Libor Lawsuit

Posted by Deena Khalil.

On Wednesday, November 6, 2014, there was a court hearing about big-time banks being sued for manipulating a financial benchmark, Libor, by “U.S. municipalities and financial funds who argue they suffered financial damages by receiving lower interest rates on transactions as a result of the suspected manipulation.” Libor is short for the London Interbank Offered Rate, and it’s used to set the rates on things worth trillions of dollars such as loans, credit cards, and some complex derivatives. The benchmark is calculated each business day by averaging out interest rates in which banks estimate they could borrow from each other. But these banks have to be within the London trading operations in order to be part of the benchmark. Some of the banks that are being accused are JPMorgan Chase, Citigroup, and Bank of America.

Plaintiffs include U.S. municipalities and financial funds who argue they suffered financial damages by receiving lower interest rates on transactions as a result of the suspected manipulation. They allege that evidence gathered by investigators in the U.S., Europe and around the globe shows bank traders involved in the rate-setting process rigged the outcomes to boost their trading profits.

The banks accused are trying to get these cases to be dismissed There are U.S banks that have been struck with billions of dollars in penalties due to Libor manipulation. For example, JPMorgan was fined $78 million by European authorities! Some banks have settled cases, but defendant banks in the present case are seeking to dismiss due to “the lack of personal jurisdiction.” Attorneys “argued the recent Supreme Court rulings established that corporations are ‘at home’ only in their respective countries and in most cases are subject only to lawsuits filed there, not in U.S. courts.” They claim that the Libor manipulation activity occurred outside the U.S.

Deena is a business finance major at Montclair State University, Class of 2017.

Media Firms Win Suspension of Comcast Deal Disclosure

Posted by ZaAsia Thompson-Hunter.

The Federal Communications Commission(FCC) is trying to enforce the disclosure of media contracts from various media companies. These companies include widely recognized corporations such as Disney, CBS, Comcast, Time Warner, and many more. These highly established media corporations oppose the order because they affirm this action will put them at a competitive disadvantage.

Earlier this month these media companies put in a request to the U.S court of appeals to stop the disclosure of their programing contracts. In response, the FCC stated that disclosure “’will aid the commission in the expeditious resolution of these proceedings.’”

Announced on November 14,2014, the media companies won the order to block the request made by the FCC. In connection, “a federal appeals court in Washington today said regulators reviewing the merger can’t immediately let third parties see the contracts.”

ZaAsia is a business administration major at Montclair State University, Class of 2017.

Pension Holder Chaos

Posted by Kimberly McNamara.

The idea of pensions have been around for nearly 100 years. Detroit, a city that recently filed for bankruptcy, is now facing more monetary concerns, and many are looking for someone to blame. According to The New York Times, the city of “Detroit has been a client of Gabriel Roeder since 1938, when the city first started offering pensions. Now the city is bankrupt, the pension fund is short, benefits are being cut . . . .” Gabriel Roeder Smith & Company is a widely known, consultant and actuary firm dealing mostly with pension plans. This company was hired by the city of Detroit to calculate the amount of money coming in versus the amount of money needed for current and future pension pay-outs.

Many Detroit pension holders are now filing lawsuits against Gabriel Roeder. There are three current cases against Gabriel Roeder: one by members of Detroit’s police and firefighting force, another by Wayne County, and Ms. Estes, a citizen and pension holder in Detroit.

Now Ms. Estes has lost not only part of her pension but much of the savings tied up in her house, while she and her neighbors overpay for paltry city services. She says she might have been spared some of the misery had Gabriel Roeder warned the trustees years ago that the pension system was unsustainable and recommended changes.

Ms. Estes is just one of many who have been put in this situation created by poor business decisions. She was also told that, “she would have to forfeit $25,000 when she reaches retirement age . . . .” There are a multitude of people who had depended on their pension for retirement and simply will never see it.

Unfortunately, Gabriel Roeder would not exceptaccept the advice of other firms including government agencies like the Governmental Accounting Standards Board (G.A.S.B.). If they had, maybe Detroit’s bankruptcy situation would be different and quite possibly there would be no lawsuits being brought againstto Gabriel Roeder Smith & Company.   The firm said they “would vigorously defend itself against the lawsuits,” but lets wait and see how well that holds up in court.

Kimberly is a business major at Montclair State University, Class of 2016.

Stryker Corp. to Repay More than $1 Billion

Posted by Abier Mustafa.

