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  • Charles Ponzi created a new topic ' One Nation grills banks 9News' in the forum.
    www.9news.com.au/national/2017/08/12/08/...treatment-of-farmers
    It's the stop before a Royal Commission.

    One Nation was on the front foot, attacking the big four banks over their treatment of farmers.

    "It actually affected me myself, I feel for these people," Western Australian Senator Peter Georgiou said.

    More than 100 submissions were received from farmers across the country, detailing horror stories of banks foreclosing and sending in the receivers leaving rural families with nothing.

    Some felt so helpless they tragically resorted to suicide.

    While Senator Malcolm Roberts has his own problems around citizenship yesterday his concerns were very Australian as he grilled ANZ, Commonwealth Bank, NAB and Suncorp about their loans to farmers.

    "Who does a farmer go to he's got no recourse really because he can't go to the courts because he can't afford a lawyer," Mr Roberts said.
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    "We have been very, very disappointed and shocked by some of the treatment of the banks.

    "The ANZ Landmark transition was pretty disappointing and very damaging to a lot of farmers but the ANZ actually admitted that today."

    The committee hearing is One Nation's prize for a deal they struck with Prime Minister Turnbull after the last election.

    Senator Pauline Hanson is understood to have wanted a Royal Commission but was convinced a Senate Inquiry would be quicker and more effective.

    "We've been going through case by case and really it's quite disgusting to be honest with you," Mr Georgiou said.

    The committee will now prepare a report to be tabled in Parliament.

    © Nine Digital Pty Ltd 2017

    Read More...
    6 days ago
  • Charles Ponzi created a new topic ' USA catches out Aussie Banker Scandal' in the forum.
    HSBC probe may have prompted Austrac concerns about CBA transactions

    The Australian 6:22pm August 7, 2017

    Leo Shanahan Sky News business reporter

    Austrac’s respected former chief executive Paul Jevtovic — also a former boss of the Australian Crime Commission — left the regulator to join HSBC in April this year as its head of financial crime based in Hong Kong.



    HSBC Australia could have played a crucial role in tipping off Australian and US authorities into alleged money laundering by organised crime gangs worth hundreds of millions of dollars to Hong Kong accounts.

    As CBA awaits any global fallout from its alleged facilitation in the money laundering of hundreds of millions of dollars to organised crime and terrorist organisations, the matter is understood to already be on the radar of US authorities after HSBC raised CBA transactions with Australian regulator Austrac as part of an investigation by American authorities into HSBC.

    Sky News Business and The Australian understand some of the tens of millions in money allegedly funnelled through the CBA to Hong Kong by an Asian drug syndicate was raised with Austrac by HSBC in Australia as part of a Department of Justice and FBI-led investigation into the global giant’s own money laundering scandal that has cost HSBC billions in fines.

    In August 2015, the same time Austrac and the Australian Federal Police were investigating alleged CBA money laundering, the Sydney headquarters of HSBC has been subject to ongoing visits by a US government monitoring team.

    The visits were part of an agreement that the bank struck with authorities to avoid criminal prosecution after it was used by Mexican and Columbian drug cartels to launder billions of ­dollars through its accounts.

    Under US anti-money laundering and anti-terrorism laws a bank can be found liable despite the behaviour not taking place in the United States. The CBA has a presence in the US, but CBA chief Ian Narev has denied the latest scandal risks the bank falling foul of US authorities.

    Austrac claims that one Asian drug syndicate moved $44m through cash deposits from Australia via fake CBA account holders to offshore accounts in Hong Kong.

    In September 2015, Austrac gave HSBC an exemption from “tipping off” rules in a bid to allow it to hand over details of bank accounts and transactions in possible breach of Australian and US anti-money laundering and counter-terrorism laws.

    It is understood some of those transactions to Hong Kong red-flagged by HSBC in Australia concerned funds that originated in CBA accounts.

    The handing over of material to Austrac in 2015 also coincides with an investigation by Austrac into how IDMs and other smart tellers were operating and whether banks were complying anti-money laundering and anti-terrorism laws.



    HSBC worked closely with Austrac in mid-2015 in an attempt to avoid further sanctions under Australian and US law.

    Austrac’s respected former chief executive Paul Jevtovic — also a former boss of the Australian Crime Commission — left the regulator to join HSBC in April this year as its head of financial crime based in Hong Kong.

    Both Austrac and HSBC have declined to comment.

    Under a five-year deferred prosecution agreement struck in 2013, the bank escaped criminal prosecution after being forced to pay $US1.9bn in fines and allowing a Department of Justice-sanctioned monitor the right to audit the bank’s staff and systems to ensure adherence to US anti-money laundering laws and a sanctions-compliance program.

    The US government found the lack of controls of HSBC’s US arm between 2006 and 2010 allowed Mexican and Columbian drug cartels to launder $US881m in drug-trafficking proceeds from Mexican accounts to the US.

    Between 2000 and 2006 the US arm of HSBC was also found to have “knowingly and wilfully” processed payments worth $US660m “on behalf of banks and other entities located in Cuba, Iran, Libya, Sudan, and Myanmar in violation of US sanctions”.



    The investigative team is led by independent compliance monitor Michael Cherkasky whose large team has been conducting an intense audit of HSBC’s operation around the world.

    Read More...
    1 week ago
  • Charles Ponzi created a new topic ' Crime Ring Funnellers of Reserve Bank Info' in the forum.
    N.Y. federal judge, pointing to class counsel’s conduct, strikes down American Express settlement
    by Jessica Karmasek | Aug. 6, 2015, 9:11am
    Garaufis

    BROOKLYN, N.Y. (Legal Newsline) - A federal judge has thrown out a settlement with American Express in a class action lawsuit over merchant fees, citing the “improper and disappointing conduct” of the lead plaintiffs attorney.

    The plaintiff retailers in the case -- among them, 7-Eleven, Wal-Mart and Target -- had objected to the deal ahead of Judge Nicholas Garaufis’ ruling, filed Tuesday, striking down the deal and $75 million in attorneys’ fees.

    Among their concerns, the objectors argued the cohesion necessary for certification was “lacking” because the proposed relief potentially benefits only some class members and/or does not benefit all class members equally.

    Surcharging currently is prohibited in 10 states, making it so merchants in those states could not implement the relief.

    The objectors also took issue with the “substantive fairness” of the settlement agreement.

    They argued the ability to impose parity surcharges -- the core of the relief -- is of zero value to many, if not most, class members and therefore class members would be worse off under the settlement than they are under the status quo.

    “The court does have serious concerns about the Settlement’s substantive fairness,” Garaufis, for the U.S. District Court for the Eastern District of New York, wrote in his 44-page ruling.

    “But the court need not, and does not, reach the merits of these aforementioned objections today, because it concludes that the improper and disappointing conduct of Co-Lead Class Counsel Gary B. Friedman has fatally tainted the settlement process.”

    The judge continued, “The procedural unfairness and failure of adequate representation (as this conduct bears on both inquiries) revealed by the Friedman/Ravelo Communications requires disapproval of the Settlement; the court cannot thoughtfully assess its substantive fairness without assurance that the class was properly represented in the negotiations thereof.”

    Friedman apparently shared confidential information with Keila Ravelo, an attorney for American Express competitor MasterCard.

