SEC and will continue to do so. It had no further comment.

Regardless of the outcome of the S&P case, the entire rating agency industry may be facing enforcement actions related to the financial crisis.

"It's a dark cloud on the horizon because this could be the first of many," said Anthony Sabino, a law professor at St. John's University in New York.

The SEC has been investigating the actions of big Wall Street players in the run-up to the financial crisis, which plunged the economy into the deepest recession since the 1930s.

The agency already has charged several securities firms over their sales of complex mortgage investments. Last year, Goldman Sachs paid $550 million to settle fraud charges — the largest penalty against a Wall Street firm in SEC history.

Before the financial crisis erupted, the three big rating agencies gave AAA ratings to trillions of dollars in securities linked to high-risk mortgages. Once home-loan delinquencies soared and the housing market went bust, so did those investments. Major banks absorbed tens of billions in losses.

Critics note that the rating agencies face an inherent conflict of interest: They're paid by the institutions whose products they rate. The agencies have been accused of issuing unduly high ratings before the crisis because of pressure from banks whose business they wanted.

New SEC rules mandated by the financial overhaul law passed last year require the agencies to provide more details about how they determine each rating.

The SEC's own reputation has been battered, in part, by its failure to detect Bernard Madoff's Ponzi scheme over the nearly two decades in which it operated. Action against S&P or other rating agencies would allow the SEC to show it's cracking down on contributors to the financial crisis.

The SEC's notice to S&P involves the rating of a 2007 collateralized debt offering, or CDO. CDO's are securities that contain many underlying mortgage loans.

A CDO generally gains in value if borrowers repay. But if they default, a CDO loses value. Soured CDO's have been blamed for deepening the 2008 financial crisis. And the big ratings agencies have been accused of being lax in rating CDOs.

James Cox, a Duke University law professor and securities law expert, said the difficulty in proving the case is showing that the rating agencies believed the investment was poor, and then decided to give it a superior rating.

"It's going to be very difficult to put together all the pieces of the puzzle," Cox said.

In addition to its inflated ratings before the financial crisis, S&P has been under fire since its downgrade of long-term U.S. debt in August. Its president stepped down last month.

The news of possible SEC legal action comes two weeks after McGraw-Hill announced plans to split into two public companies. One would focus on education, the other on financial markets, including the Standard & Poor's unit. The move had been expected, in part because investors have pushed the New York company to boost its stock price, which is off more than 40 percent since 2006.

McGraw-Hill Markets will retain S&P and J.D. Power and Associates, a market research company. It will also include S&P Capital IQ, a provider of data, research, benchmarks and analytics and Platts, a provider of information and data on energy, petrochemicals and metals.

McGraw-Hill shares rose 27 cents, or 0.6 percent, to close Monday at $43.20.


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Saturday, July 30, 2011

BofA legal troubles deepen as big investors sue (Reuters)

NEW YORK (Reuters) – Bank of America Corp (BAC.N) was sued by 15 former Countrywide Financial Corp institutional investors who said they lost money after being misled about the mortgage lender's financial condition and lending practices.

BlackRock Inc (BLK.N), the California Public Employees' Retirement System (CalPERS), T Rowe Price Group Inc (TROW.O), TIAA-CREF and the other plaintiffs, including some in Europe, sued in Los Angeles federal court, after deciding not to join a $624 million settlement that won court approval in February.

These plaintiffs believed they could recover more by suing on their own over the "massive and pervasive" fraud at Countrywide, which Bank of America bought on July 1, 2008.

Thursday's lawsuit deepens the legal problems for Bank of America over Countrywide, for which it paid $2.5 billion. Analysts have estimated that its ultimate cost, including legal bills and loan losses, could easily exceed 10 times that sum.

Last month, the Charlotte, North Carolina-based bank entered an $8.5 billion agreement to end most litigation by investors who bought securities backed by risky Countrywide home loans. Some of those investors have complained this agreement too may be unfair.

According to the 425-page complaint by the 15 plaintiffs, Countrywide and officials like former Chief Executive Angelo Mozilo abandoned prudent lending, reserved too little for bad loans and inflated earnings, in a drive to triple market share to 30 percent and enrich themselves.

Top executives "were fully aware of but failed to disclose, and in fact expressly authorized and engaged in, Countrywide's risky lending," the complaint said.

Countrywide shares ultimately sank more than 90 percent from their peak as losses from its subprime, pay-option and other risky mortgages began to pile up.

Bill Halldin, a Bank of America spokesman, said: "It is unfortunate that select investors chose to opt out of a fair and equitable agreement to settle these issues. We intend to vigorously defend these claims."

"UNFORTUNATE," BANK SAYS

The plaintiffs seek unspecified damages and class-action status for the March 12, 2004 to March 7, 2008 period.

They are also seeking a jury trial, and to "maximize the recovery of their damages," their lawyer Blair Nicholas, a partner at Bernstein Litowitz Berger & Grossmann, said.

Other defendants include former Chief Operating Officer David Sambol and former Chief Financial Officer Eric Sieracki, and former auditor KPMG LLP.

Lawyers for the former executives did not return requests for comment. KPMG spokesman Dan Ginsburg declined to comment.

The February 25 settlement approved by U.S. District Judge Mariana Pfaelzer in Los Angeles called for Bank of America to pay $601.5 million to former Countrywide investors, and set aside $22.5 million for claims of investors that opted out.

That money would go to investors in the earlier settlement if it is not used within two years.

Mozilo last October reached a $67.5 million settlement of a U.S. Securities and Exchange Commission civil fraud lawsuit accusing him of misleading investors and generating improper gains from stock sales. He did not admit wrongdoing.

Bank of America shares have fallen close to 60 percent since it bought Countrywide, roughly three times as much as the KBW Bank Index (.BKX). In afternoon trading, the shares were unchanged at $9.79.

(Reporting by Jonathan Stempel; Editing by Phil Berlowitz)


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