$1.6 Million Award for Information! Seeking Whistleblower with Inside Information about Price Manipulation of Fannie Mae and Freddie Mac Unsecured Bonds
The U.S. Department of Justice has opened a criminal investigation into price manipulation of Fannie Mae and Freddie Mac unsecured bonds. Media sources claim that several people have confirmed that prosecutors are looking at several bank trading desks. They believe traders may have colluded to manipulate bond prices. When that happens, the banks benefit while investors are hurt. Many of those investors are employee pension plans.
The Federal National Mortgage Association (“Fannie Mae) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) are two government sponsored enterprises that function like private corporations. They also have authority to issue their own bonds which investors can purchase and hold.
Fannie Mae and Freddie Mac were created to facilitate home ownership. They do that by insuring residential mortgages. Those mortgages are packaged into securities. Most of debt instruments issued by Fannie Mae and Freddie Mac are mortgage pools.
The two companies also issue their own debt called “agencies.” These bonds are unsecured and are subject of the government’s investigation. Presently there is $548 million of these unsecured bonds outstanding.
The Justice Department is investigating whether traders at some of the large money center banks are working together to fix or manipulate bond prices. Unfortunately, America’s “too big to fail” banks are no strangers to price fixing. In recent years, several large US banks including Bank of America and Citi were implicated in the Libor fixing scandal.
Short for the London Interbank Offered Rate, “Libor” is used to set interest rates in trillions of dollars of loans. Since mortgages, student loans, financial derivatives, and commercial loans often rely on Libor as a reference rate, the manipulation of those rates can significantly hurt consumers, businesses and financial markets worldwide.
Rolling Stone called the Libor scandal “the biggest price fixing scandal ever.” And now it appears that the banks may still be at it.
Why? Because they can and because they make millions doing so.
Instead of competing, banks have figured out they can make more money by colluding.
During the Libor scandal, traders were caught communicating by instant messages. Obviously they never thought they would be caught since their behavior was stunning in its arrogance.
One message said, “It’s just amazing how Libor fixing can make you that much money.” Another admitted, “Pure manipulation going on.”
The big banks ultimately paid some hefty fines but as we have long said, those fines are simply a price of doing business. UBS paid $1.5 billion in penalties, Barclays paid $450 million and Royal Bank of Scotland paid $615 million.
The class action lawsuits by those affected by the Libor manipulation continue. And now Fannie Mae and Freddie Mac agencies manipulation may be next.
On the heels of the Libor scandal came the FOREX manipulation scandal. Short for the foreign exchange market, some $5.3 trillion is traded daily through forex.
In that scandal some of the same suspects were the targets of government investigations worldwide. Big household name banks such as Barclays, HSBC, and Goldman Sachs, Citigroup, JPMorgan Chase, Royal Bank of Scotland (RBS) Standard Chartered, Deutsche Bank, HSBC, UBS and Bank of England.
Once again, the traders were colluding through instant messaging and private chat rooms. Chat rooms with names like “The Cartel”, “The Bandits’ Club”, “One Team, One Dream” and “The Mafia.”
As a result of that investigation, several banks once again paid huge fines. On May 20, 2015 four of the banks, including Barclays, Citigroup, JP Morgan, and Royal Bank of Scotland pleaded guilty to manipulation of the foreign markets and paid $5.7 billion in fines. UBS pleaded guilty to wire fraud and agreed to a $203 million fine. Bank of America, while not convicted of crime, agreed to pay a $204 million fine for unsafe practices in foreign markets.
After each of these price fixing and manipulation settlements each of the involved banks agreed to police themselves and self report any violations. In our humble opinion, that is the equivalent of opening the doors to our prisons and simply asking the prisoners to stop committing crimes.
No one is saying who is being investigated today for the Fannie Mae and Freddie Mac unsecured bond price manipulation (price fixing) but we suspect it will be the same suspects… Bank of America, Citi, Deutche and maybe Wells Fargo and JP Morgan Chase.
FIRREA Bank Whistleblower Rewards
We are looking for traders and insiders with knowledge of these scams to step forward. A 1989 law allows the Justice Department to pay rewards of up to $1.6 million for inside information about misconduct involving US banks or banks whose accounts are insured by the FDIC. NCUA backed credit unions also qualify but we suspect that none are large enough to be able to manipulate Fannie Mae and Freddie Mac bond prices.
Called the Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA), this law can pay up to $1.6 million rewards to insiders. There is no need to be a US citizen or resident either.
An added benefit to FIRREA is the possible abilityto remain anonymous. (Each case is unique, but we determine your ability to remain anonymous before filing anything on your behalf.)
We are looking for insider information in order to stop these illegal practices. Our goal is also to help secure our whistleblowing clients the largest cash rewards possible. Your information may also be useful in class actions against the banks. Just like the previous FOREX and Libor manipulation scandals, manipulating Freddie Mac’s and Fannie Mae’s unsecured bond prices hurts investors and destroys the public’s faith in our capital markets.
About Mahany Law. We are a national boutique law firm that represents whistleblowers, protects consumers and fights fraud. We helped secure the largest recovery against a single defendant in U.S. history, the 2014 victory against Bank of America that recovered $16.67 billion.
To learn more, visit our FIRREA whistleblower page. Want to see if you qualify for an award or help in our fraud investigation? Contact us online, by email or by phone (direct). All inquiries are protected by the attorney – client privilege and kept strictly confidential.