    Ravelo, formerly a partner at Hunton & Williams LLP and then Willkie Farr & Gallagher LLP, was arrested in December on charges that she participated in a conspiracy to defraud the law firms and MasterCard of several million dollars.

    Ravelo resigned from Willkie in November, shortly after the law firm learned she was under investigation.

    In the course of an internal review of Ravelo’s conduct, the firm discovered certain documents in her possession that Willkie perceived to be subject to the protective order entered in the class action which MasterCard was not a party.

    In February, Willkie informed the parties to the American Express class action and certain objectors about what it had found.

    After being informed of Willkie’s discovery of these communications, the 7-Eleven and Target objector groups alerted the federal court and noted their concern that the information provided indicated the proposed settlement may have been “compromised.”

    The settlement agreement, which resolved two class action lawsuits, had received preliminary approval in 2013.

    The class plaintiffs -- all merchants that accept American Express cards at any location in the U.S. as of or after Feb. 12, 2014, onward -- claimed American Express violated the antitrust laws by imposing rules that limited merchants from steering their customers to other payment methods and that required merchants that want to accept any American Express cards to accept all American Express cards.

    The class plaintiffs claimed these rules insulated American Express from competitive pressure to lower merchant fees and caused an upward spiral in merchant fees for American Express, Visa and MasterCard. American Express denies these claims.

    Garaufis, in his order, seems shocked by the alleged collusion between Friedman and Ravelo.

    “As a matter of course, Friedman improperly sent emails containing confidential and highly confidential information of American Express that was produced subject to a protective order that prohibited its further dissemination to Ravelo, counsel for MasterCard, American Express’s major competitor and not a party to the protective order(s),” he wrote.

    “The emails unequivocally reveal that this was not an inadvertent violation: In at least two of them, Friedman writes, ‘Burn after reading,’ and the content of others indicates his contemporaneous recognition of the confidential and highly confidential nature of the materials.”

    As the judge points out, Ravelo was not merely a third party who was “unentitled” to receive the materials that were sent to her by Friedman.

    “She was counsel for MasterCard, a defendant in the 1720 MDL and an adversary to the merchant class in that case -- a class to which nearly all members of the Amex Class Actions merchant class also belong,” he explained.

    “The documents indicate that Friedman and Ravelo were in frequent, possibly constant, communication regarding the negotiating process and status of both the 1720 MDL settlement and the Class Settlement Agreement. As Class Plaintiffs themselves describe it, ‘Mr. Friedman consulted [Ms. Ravelo] as a confidante and sounding board on strategic issues, drawing on her defense-side insights to help advance the interests of the merchant class.’”

    Garaufis said the reason or reasons behind Friedman’s conduct and for involving Ravelo in the class actions are unknown. But the judge said it is “undisputed” that Friedman and Ravelo have a “longstanding personal relationship.”

    They have been friends since 1992 when they were associates together at large law firm. They even vacationed together, Garaufis noted in his order.

    “Whether Friedman exchanged confidential and/or privileged materials with Ravelo and consulted with her regarding these actions for financial reasons, out of personal loyalty, due to a misplaced sense that her advice would in fact benefit the merchant class and was not improper, and/or for some other reason(s), is something this court cannot currently, and need not, determine,” the judge wrote.

    “Whatever his reason for doing so, Friedman’s bringing MasterCard’s counsel into the negotiating process created a conflict between class members and Class Counsel, and specifically a risk that Friedman, with Ravelo in his ear, negotiated settlement terms that are worse for class members than the terms he might have negotiated absent that conflict. This risk requires the court to deny approval of the Settlement.”

    Garaufis ordered that Friedman and his law firm, Friedman Law Group LLP, be removed as counsel in the class actions.

    The judge also ordered that fellow class counsel Read McCaffrey and Christopher Hellmich of Squire Patton Boggs LLP and Mark Reinhardt of Reinhardt Wendorf & Blanchfield to show cause in writing, by Sept. 8, why they should continue in their capacities and if they should remain, to propose a replacement for Friedman.

    “The court is concerned that none of the Co-Lead Class Counsel were, or are, acting in the class’s best interests, as opposed to their own interests in effectuating this settlement agreement and collecting a fee,” Garaufis wrote.

    Should the class plaintiffs, with replacement counsel, and American Express seek to return to mediation, the judge directed them to obtain a different mediator “who is experienced in antitrust law,” and to seek court approval.

    Friedman could not immediately be reached for comment.

    From Legal Newsline: Reach Jessica Karmasek by email at This email address is being protected from spambots. You need JavaScript enabled to view it..

    Read More...
    2 weeks ago
  • Charles Ponzi created a new topic ' Bob katter says:-' in the forum.
    Bob Katter
    2 mins ·

    Just one more MP needs to cross the floor against the LNP Govt in the finely-balanced Federal Parliament to secure the People of Australia’s Commission of Inquiry into Banking and Financial Services, after the Member for Dawson supported legislation I introduced back in March. Allegations of more than 50,000 breaches of anti-money laundering laws by the Commonwealth Bank have put pressure on Govt politicians to support my legislation for a Royal Commission into the banks when Parliament returns next week - or they can face up to Australians and explain why they won't.
    Of course, the banks will claim ‘aah, we didn’t know’ – but an entry level clerk in the public service could have seen this happening... Millions of dollars in the bank’s account and nobody knows? That’s a bigger whopper than a Hungry Jack’s hamburger! I doubt whether there would be 5 per cent of this country who’d say a Royal Commission into the banks is not needed. Everyone else agrees except the Liberal Party. But their isolation is now standing out like a neon light, and the cowardice of those people who have not yet advocated it – who cannot be found when it’s put to the Parliament – they’ll be hiding in the toilets.
    So we must all note the courage and intellectual integrity of some, and the cowardice of others. The people to blame for terrorism in this country are the people in Canberra on $230,000 pay packets who are the most spineless, cowardly wonders. Every one of these invisible bludgerigars would know 100 people who have suffered so unfairly at the hands of the banks. But all they’re concerned with is their Liberal-National Party endorsements.
    The Catholic priest in the greater Longreach area said there were 42 farms being foreclosed on – station properties belonging to families. The now-famous Charlie Phillott (twice on 60 Minutes Australia) named 13 properties in his area of Winton being foreclosed on. I knew of eight in the area south of Hughenden and Richmond, the Muttaburra and Aramac area.
    The People of Australia’s Commission of Inquiry (Banking and Financial Services) Bill 2017 that I put to the Parliament earlier this year has the full powers of a Royal Commission, plus additional protections for whistleblowers... because there's been 37 inquiries in the past seven years that have achieved absolutely nothing – except for the last inquiry, in which each of the heads of the banks have said, ‘Oh we’ve been so guilty, we’ve got to do things right in future’. They admitted their guilt but we haven’t destroyed the problem.
    From my experience in Queensland, once the spotlight of public opinion through a Royal Commission of Inquiry turned upon police corruption in that state, we were able to destroy it. And we would not have been able to destroy it otherwise.


    Read More...
    2 weeks ago
  • Charles Ponzi created a new topic ' FOS says Broker is the Agent of the Bank' in the forum.
    Why FOS Ombudsman's Service needs to be DEMOLISHED.

    Customer Loans Inquiry on 16 October 2015 in Melbourne:
    Philip Field (Ombudsman) gives evidence thus:
    "they (consumers) can still have redress (against banks) through our service by lodging a complaint against the bank, because the bank is responsible for its agents."

