Financial Services Litigation & Investigation Monitor : Financial Services Lawyer & Attorney : Perkins Coie Law Firm : Government Investigations, Class Actions

At a November 29, 2010 press conference, Attorney General Eric Holder confirmed that Preet Bharara,  U.S. Attorney for the South District of New York, is leading a "very serious" criminal probe into Wall Street firms.  While Holder declined to provide details, the announcement is on the heals of a November 22 FBI search at three hedge funds purportedly seeking evidence related to an insider trading investigation.   The investigators searched the offices of Diamondback Capital Management LLC, Level Global Investors LP and Loch Capital Management LLC.  FBI spokesman James Margolin said the Bureau was “conducting searches as part of an ongoing investigation.”

Read more at Law360 ; Bloomberg.

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A November 17, 2010 article in  The Wall Street Journal reports that the Federal Deposit Insurance Corp (FDIC) is conducting about 50 criminal investigations in connection with U.S. banks that have failed since the start of the financial crisis. The FDIC is responsible for dealing with bank failures.  Its open criminal investigations concern former executives, directors and employees at failed U.S. banks who may have engaged in recklessness, fraud or other criminal behavior, the Journal said.  The FDIC is also increasing the pace of its civil claims to recover money from former bankers at busted lenders, the newspaper said.

More than 300 banks and savings institutions have failed since the beginning of 2008, but only a few have led to criminal charges against bank officials.

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A class action filed against the SEC in the Southern District of New York alleges that during a 16 year period the federal agency "serially disregarding" complaints and allegations about Bernard Madoff's $65 billion Ponzi scheme.   The complaint asserts that the SEC "did not adequately review the facts nor reasonably understand the Ponzi scheme allegations presented in the numerous complaints provided to the SEC over the course of sixteen years."  The suit is filed on behalf of persons who invested in Madoff Investment Securities, LLC, directly or indirectly, between November 1992 and December 2008, and who have filed administrative claims with the SEC seeking to recover damages for the agency's alleged negligence.

(Click here to access the Class Action Complaint.)

In 2009, the SEC's Inspector General issued a 457-page report that included details of the agency's failure to detect Madoff's Ponzi scheme despite numerous clues about the fraud.   (The SEC's IG Madoff Report is available here.)

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Law360 reports that Bank of America has filed a bad faith insurance practices lawsuit against mortgage insurer Old Republic Insurance Co. over denied mortgage claims.  The Complaint, filed in the U.S. District Court for the Western District of North Carolina, alleges that Old Republic improperly turned down hundreds of millions of dollars in valid mortgage insurance claims "for reasons that are unsubstantiated under the terms and conditions of the Policy."  The Bank seeks over $300 million in damages and an order requiring that that insurer pay valid claims.

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