Notwithstanding record settlements in the billions of dollars, federal prosecutors continue to hammer Big Banks for their role in the collapse of the housing market and resulting economic turmoil in 2007. Years later and many Americans are still unemployed, underemployed or earning significantly less than they were. For folks who lost their homes, some may never fully recover from the meltdown.
The newest battles in the war to hold banks and Wall Street accountable are being fought over the pricing of certain mortgage bonds. According to the Wall Street Journal, authorities are investigating whether big banks hurt clients and the American economy by “deliberately mispricing” mortgage bonds. This new round of investigations represents huge opportunities for whistleblowers hoping to do their part to stop fraud.
Of course, whistleblowers may also be entitled to millions of dollars in reward money for doing the right the thing. For the banks, the newest round of investigations could not come at a worse time. (Banks are also facing a fresh round of money laundering investigations.)
From what we know, in the years immediately following the meltdown, institutional banks continued to hold billions of dollars of mortgage bonds. Now the feds are asking if the banks lied about the value of those securities in order to get them off their books.
The Journal reports that Barclays, Citigroup, Deutsche Bank, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Royal Bank of Scotland and UBS are all targets of the probe.
Of course, news of an investigation doesn’t mean that any of these banks did anything illegal. Still, based on our extensive knowledge of the banking industry we believe there are many skeletons hiding in the closets of Wall Street.
What does this mean for whistleblowers? Plenty!
The Financial Institutions Reform Recovery and Enforcement Act – FIRREA – allows whistleblowers to receive cash awards of up to $1.6 million for information about bank fraud. The SEC offers its own whistleblower program that can pay even higher awards.
The Journal says the government is examining whether banks priced their mortgage backed securities at “artificially depressed or inflated” values between 2009 and 2011. The victims of this price manipulation were often hedge funds and other banks.
Although many agencies are involved in the investigation, the lead is SIGTARP, the Special Inspector General for the Troubled Asset Relief Program. (See our previous article on TARP fraud here; whistleblowers with information about fraud against the TARP program may also qualify for whistleblower awards under the federal False Claims Act.)
The latest investigation suggests Wall Street’s legal headaches related to mortgage securities may continue.
We welcome the investigation into how the big Wall Street banks priced their mortgage backed securities. Many were overpriced causing a ripple effect in the financial community as those securities later plummeted in value.
Present or former bank employees with inside knowledge of fraud against TARP may be eligible for a percentage of whatever the government collects from those responsible for the fraud.
While most of the TARP monies have now been repaid, the government can still collect significant fines under the Financial Institutions Reform, Recovery and Enforcement Act – FIRREA. Under that law, whistleblowers can receive an award of up to $1.6 million. We are currently looking for workers from Chase, Barclays, Citigroup, Deutsche Bank, Goldman Sachs, Bank of America, Morgan Stanley, Royal Bank of Scotland and UBS with inside, original source information about price manipulation or fraud. Former bond traders and persons involved with RMBS pricing may have valuable information that can be used to remedy prior fraudulent conduct and earn substantial whistleblower awards
If you have inside, “original source” information about mispriced mortgage bonds or TARP fraud, give us a call. We represent whistleblowers and help them stop fraud and collect the largest award possible.
Mahany & Ertl – America’s Fraud Lawyers. Our whistleblower lawyers represent folks across the United States.
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