    BANK IS RESPONSIBLE FOR ITS AGENTS!!! So why is it that in all the Ombudsmen's Determinations to the aggrieved both Philip Field and Tonti-Filipinni write: "the broker is the agent of the borrower." This intentional misuse by the Ombudsman of the Argument of Agency is totally false as explained to Bank CEO's by Chief Ombudsman Colin Neave (and ex Commonwealth Ombudsman and now works for ANZ): Neave warned the Banks in a written warning 2001: "The Broker is the Agent of the Bank."

    Professor Ian Ramsay needs to explain this problem with FOS in his EDR Report as he has been fully briefed of this problem with EDRs. What must happen is either an independent committee review 'every' FALSE DETERMINATION from FOS or CIO back to 2001 or, the EDR system needs to be abolished immediately.
    Better to have NO EDR complaint handling service at all than have a bunch of LIARS captured and paid by Bankers, than tell consumers its a good and reliable service which it is not.

    The max compo which BFCSA members fought for have risen twice from $100k in 2001 to $309k today. BUT BUT BUT: Mr Field and others, only hand out compo claims of average $20k - $60k discount on the Mortgage. Petty cash and slapped wrists for bankers. The average losses are in fact $200k DEBT FOR LIFE for most victims of bank fraud. Field ensures the Bankers are then able to then steal your home when you cannot pay off $200k aged in your sixties and older. Banks then free to continue to profit from an obvious FRAUD.

    FOS and CIO are a FRAUD and ought to be DEMOLISHED.
    Ian Ramsay wants to suggest a new ONE STOP SHOP super sized EDR complaint handling service. Until the system is free from the industries they represent there is no consumer protection as these complaint handling dopey ideas are mired in corruption and controlled by the Control Fraud Masters: THE BANKS.

    How can those under the influence of bankers and on the payroll, possibly determine what is best for CONSUMERS of banking products?
    The conflicts of interests are numerous and intended.

    Denise Brailey #BFCSA #BankRC

    LIKE OUR PAGE and join BFCSA www.bfcsa.com.au
    We will teach you how to look for the fraud on your document file re Mortgage Loans. $1 per week per person to understand the crime scene you are dealing with as an individual. This email address is being protected from spambots. You need JavaScript enabled to view it.
    Press the Membership button and ask for assistance..

    Read More...
    3 weeks ago
  • Charles Ponzi created a new topic ' Clinton Foundation "Donations" from Foreigners' in the forum.
    Will this help the IRS Investigations?

    yournewswire.com/hillary-clinton-special-counsel/
    CLINTON FOUNDATION UNDER SCRUTINY

    The conservative-authored amendment asks the Justice Department to explain why the FBI did not further investigate Clinton for “selling access to the U.S. State Department through Clinton Foundation donations.”

    Read More...
    3 weeks ago
  • Charles Ponzi created a new topic ' Ross Coulthart 60 Minutes says:' in the forum.
    By Ross Coulthart
    www.9now.com.au/60-minutes/2017/extras/l...g-banks-are-bastards
    In the mailbags and inbox email servers of Australian public affairs television programmes like 60 Minutes, there is one issue that enflames viewers’ vitriolic responses more than any other. The sheer volume of angry letters and emails we receive about this issue far outweighs anything else upsetting our audience, and it’s been the case for years.

    The level of public passion and bitterness this issue inspires is overwhelming in comparison to what you might expect to be the top issue of the day: fears about Islamist extremism and terrorism, crime, anger about the Family Court, opprobrium of politicians (and journalists), the rising cost of living, immigration, and refugees. No – they aren’t it.

    There is a number one concern in Australia at the moment that leaves dust behind every single one of its rivals for top billing as the topic that incites more excoriating contempt and condemnation than any other.

    I’m talking of course about Australia’s BIG BANKS.

    Ten days ago 60 Minutes aired a story about Cairns businessman Roy Lavis, whose company CEC Group went into receivership in 2011, devastating the lives of 750 employees who lost their jobs – just some of around 5,000 locals directly and indirectly affected by CEC’s collapse.

    Our story was straightforward in the telling because, unlike so many complex banking stories, we had the benefit of the findings of an exhaustive investigation report prepared into the CEC Group collapse by the Federal Government’s Small Business and Family Enterprise Ombudsman Kate Carnell. Her damning report was explosive in its findings. It declared that ‘It is highly likely the CEC Group would have survived if not for the actions of the CBA’. It also declared that the bank’s treatment of CEC was ‘highly unreasonable’ and ‘potentially unconscionable’.

    Suggesting a bank acted potentially unconscionably is to suggest that bank may have acted illegally, breaching Australia’s strict consumer laws by abusing its power. It is an incendiary, albeit – as the Ombudsman found – a justified allegation. So, as is fair and proper, the Ombudsman Kate Carnell’s report was sent confidentially to the Commonwealth Bank in early March this year for comment. But, as Ms Carnell revealed in the blowback from the bank against our story, the CBA completely failed to respond to her findings. “They didn’t respond to it,” she said. “I thought they didn’t have any problem with it.”

    Imagine that. A major bank is accused of possibly illegal conduct by a Government Ombudsman and it totally fails to avail itself of the opportunity to defend itself against those findings. It was when 60 Minutes obtained a copy of the Ombudsman’s report and asked the bank for an interview, that, shortly before our broadcast, the Bank sent its government relations lobbyist Euan Robertson to Canberra to angrily complain to the Small Ombudsman that her report had found its way to 60 Minutes. The gall of it; shame on us for having the temerity to publish a Government report criticising a bank!

    That is why we decided to criticise Commbank on 60 Minutes for what we dubbed in our story’s introduction as its “breathtaking arrogance”. That a bank felt so powerful that it believed it did not need to even respond to the Ombudsman’s findings is, we believe, symptomatic of a wider malaise across the banking industry.

    Boom to bust: Part one
    Boom to bust: Part one

    And it is not just 60 Minutes that is attracting victims’ bitter allegations about ‘bastard banks’. The Federal Labor Opposition is pushing for a Royal Commission into our banks; and there is also support among Coalition MPs for a banking tribunal – an initiative that is also supported by Ms Carnell. Federal politicians are getting the same mail we are; they know that the major banks have a terrible perception problem and complaints about their behaviour are clogging up their inboxes too. Treasurer Scott Morrison clearly had his reasons when he told the big banks in the May Budget that ‘no one likes you anyway’. Australians have had a gut-full of the way our major banks are perceived to treat their customers, especially small business; and the banks have a perception problem – whether they want to admit it or not.

    When we interviewed Kate Carnell for 60 Minutes she made this astonishing admission:

    When I started in this process for this banking inquiry, I believed that – you know – that there’d be two sides to every story. I believed that – you know – that banks wouldn’t operate this way. I just believed that and it was just, the more we got into these stories like Roy [Lavis’], the more I realised people really were treated unfairly and really were hurt and really do need to have some justice.

    Ms Carnell also stated categorically that, based on her analysis of what happened to Roy Lavis and CEC Group the Commonwealth Bank was best advised to negotiate a quick and speedy financial settlement with him for its clear failings: “Commbank is our biggest bank,” she told us. “I think it has an obligation, a moral obligation to, you know, to settle with people like Roy.” She clearly believes she is in the right - that her findings against CBA are based on the very best expert advice, and she is not backing down, as perhaps the bank hopes she will.