Stryker Corp., a device maker company, recalled its Rejuvenate and ABG II hip implant devices in July 2012 after warning surgeons they could harm tissue around the hip and cause other health problems to its patients. Patients have complained of severe pain, unusual swelling and excessive metal debris in their blood, blaming all these symptoms on the Stryker devices. There are at least 1,800 cases Stryker consolidated before U.S. District Judge Donovan Frank in St. Paul, Minnesota. After facing more than 4,000 suits consolidated in the New Jersey state court and federal court in Minnesota alone, Stryker will pay a base amount of $300,000 per patient’s case. This settlement to patients who had the devices surgically removed prior to November 3rd.

Stryker Corp. has reported more than $9 billion in revenue in 2013 on the advertisement of their hip implants lasting for years. After the devices failed patients within a short amount of time, the company has now agreed to pay more than $1 billion to resolve these lawsuits. However, “the company said that it set aside more than $1.4 billion to cover costs of handling cases over the recalled hips so the settlement fell into the “‘low end of the range of probable loss.’” “This settlement program provides patients compensation in a fair, timely and efficient manner,” Bill Huffnagle, a spokesman for Kalamazoo, Michigan-based Stryker, said in an e-mailed statement. A source also reveals that a majority of the payments will be made by the end of 2015.

Abier is a finance major at Montclair State University, Class of 2016.

Honeywell Gets EU Complaint Along With DuPont Over Car Coolant

Posted by ZaAsia Thompson-Hunter.

The European Union isn’t happy with Honeywell and DuPont because they believe they are breaking antitrust rules. Honeywell and DuPont are the only two companies that produce the chemical R-1234yf. This chemical is used to produce the only car-coolant that meets the standards on the European Union’s greenhouse-gas emissions. By working together, the European Commission believes that Honeywell and DuPont are limiting the supplies of the coolant sold to other carmakers and furthermore reducing technical development. “The investigation, triggered by French company Arkema SA (AKE), also examined Honeywell’s alleged ‘deceptive conduct’ when the product was endorsed by a car-industry trade group, and whether it charges ‘fair and reasonable’ license fees to rivals who want to produce the product.” This investigation may lead to fines as much as 10% of yearly sales.

DuPont plans to fight against all accusations made by the EU because they feel they have not violated any policies and have been abiding by all the rules and laws that apply. In an e-statement, DuPont says they “will fight this every step of the way, as it has no basis in law or fact.” Additionally, in this ongoing case, Honeywell responded by saying the EU’s allegations were “baseless and conflict with the EU’s own laws that encourage collaboration on development,” according to an e-mailed statement.

ZaAsia Thompson-Hunter is a business administration/psychology major at Montclair State University, Class of 2017.

IRS Seizing Bank Accounts That Look Like They Are Part of “Structuring” Ahead of Formal Charges

Members of organized crime, drug dealers, and terrorists transact their “business” in cash to hide their tracks. As part of a scheme to launder money (make it look it was earned legitimately), criminals will deposit their ill-earned cash in bank accounts. In response, Congress passed the Bank Secrecy Act, requiring banks to assist the government in catching money launderers.

Under the Act, banks are required to report any cash transaction or combination of cash transactions in excess of $10,000 to the IRS.  Knowing this, criminals resort to structuring. Structuring is the deliberate parcelling of a large cash deposit into a series of smaller transactions in order to avoid detection by regulators. When bank officials suspect structuring is occurring, they are required to file a suspicious activity report, or SAR, and notify regulators of what they believe is happening.

In Ratzlaf v. United States, 510 U.S. 135 (1994), the Supreme Court found that government had to prove that defendant acted with knowledge that structuring is unlawful. As a result, Congress removed the “willfulness” requirement making it easier for the government tor prosecute structuring cases. The IRS, however, has been seizing assets of legitimate businesses and individuals without any proof or any charges filed. Small business and individuals can be a target.

In one case, the IRS seized $66,000 from an Army sergeant’s college savings account, even though the sergeant was told by the bank teller to make smaller deposits in order to avoid taxes. Ultimately, the analysis comes down to whether the structuring statute in present form and execution is constitutional.  Under the Fifth Amendment, the government cannot take a person’s property “without due process of law.”  A person must be given notice and an opportunity to be heard.

In a written statement, Richard Weber, the chief of Criminal Investigation at the IRS, said, “After a thorough review of our structuring cases over the last year . . . IRS-CI will no longer pursue the seizure and forfeiture of funds associated solely with ‘legal source’ structuring cases unless there are exceptional circumstances justifying the seizure and forfeiture and the case has been approved at the director of field operations (D.F.O.) level.”

Girl Sues Parents for College

Posted by Deena Khalil.

There are two sides of every story. According to Kelly Wallace who works for CNN, “It’s a case of she said versus they said.”

