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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
No Whistleblower Award in Moody’s $864Mn Settlement
Ilya Eric Kolchinsky, a former managing director with Moody’s Investors Service, lost his battle to collect a whistleblower award on a recent $864 million settlement. Kolchinsky accused Moody's of issuing inflated ratings for mortgage securities, CDSs (credit default swaps) and CDOs (collateralized debt obligations) leading up to the 2008 credit crisis, and he provided information to federal investigators.
However, in the eyes of U.S. District Judge William Pauley, Kolchinsky failed to show that Moody’s violated the federal False Claims Act, largely on the basis that the government kept paying for its ratings even after learning they might be compromised. Government prosecutors opted not to join Kolchinsky's lawsuit, which left him to pursue the case on his own.
Instead, the Justice Department filed its claim under the federal Financial Institutions Reform, Recovery and Enforcement Act, or FIRREA, and joined attorneys general from 21 states and the District of Columbia who filed claims under their respective state laws. As part of the settlement, Moody's acknowledged that it had not followed its own rating standards, but did not admit liability.
In his ruling, Judge Pauley wrote the following:
"This court is particularly sympathetic to Kolchinsky's position in light of the serious and far-reaching effects that Moody's conduct had on the American economy."
"This observation does not, however, cure the deficiencies in Kolchinsky's pleadings or enable him to collect a share of the FIRREA settlement."