    At this point, you would think the Commonwealth Bank might sit back for a moment and quaff a reflective brandy or two in its 19th floor boardroom; that it would consider very carefully how and if to take this further. It has been excoriated in an Ombudsman’s report that it failed to respond to. It has, according to evidence given to a Parliamentary banking inquiry, another 2000 or so Bankwest complainants claiming that it unfairly shafted them and, despite the bank’s denials in that hearing of a conspiracy against its customers, it seems inevitable that at least some of those many cases will eventually find their way to a new Government banking tribunal that can publicly investigate alleged bank malpractice and levy penalties where breaches are found.

    But in the wake of our story, the Commbank’s lobbyists and spin-doctors chose to stand and fight (perhaps they got heady inspiration from Nine’s Ninja Warriors fighting it out on Cockatoo Island in the harbour far below their corporate HQ). Through the pages of the Australian Financial Review Commbank has unleashed a splenetic scourge of spin-doctors - and it also, unwisely, chose to take on the Small Business Ombudsman upon whom we relied for our story. In 33 years of reporting, I have never seen an Ombudsman savaged so mercilessly as Kate Carnell was this week. Just about everything she found against the CBA was arrogantly dismissed by the AFR (and Commbank) as politically motivated – about the most damaging slur you can levy against a Government official entrusted as an independent arbiter.

    In five successive days and venting thousands of words, Aaron Patrick, the AFR journalist entrusted as the safe pair of hands to air Commbank’s claims, has run six breathless major, often full-page, stories in which he has sought to weave an elaborate conspiracy theory suggesting that 60 Minutes is working in league with Federal MP Warren Entsch and Ms Carnell.

    ‘Bank executives believe that Ms Carnell’s investigation into the CEC collapse and several earlier parliamentary inquiries into the banks, are being driven by politically connected property developers upset with commercial decisions made by banks during the global financial crisis,’ Patrick credulously reported.

    For good measure, the AFR’s editorial writers also weighed in, slavishly towing the CBA line and dismissing the whole Ombudsman’s report as ‘bank bashing hysteria’. 60 Minutes’ story was also peremptorily cast aside as ‘one-sided’. On the way through, the AFR also put the boot into Prime Minister Turnbull, suggesting he was simply playing to political populism when he upbraided the banks for their arrogance at Westpac’s 199th anniversary lunch in April last year. So it’s a case of ‘Nothing to see here, it’s all politicised bollocks and how dare those vulgar scoundrels from commercial TV investigate the banks’, the AFR appears to be sycophantically spluttering. It was not the greatest moment in the once-mighty AFR’s contribution to investigative journalism.

    At least the AFR’s Mr Patrick had the good grace to report to his readers that when he rang me for comment I called him a ‘lickspittle’ for his craven toadying to the bank’s line. He also acknowledged that I had asked if he would be able to look at himself the morning after his obsequious puff-piece was published. One claim he made in support of his wacky conspiracy theory was that we did not mention that MP Warren Entsch had been the company’s acting chairman, thereby suggesting that 60 Minutes had deliberately concealed his board role on the CEC Group board. Patrick’s allegation was totally false. Our story stated clearly that Mr Entsch was ‘on the board of CEC when he says the company collapsed under the weight of Commbank’s demands’. At time of writing, our requests for a correction by Mr Patrick have been ignored. Mr Entsch is also writing his own complaint to the AFR but we are not holding our breath in expectation that it actually gets published.

    The Small Business Ombudsman’s office yesterday revealed that the AFR’s Mr Patrick has repeatedly ignored several offers to come to Canberra to review the evidence the Ombudsman relied upon to make her findings. It is a very generous offer, and it has to be asked how could the AFR possibly assert that it has done a proper investigation into this matter if it has not bothered to actually sit down with the Ombudsman to hear her evidence? 60 Minutes spoke to both Ms Carnell, Mr Lavis, Mr Entsch, and Commbank and we also spoke to former CEC employees and investors and other sources.

    On Wednesday evening, Mr Entsch wrote an angry letter to the AFR complaining about its one-sided coverage:

    “Mr Patrick has shown nothing but contempt for Small Business and Family Enterprise Ombudsman Kate Carnell by dismissing her findings and questioning her professional skills and ability to conduct a thorough and impartial review of the CEC case.

    “I would like to know why reporter Aaron Patrick has failed to declare in print that he has been invited by the Ombudsman to come and view the evidence in the CEC case first-hand, but has repeatedly refused this offer? In fact, he told Ms Carnell he is ‘not interested in that’ and that he is ‘only interested in a short grab’ for his articles. How can you tell an accurate story when you refuse to look at all the facts?”

    But of course, the fact that Mr Entsch has had any dealings with the Ombudsman this week at all is just further evidence for the AFR of this massive supposed conspiracy to undermine the banks. No doubt, as we speak, the AFR has its photographers poised to capture Kate Carnell slugging back fine Grange in a mansion on the Gold Coast with Mr Entsch and those dreadful Queensland property developers behind the conspiracy against our banks.

    We had heard about Roy Lavis’ case during 2015 Parliamentary inquiries into impaired loans but it came up again while we shot another story in Cairns earlier this year, investigating how the National Australia Bank had pressured a husband and wife couple, Terry and Cathy Maloney, to deal with a convicted criminal named Joseph Prestia.

    Crook deal: Part one
    Crook deal: Part one

    As always happens with bank stories, that NAB exposé generated a blizzard of other alleged bank victims who then sent their mounds of paperwork into 60 Minutes, all pleading for their gripe with their bank to be exposed. A plethora of these cases were small business clients of Bankwest who found themselves foreclosed, and declared to be in ‘non-financial default’ by the Commonwealth Bank after the CBA bought Bankwest off United Kingdom bank HBOS in 2008. Time and time again, these Bankwest complainants alleged that Commbank had shut them down using questionable loan-to-value ratio non-financial defaults, suggesting that the value of the asset against which they had borrowed was now far lower than Bankwest had agreed. Significantly, most of the alleged victims asserted that they were never in financial default on their loans – they had consistently paid their interest and principal on time and in full.

    Crook deal: Part two
    Crook deal: Part two

    Banking stories are notoriously difficult to produce for television because they invariably involve complicated discussions about the masses of paperwork used to contract the loan to the borrower in the first place. How to measure the rights and wrongs of a bank’s actions when, as happened in Roy Lavis’ case, in 2008 he says he and his CEC Group board were suddenly confronted by a panicked demand from CBA that CEC dramatically reduce the borrowings that the bank had agreed to only weeks earlier? Throughout the previous year the bank had supported CEC in a growth strategy to buy land for development by approving borrowings from $106 million to $169 million by Christmas 2007; it had authorised $18 million just before Christmas after undertaking a credit risk assessment of Roy’s company. Then the Global Financial Crisis began to hit and, as Roy tells it, just weeks later, in late February 2008, CBA decided he would not get his money unless he agreed to a massive reduction in debt; by October 2008 he claims he was forced to more than halve his debt down to $80 million. Roy says he complied with the Bank’s debt reduction demands and, with a lot of effort, he kept on paying his interest and principal on time – and, because of that, he believed he had the bank’s support to keep on running his business. But what he says happened is that as he reported the bank’s imposed debt reductions to the Australian Stock Exchange, shareholder confidence in the business gradually collapsed; and then the bank’s demands for debt reductions continued even further. He was forced to realise $89 million from asset sales in eight months to reduce a debt that had increased with the bank’s approval by just $63 million in the preceding year. Being forced to sell his most valuable assets, Roy says (and Kate Carnell agrees with him), destroyed his business.