Rachael Cunnings, a young girl from New Jersey, accused her parents of throwing her out of their house when she turned eighteen. They refused to pay for her private school tuition, and so she sued them for expected future expenses, such as transportation, bills, college tuition, and living expenses.   The teen’s parents argue “that she was not kicked out of the house. Instead, they say she left on her own back in October because she didn’t want to abide by their rules.” There were many claims against each side, such as Rachael’s parents not liking her boyfriend, missing curfews, getting suspended, and apparently the teen’s parents were abusive.

The judge in the New Jersey Superior Court denied Cunnings request for high school tuition and living expenses. “The judge sounded skeptical of some of the claims in the lawsuit, saying it could lead to teens ‘thumbing their noses’ at their parents, leaving home and then asking for financial support.” There was another hearing that took place the following month about other issues in the case including her college expenses. Before the hearing, Rachael dropped the case; she was accepted by Western New England University with a $56,000 scholarship. In the end, the teen did not end up empty handed.

Deena is a finance major at Montclair State University, Class of 2017.

SCOTUS Permits Texas Voter ID Law Before November Elections

The Supreme Court issued an order denying an application to vacate the Fifth Circuit’s stay of a district court’s final judgment enjoining the enforcement of a Texas voting statute. The statute requires voters to produce identification before they vote. Business law students learn about injunctions (in this case, the court’s power to stop a party from acting) as a equitable remedy.

Congressman Marc Veasey, D-Fort Worth, sued Governor Perry and Texas Secretary of State John Steen in federal court, challenging the enforcement of the voter ID law, named SB 14. Veasey claimed that the law had the potential of preventing hundreds of thousands of people from voting. The strict Texas statute “requires the state’s estimated 13.6 million registered voters to show one of seven kinds of photo identification” before casting their ballot. Defendants responded SB 14 was designed to prevent voter fraud and argued voter ID laws were already approved by the Supreme Court in an Indiana case.

After a hearing, the district court agreed with Veasey that enforcement of the law “may prevent more than 600,000 registered Texas voters (about 4.5% of all registered voters) from voting in person for lack of compliant identification.” The district court determined the strict Texas statute was unconstitutional and enjoined defendants from forcing voters to produce ID. The Fifth Circuit issued a stay of the order, meaning defendants were temporarily permitted to enforce the law. The Supreme Court denied Veasey’s application to vacate the stay pending appeal. Led by Justice Ginsberg, three Justices wrote a scathing dissent (and in a rare circumstance, later corrected) expressing disagreement with the court’s decision not to vacate the stay.

Voting rights are analyzed under strict scrutiny. As of now, voters in Texas must show proper ID before they are allowed to vote in the midterm elections on November 4th.

AT&T to Refund $105 Million

Posted by Abier Mustafa.

Cell phone Company, AT&T, has agreed to pay back $105 million in what is being called ”the largest cramming settlement in history.” AT&T has been adding unauthorized charges to tens of thousands of customers’ monthly bills. The charges are usually for the amount of $9.99 per month, coming from third-party services, including trivia, horoscopes, and love tips.  ”AT&T is accused of keeping at least 35% of the fees, as well as obscuring the charges on bills and preventing customers from securing full refunds.”

There have been previous lawsuits against other cell phone providers besides AT&T.  For example, the Federal Trade Commission has filed a similar lawsuit against T-Mobile in the past also due to unethical charges to customers.  “For too long, consumers have been charged on their phone bills for things they did not buy,” Wheeler, the Federal Communications Commission chairman, said- “It’s estimated that 20 million consumers this year are caught in this kind of trap, costing hundreds of millions of dollars.”

AT&T has released a statement saying that they have provided customers with “Premium Short Messaging Services” in the past. However, they have discontinued third-party billing.  To resolve all claims, $80 million of the settlement has been set aside for customer refunds, along with $25 million in penalties due to regulators.

So if you’re an AT&T customer and have been wrongfully charged, you may be eligible for a refund!

Abier is a finance major at Montclair State University, Class of 2016.

Why Being a Lawyer In Our Present Economy Isn’t a Bad Idea

Posted by Patrick Osadebe 

Do you think the lawyers in America get paid as much as they deserve? How much do you think a lawyer makes in a year? According to a survey conducted in 2014 by the Association of Law Placement, the highest starting salary of one of the largest firm in the US with about 700 plus employee is $160,000. This number may seem to be high based on our present economy situations but the results are accurate.

From the survey, only 27% of firms actually responded and one third actually start their employees with $160,000. According to James Leiplod who is the current NALP executive director, he stated that “it is fair to say that law firm starting salaries are flat.” In contrast to that statement, the starting salaries was much higher before the economic recession and the figure is basically a reflection of changes in large firm market.

Different firms may have different starting salaries based on size and experience but according to the survey, the median starting salary is about $125,000, which has been unchanged since 2012.

Patrick is a business administration major with a concentration in finance at Montclair State University, Class of 2016.