Citigroup Inc. was ordered to pay clients $3.1 million by an arbitration panel for failing to supervise one of their brokers. The charges against Citigroup were brought after one of their brokers, Scott King, directed a couple into investing in a real estate project. The investors, the Madhany family, invested one million dollars into the project which had eventually gone broke. Before the project went broke, the Madhany's and other investors cosigned a twelve million dollar loan to help fund the project. Once the project went flat, the investors were then faced with paying back the defaulted loan. The arbitration panel also concluded that Citigroup should pay the Madhany's part of the money owed from the loan.
Robert Keenan, a newly elected Financial Industry Regulatory Authority (FINRA) board member, is currently being investigated for his firm's role in an alleged bribery scandal. The investigation has already brought an indictment against former Arkansas treasurer, Martha Shoffren. Federal prosecutors allege that $36,000 was given to Shoffren to ensure that the state would do business with St. Bernard Financial Services Inc. which is where Keenan an executive. From 2008 to 2013, Keenan's firm sold the state of Arkansas approximately $1.69 billion of bonds which was close to double the amount purchased from any other firm. While no criminal charges have been filed against Keenan, the federal authorities have compiled evidence against Shoffren. Investment News reports that she is currently facing fourteen counts of bribery and extortion.
The Securities and Exchange Commission (SEC) filed a lawsuit against Bitcoin Savings and Trusts Inc. The SEC alleges that, Trendon Shavers, the founder of Bitcoin, deceived investors into taking part in a fraudulent Ponzi scheme. The SEC alleges that Shavers used money he collected from newer investors to pay older investors. Bitcoin is now being more closely examined by the government and as well as other ventures touting the use of "virtual" currencies.
Recently, a Financial Industry Regulatory Authority (FINRA) arbitration panel ordered Citigroup to pay $10.8 million to an investor, based upon the investor's claim that it failed to hedge a large position in Royal Bank of Scotland Group Plc. (RBS) stock. As part of the award, the branch manager of the Citigroup office was also ordered to pay $250,000 due to a lack of supervision.
According to The Wall Street Journal, "J.P. Morgan faces six separate investigations from the U.S. Justice Department..." JP Morgan recently made an announcement about one of these investigations and increased its litigation reserves. One of the investigations centered around allegations that JP Morgan concealed facts regarding the actual financial condition and risks associated with mortgage backed securities. The criminal investigation is still in the preliminary stages.