    Boom to bust: Part two
    Boom to bust: Part two

    We first met Roy Lavis when he rolled up to the Cairns Hilton in a borrowed, battered, Toyota land-cruiser hefting a distressingly large pile of manila folders and binders, the last remnants of CEC Group’s paperwork during that 2008-2011 period when he was fighting for his corporate life. Roy gave personal guarantees to try to keep his company afloat and he was forced into bankruptcy; it has made his efforts to rekindle his business almost impossible. The irony is that, as we stand on the Cairns harbour esplanade, almost everything around us was built by Roy’s CEC Group – for decades he was the bloke who built Cairns’ sewers, streets and housing developments. As Carnell told us: “Roy was one of those fantastic Australians that grow a business from nothing. We need more Roys.”

    Over two weeks before our story was due to be broadcast we sent Commbank an exhaustive list of questions aimed at extracting from the bank an explanation for why it did what it did to Roy Lavis and CEC. We also attended a long off-the-record briefing with CBA’s public affairs manager Tracy Lee and government lobbyist Euan Robertson, a former advisor to Labor Shadow Minster Tony Burke. Days passed without a bank response and broadcast drew closer. Then shortly before broadcast the bank finally agreed to allow us a short interview opportunity to put questions to CBA’s chief risk officer David Cohen. We have always made an extended version of that interview available online, despite the AFR’s false assertions that we only gave Mr Cohen 90 seconds. That interview can be viewed here:
    EXTRA MINUTES | Ross Coulthart questions David Cohen on why Commonwealth Bank 'abandoned' Roy Lavis
    EXTRA MINUTES | Ross Coulthart questions David Cohen on why Commonwealth Bank 'abandoned' Roy Lavis

    What surprised us from the start about the bank’s position was that it unrepentantly claimed in the interview that Small Business Ombudsman Kate Carnell had got things badly wrong and that, in particular, it was CEC who came to the bank in December 2007 recommending a debt reduction strategy. Former CEO Roy Lavis and former chairman Warren Entsch both adamantly deny this claim – and so does the Small Business Ombudsman Kate Carnell. “It’s complete and utter bullshit,” former acting chairman Warren Entsch told us. They say the company only agreed to a debt reduction demand made by the bank at the end of February 2008 and that when it was reported to the ASX the CEC share price plummeted because of it. But the bank purports that the opposite is the case:

    “By December 2007,” CBA’s Mr Cohen claimed “the board of CEC, and these were very experienced board directors, we had a former Premier of Qld in Rob Borbidge, we had a former chairman of ASIC, we had a current Federal member [Entsch], um very senior people, very senior accountant, these directors and senior management, including Roy Lavis, came to the view that actually the business model as CEC had been implementing was just not viable, so CEC itself decided that it needed to reduce its debt…”.

    I challenged Mr Cohen during our interview about this assertion (and we included that exchange in our story) because I knew that it was clear from the documents that the debt reduction strategy had been imposed on CEC by Commbank. Here’s an extract from a letter from CEC to CBA dated 22 February where CEC’s managing director clearly states that the debt reduction strategy was the bank’s concern, not CEC’s:



    In another letter dated 28 February 2008, it is again abundantly clear that CEC’s continued loan facility is dependent on the company agreeing to CBA’s proposed dramatic debt reduction strategy – a demand made by the bank, not CEC:

    It’s the same again when the facility is renewed on 30 May 2008, the bank requiring yet another huge cut to CEC’s borrowings. It is very clear the debt reduction strategy demand has come from the bank not CEC:

    When the facility is up for review again in October 2008, it is again the bank that is insisting on the debt reduction strategy, not CEC:

    Roy Lavis laughs off suggestions by CBA’s David Cohen that it was CEC who came begging in that December 2007 period for a debt reduction. As he correctly notes, the bank had approved another $18 million extension to his loan facility on 20 December 2007. “Why in heavens name would we have agreed to CEC Group paying bank fees totalling $875,000.00 within 12 months for a debt reduction programme that the bank falsely claims was CEC Group’s initiative,” Roy asks.

    Nothing in any of the AFR’s lengthy reports addresses this clear conflict between what the bank claims and what the Ombudsman accepted as the truth. Instead, everything the Ombudsman said was peremptorily dismissed by its reporter as politically motivated. To further underline the charge, much was made of the fact that MP Warren Entsch has campaigned on behalf of his friend and former CEC board member Roy Lavis to highlight what Entsch calls ‘bank bastardry’. Then again, in his most recent article suggesting a massive conspiracy against the banks, the AFR’s Aaron Patrick quotes an anonymous former director of CEC as saying the CBA was not to blame for the company’s failure. Oddly, the purported former director does not explain why he agreed at the time to the investment strategy which he now so fulsomely decries as ‘reckless’ to the AFR.

    When it comes to anonymous former directors speaking up against the evidence obtained and painstakingly analysed by the Small Business Ombudsman, I know who to trust.

    Read More...
    3 weeks ago
  • www.change.org/p/call-an-independent-roy...e_twitter_responsive

    etition update
    Prime Minister is accused of tricks, lies & deceit 4 not calling a Royal Commission: Hetty Johnston
    Susan G

    21 Jul 2017 — Malcolm Turnbull bears brunt of Bravehearts founder’s fury after declining Royal Commission
    Dwayne Grant, This email address is being protected from spambots. You need JavaScript enabled to view it., Gold Coast Bulletin
    July 21, 2017 12:00am

    BRAVEHEARTS founder Hetty Johnston says the Prime Minister has turned his “back on thousands of children” by refusing a Royal Commission into Australia’s family law system.

    The child sexual abuse advocate said she had obtained expert legal advice that showed Malcolm Turnbull falsely cited “significant constitutional limitations” as the reason a Royal Commission could not proceed.

    Mrs Johnston met with the PM in October to discuss her belief that a commission is the only legal framework capable of overcoming the significant hurdles needed to thoroughly investigate the family law system, including State and Federal bodies such as police and child protection agencies.

    “I got a letter signed by the Prime Minister (outlining why a Royal Commission was not feasible) and we believed it and said we would work with him.

    “(But) we also got constitutional advice to be sure and just as well because both those very well-known, esteemed, clever people disagreed with the Prime Minister. We were fed a furphy.

    “(The Prime Minister’s office) saw us fold and we were tricked and lied to by the Prime Minister and that is betraying Australia’s children … it’s not he can’t protect Australia’s children. It’s that he won’t.”

    In his letter to Bravehearts, Mr Turnbull said the Government was committed to ongoing improvements to the family law system but a Royal Commission was “not a viable pathway for these improvements to occur”.

    “There are significant constitutional limitations in respect of any executive inquiry into the courts arising from the principles of judicial independence in Chapter III of the Constitution,” he wrote.

    Mrs Johnston said this was contrary to advice received by Curtin University Law School’s Professor Gerard Carney and University of NSW Law Dean George Williams.

    “This attempt by the office of the Prime Minister to derail calls for a Royal Commission into the family law system is deceptive and alarming,” she said.

    “One day a Royal Commission into the family law system will be conducted and our current Prime Minister may be called upon to explain why, when he knew of the horrors being faced by these children and their protective parents, he did nothing to save them.”

    Mrs Johnston said she was now calling on the Opposition to push for the Royal Commission.

    “We don’t need to wait for this man to find his backbone,” she said. “(The Opposition) has nearly got the numbers and I’m asking every parliamentarian in there to stand up for our children.

    “Trust is my big button and when I sit with the Prime Minister in his office … you want to believe this is a man who cares about children.”

    Read More...
    4 weeks ago
  • Charles Ponzi created a new topic ' Witness wired in the Legal Services Board Cases' in the forum.
    Chancery Halts ServiceMesh Case For Criminal Investigation

    By Matt Chiappardi
    Law360, Wilmington (July 20, 2017, 7:26 PM EDT) -- A Delaware Chancery judge on Thursday granted the U.S. government’s request to halt all discovery in a case alleging the founder of cloud computing company ServiceMesh Inc. paid bribes to score nearly $100 million in earn-out payments from the company's sale, so the feds can finish a criminal investigation.
    Ruling from the bench in Wilmington, Chancellor Andre G. Bouchard said that the federal government had shown there was “an actual risk of witness tampering,” and agreed to stay all discovery in the case for 90 days.

    The case, which has splintered into a bevy of claims and counterclaims, involves Computer Sciences Corp., which bought out ServiceMesh in 2013, alleging that $98 million in earn-out payments it paid to the target's founder and former CEO, Eric Pulier, were the result of bribery scheme he implemented.

    The U.S. Department of Justice says it is conducting a similar criminal investigation, and is concerned that Pulier’s deposition requests of overlapping witnesses, particularly a cooperating witness who wore a wire, could wind up undermining its case and make others reluctant to come forward to help the probe.

    Chancellor Bouchard agreed, also ruling that the discovery stay could wind up narrowing the scope of the Chancery case and saving resources if criminal charges are indeed filed, and that the three-month pause doesn’t significantly affect Pulier in the civil proceedings.

    “Any prejudice to Mr. Pulier from a relatively modest 90-day stay would be minimal,” the chancellor said from the bench.

    That notion was strongly disputed by the Pulier side, which argued that the government is simply trying to gain a tactical advantage in any potential criminal case, and that the ServiceMesh founder needs to defend himself in the Chancery proceedings in which he’s the one facing allegations.

    “We the ones who were sued,” Pulier attorney Martin S. Lessner of Young Conaway Stargatt & Taylor LLP said. “This not a case where a civil case has been ginned up. We’re doing what we need to do to defend ourselves from very serious charges.”

    The Chancery case was launched in 2015, with CSC alleging that $98 million in earn-out payments connected to the company's equity acquisition of ServiceMesh were obtained through a bribery scheme.

    CSC bought privately held ServiceMesh in 2013 from its equity holders, the largest of which was Pulier, for an initial cash payment of $93 million plus post-closing earn-outs based on the target's revenue, according to court records.

    The buyer wound up paying $98 million extra under the deal, but CSC alleges that Pulier induced much of the relevant revenue by payments he made to executives at Commonwealth Bank of Australia to generate contracts that triggered the earn-outs.

    CSC does not implicate the bank in the scheme.

    The Justice Department said it began its investigation in summer 2015 after two CBA executives, Keith Hunter and Jon Waldron, were charged in Sydney with receiving kickbacks.

    Hunter pled guilty to the Australian charges in June 2016, and Waldron’s case remains pending, according to court records.

    In court Thursday, Assistant U.S. Attorney Stephen A. Cazeres argued that the federal government is particularly concerned about potential witness tampering and intimidation, saying that one of the first people Pulier sought to depose in the Chancery case was the one who wore a wire for the investigation.

    Because the company at issue is small, the people involved “almost become a family in a fight,” making it easy to dissuade witnesses to fully participate in the criminal case, Cazeres said.

    The assistant U.S. attorney contended that the Pulier side told witnesses that they could be exposed to criminal prosecution. Lessner countered that there were no threats and that Pulier has no ability to charge someone with a crime.

    While discovery in the case has been stayed, Chancellor Bouchard said that other matters, such as claims for advancement, would go forward as scheduled.

    The attorneys for the sides declined to comment after the hearing.

    The U.S. government is represented by Acting U.S. Attorney for the District of Delaware David C. Weiss, Assistant U.S. Attorney Laura D. Hatcher, Acting U.S. Attorney for the Central District of California Sandra R. Brown, Assistant U.S. Attorney Stephen A. Cazeres and Assistant U.S. Attorney Scott Paetty.

    Pulier is represented by Martin S. Lessner, Tammy L. Mercer and Nicholas J. Rohrer of Young Conaway Stargatt & Taylor LLP and Mark Holscher, Jeffrey Scott Sinek and Michael J. Shipley of Kirkland & Ellis LLP.

    CSC is represented by Peter J. Walsh Jr. and Jacob R. Kirkham of Potter Anderson & Corroon LLP, and Bryant C. Boren Jr. and Thomas E. O'Brien of Baker Botts LLP.

    The case is Computer Sciences Corp. v. Pulier, et al., case number 11011, in the Chancery Court of the State of Delaware.

    --Additional reporting by Vince Sullivan. Editing by Joe Phalon.

    Read More...
    4 weeks ago
  • OPENING STATEMENT – Senate Inquiry into Lending for Primary Production Customers.



    DENISE L BRAILEY, President of the Banking and Finance Consumers Support Association (Inc)

    19th July, 2017 Perth WA.

    My Research into Australian Mortgage Fraud during the past 17 years has led me to conclude: the Frauds and manipulated data, found on thousands of Loan Applications forms are a key indicator of the existence of a CONTROL FRAUD, engineered by well-known Lenders.

    Australia is now recorded as having the second highest HOUSEHOLD DEBT in the World. The amount of Subprime Interest Only loans being sold per annum (85% by our Major Banks) has grown to more than $139 billion per annum. The total mortgage loan books are reported as being $1.7 Trillion and rising.

    The collective evidence of our members who include Farmers and “asset rich and income poor” ARIPs, are described by Banks as “The Target Market,” those who own their own home/property, are aged 50-years and over and have little or no debt. Farmers are targets due to extensive family land holdings and assets of stock vehicles and machinery.

    Both groups are hooked into initial debt and then further suggestions of purchase only stand to increase the ASSETS for the lenders to CONTROL and increase debt to the customers, plus the exorbitant costs of servicing debt. Within five years, these 30-year loans will implode. They are UNAFFORDABLE, UNSUSTAINABLE AND UNVERIIED.

    The Mortgage Loan Model uncovered, is in fact a well-engineered PONZI Structure. A never-ending stream of new borrowers with ASSETS, are required to prop up existing ASSET levels. ASSET-STRIPPING is where the RISKS are KNOWN to Lenders yet those RISKS of homelessness and ruin, are intentionally hidden from customers.

    Customers are left in shock, but by then it’s too late. They are TRAPPED in a monstrous nightmare of debt and despair.

    The second yet most lucrative purpose of Asset-Stripping is for Banks to offload the mortgage products into RMBS packs, then on-sale the securitisation of INCOME STREAMS to Commercial Investors. We know the income stream of so many customers are highly exaggerated created by the banks, hence the engineering of the compulsory and computerised serviceability calculator.

    Bankers ensure the blame for the FRAUD is conveniently off-loaded to the borrowers and also the brokers (45%). Bank staff (55%) sell the same products, to the same targets and the fraud and the loss results are identical. SELLERS do not approve the loans. The loan file is then recorded on the TRACKER. Incomes are subject to further and manipulation by the computerised ROBO approvals.

    The only winners of this Ponzi Financing operation are the Bankers. Everyone else connected to these activities are the losers. These crimes go way beyond mere allegations of unconscionable conduct.

    Predatory Lending will continue in Australia, until we have a Royal Commission into Banks.

    Key elements of the FRAUD obtained from over 2000 consumer files (all states) demonstrate the patterns which lead to the obvious conclusions: “intention to deceive” and “asset-stripping” are the key criminal activities that BFCSA Members have collectively uncovered during the past decade.

    Farmers and ARIPs are being targeted for further debt by suggestions of purchasing additional assets. Suggestions are made to purchase assets as a condition of the loan facility. Those who have who have been under threat for years, or have lost their all assets are still left with residual DEBT for LIFE.

    These activities must be stopped. We are placing our FOOD BOWL at risk of ending up in foreign hands. The Federal Government ought to declare an immediate moratorium on foreclosures of family farms.

    SELLERS: 55% are Bank Managers and 45% are external Brokers and despite the Determinations from the EDR’s, the Brokers are in fact, the Agents of the Banks. EDR’s are not following the lead of the Courts. The EDR system is controlled and funded by the Code of Compliance Monitoring Committee Association (“CMCA”). The sixteen Members of this organisation are the Major Bankers.

    As in any good Ponzi Structure, CONTROL of the complaint handling system is vital. The narrow clauses used from the CCMCA constitution, state that complaints against the bank cannot interfere with “commercial decisions in lending and securitisation.” That specific clause ensures all complaints re lending can be easily controlled and or redefined by the lenders.

    The EDR system for all whose losses are less than half a million dollars, will only see average “discounts” on mortgages of between $20k and $60k. DEEDs are drawn up to hide the crimes committed, tied down with clauses of “confidentiality.”



    For the benefit of the Senators and this Parliament, I will now point out:

    KEY Indicators of Fraud in Mortgage Lending:

    1. No Borrower is permitted to fill out the Loan Application Form (“LAF”). WHY is that happening?

    2. Borrowers are asked to sign a three-page LAF, not knowing the document contains an additional eight pages. No copy is left with the Borrower. Why?

    3. The Australian Government can no longer leave the door open for bankers to profit from fraud. The Government also ought not to be profiting from fraudulent mortgage lending.

    4. Target Market flagged by Major Banks are ARIPs aged 50 and over, who own their own home and have no debt. Borrowers have no idea of the fraud.

    5. Borrowers frequently complain they were not told their loans were INTEREST only. These products are sold as “normal mortgages.”

    6. Manipulation of data, using “secret projected incomes,” generated by a compulsory Serviceability Calculator. This calculator uses hypothetical scenarios based on future assumptions, not in keeping with the borrower’s own truthful assessment of finances.

    7. Documents are hidden from the borrower. Bankers obstruct and frustrate retrieval attempts. Bankers refuse to hand over vital documentation that clearly show the cleverly engineered financial details of the customer.

    8. The ABN for a DAY SCAM is still operational with $300k loans being made to 18-year olds, particularly the sons of farmers. Parents should be made aware prior to approval that Parental Guarantees are likely to involves loss of home for the parents.

    9. Lending Policy Guidelines demand ABN’s required to be registered for minimum two years, and have GST registration, with evidence of actual business performance and profitability.

    10. Valuations are manipulated to provide higher figures that suit the banks arguments and then lower figures also when it suits.

    11. We call on the Australian Government to ensure ALL documents contained in the Lender’s client file be handed over to the client immediately: all pages of the TRACKER / all pages of the LAF / Serviceability Calculator (2 pages attached to the LAF) / Valuations / Loan Mortgage Insurance Policy / COL Expense Sheets /.

    12. A Key Indicator of Fraud: These are documents relied upon by the bank to make an “informed decision” in lending and yet hidden from the Customer.

    13. All RMBS Packs should contain warnings to Corporate Investors of the level of SUB PRIME incomes in Tranches on offer. These warnings should not be mere stickers sourced from the banks to the ratings agencies. These issues were raised by me on 8th August 2012 in the “Banking Post GFC Inquiry.”

    14. APRA is suggesting Low Docs are no longer in the system. APRA should be making a public statement as to why figures they are offering to BIS, may be out of kilter with reality. We ask the names of the November 2016 “external auditors,” be made available to the public as to the denials relating to Sub Prime lending and why the recent need for APRA to ask for a THIRD EXTERNAL AUDIT.

    15. The Australian Government must explain why it has permitted loans to be marked “affordable” by Bankers when so many IO loans are being serviced by borrowers from a variety of “additional debt instruments” including TOP UPS, BUFFERS, LOCS, Refinancing, SPLIT LOANS, and $100,000 credit cards.

    16. Relating to farmers and any small businesses, we mention the use of “Working Accounts” as a fund to be manipulated by the Banks when its serves their purpose.

    None of the above activity is in the best interests of Consumers. When mired in debt, there are no funds left to seek legal advice.



    I am happy to take Questions.



    OPENING STATEMENT – Senate Inquiry into Lending for Primary Production Customers.



    DENISE L BRAILEY, President of the Banking and Finance Consumers Support Association (Inc)

    19th July, 2017 Perth WA.

    My Research into Australian Mortgage Fraud during the past 17 years has led me to conclude: the Frauds and manipulated data, found on thousands of Loan Applications forms are a key indicator of the existence of a CONTROL FRAUD, engineered by well-known Lenders.

    Australia is now recorded as having the second highest HOUSEHOLD DEBT in the World. The amount of Subprime Interest Only loans being sold per annum (85% by our Major Banks) has grown to more than $139 billion per annum. The total mortgage loan books are reported as being $1.7 Trillion and rising.

    The collective evidence of our members who include Farmers and “asset rich and income poor” ARIPs, are described by Banks as “The Target Market,” those who own their own home/property, are aged 50-years and over and have little or no debt. Farmers are targets due to extensive family land holdings and assets of stock vehicles and machinery.

    Both groups are hooked into initial debt and then further suggestions of purchase only stand to increase the ASSETS for the lenders to CONTROL and increase debt to the customers, plus the exorbitant costs of servicing debt. Within five years, these 30-year loans will implode. They are UNAFFORDABLE, UNSUSTAINABLE AND UNVERIIED.

    The Mortgage Loan Model uncovered, is in fact a well-engineered PONZI Structure. A never-ending stream of new borrowers with ASSETS, are required to prop up existing ASSET levels. ASSET-STRIPPING is where the RISKS are KNOWN to Lenders yet those RISKS of homelessness and ruin, are intentionally hidden from customers.

    Customers are left in shock, but by then it’s too late. They are TRAPPED in a monstrous nightmare of debt and despair.

    The second yet most lucrative purpose of Asset-Stripping is for Banks to offload the mortgage products into RMBS packs, then on-sale the securitisation of INCOME STREAMS to Commercial Investors. We know the income stream of so many customers are highly exaggerated created by the banks, hence the engineering of the compulsory and computerised serviceability calculator.

    Bankers ensure the blame for the FRAUD is conveniently off-loaded to the borrowers and also the brokers (45%). Bank staff (55%) sell the same products, to the same targets and the fraud and the loss results are identical. SELLERS do not approve the loans. The loan file is then recorded on the TRACKER. Incomes are subject to further and manipulation by the computerised ROBO approvals.

    The only winners of this Ponzi Financing operation are the Bankers. Everyone else connected to these activities are the losers. These crimes go way beyond mere allegations of unconscionable conduct.

    Predatory Lending will continue in Australia, until we have a Royal Commission into Banks.

    Key elements of the FRAUD obtained from over 2000 consumer files (all states) demonstrate the patterns which lead to the obvious conclusions: “intention to deceive” and “asset-stripping” are the key criminal activities that BFCSA Members have collectively uncovered during the past decade.

    Farmers and ARIPs are being targeted for further debt by suggestions of purchasing additional assets. Suggestions are made to purchase assets as a condition of the loan facility. Those who have who have been under threat for years, or have lost their all assets are still left with residual DEBT for LIFE.

    These activities must be stopped. We are placing our FOOD BOWL at risk of ending up in foreign hands. The Federal Government ought to declare an immediate moratorium on foreclosures of family farms.

    SELLERS: 55% are Bank Managers and 45% are external Brokers and despite the Determinations from the EDR’s, the Brokers are in fact, the Agents of the Banks. EDR’s are not following the lead of the Courts. The EDR system is controlled and funded by the Code of Compliance Monitoring Committee Association (“CMCA”). The sixteen Members of this organisation are the Major Bankers.

    As in any good Ponzi Structure, CONTROL of the complaint handling system is vital. The narrow clauses used from the CCMCA constitution, state that complaints against the bank cannot interfere with “commercial decisions in lending and securitisation.” That specific clause ensures all complaints re lending can be easily controlled and or redefined by the lenders.

    The EDR system for all whose losses are less than half a million dollars, will only see average “discounts” on mortgages of between $20k and $60k. DEEDs are drawn up to hide the crimes committed, tied down with clauses of “confidentiality.”



    For the benefit of the Senators and this Parliament, I will now point out:

    KEY Indicators of Fraud in Mortgage Lending:

    1. No Borrower is permitted to fill out the Loan Application Form (“LAF”). WHY is that happening?

    2. Borrowers are asked to sign a three-page LAF, not knowing the document contains an additional eight pages. No copy is left with the Borrower. Why?

    3. The Australian Government can no longer leave the door open for bankers to profit from fraud. The Government also ought not to be profiting from fraudulent mortgage lending.

    4. Target Market flagged by Major Banks are ARIPs aged 50 and over, who own their own home and have no debt. Borrowers have no idea of the fraud.

    5. Borrowers frequently complain they were not told their loans were INTEREST only. These products are sold as “normal mortgages.”

    6. Manipulation of data, using “secret projected incomes,” generated by a compulsory Serviceability Calculator. This calculator uses hypothetical scenarios based on future assumptions, not in keeping with the borrower’s own truthful assessment of finances.

    7. Documents are hidden from the borrower. Bankers obstruct and frustrate retrieval attempts. Bankers refuse to hand over vital documentation that clearly show the cleverly engineered financial details of the customer.

    8. The ABN for a DAY SCAM is still operational with $300k loans being made to 18-year olds, particularly the sons of farmers. Parents should be made aware prior to approval that Parental Guarantees are likely to involves loss of home for the parents.

    9. Lending Policy Guidelines demand ABN’s required to be registered for minimum two years, and have GST registration, with evidence of actual business performance and profitability.

    10. Valuations are manipulated to provide higher figures that suit the banks arguments and then lower figures also when it suits.

    11. We call on the Australian Government to ensure ALL documents contained in the Lender’s client file be handed over to the client immediately: all pages of the TRACKER / all pages of the LAF / Serviceability Calculator (2 pages attached to the LAF) / Valuations / Loan Mortgage Insurance Policy / COL Expense Sheets /.

    12. A Key Indicator of Fraud: These are documents relied upon by the bank to make an “informed decision” in lending and yet hidden from the Customer.

    13. All RMBS Packs should contain warnings to Corporate Investors of the level of SUB PRIME incomes in Tranches on offer. These warnings should not be mere stickers sourced from the banks to the ratings agencies. These issues were raised by me on 8th August 2012 in the “Banking Post GFC Inquiry.”

    14. APRA is suggesting Low Docs are no longer in the system. APRA should be making a public statement as to why figures they are offering to BIS, may be out of kilter with reality. We ask the names of the November 2016 “external auditors,” be made available to the public as to the denials relating to Sub Prime lending and why the recent need for APRA to ask for a THIRD EXTERNAL AUDIT.

    15. The Australian Government must explain why it has permitted loans to be marked “affordable” by Bankers when so many IO loans are being serviced by borrowers from a variety of “additional debt instruments” including TOP UPS, BUFFERS, LOCS, Refinancing, SPLIT LOANS, and $100,000 credit cards.

    16. Relating to farmers and any small businesses, we mention the use of “Working Accounts” as a fund to be manipulated by the Banks when its serves their purpose.

    None of the above activity is in the best interests of Consumers. When mired in debt, there are no funds left to seek legal advice.



    I am happy to take Questions.

    Read More...
    4 weeks ago
  • Charles Ponzi created a new topic ' Luby Fuddrucker vs Visa and Banks' in the forum.
    The $5.75 billion antitrust trainwreck ripped up Antitrust Settlement Cases at the Victorian Legal Services Board, and the carnage rolls on.


    deref-gmx.com/mail/client/dgOgQC2e_vw/de...it-Card-Company-Fees


    Luby's Fuddruckers Restaurants, LLC v. Visa Inc. et al
    Plaintiff: Luby's Fuddruckers Restaurants, LLC
    Defendant: Visa Inc., Visa U.S.A., Inc., Visa International Service Association, MasterCard Incorporated, Mastercard International Incorporated, BA Merchant Services LLC, Bank of America Corporation, Barclays Bank of Delaware, Capital One, N.A., Capital One Bank (USA), N.A., Capital One Financial Corporation, Chase Bank USA, N.A., JPMorgan Chase Bank, N.A., JPMorgan Chase & Co., Citigroup, Inc., Citibank, N.A., Fifth Third Bancorp, First National Bank of Omaha, HSBC Finance Corporation, HSBC North America Holdings, Inc., PNC Financial Services Group, Inc., SunTrust Banks, Inc., SunTrust Bank, Texas Independent Bancshares, Inc., Wells Fargo & Company and Wells Fargo Merchant Services, LLC
    Case Number: 4:2017cv01049
    Filed: April 5, 2017
    Court: Texas Southern District Court
    Office: Houston Office
    County: Harris
    Presiding Judge: David Hittner
    Nature of Suit: Antitrust
    Cause of Action: 15:1
    Jury Demanded By: Both
    Access additional case information on PACER

    Use the links below to access additional information about this case on the US Court's PACER system. A subscription to PACER is required.

    Access this case on the Texas Southern District Court's Electronic Court Filings (ECF) System

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    Search for this case: Luby's Fuddruckers Restaurants, LLC v. Visa Inc. et al
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    Defendant: Visa Inc.
    Represented By: Lee L Kaplan
    Represented By: Mark R. Merley
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    Defendant: Visa U.S.A., Inc.
    Represented By: Lee L Kaplan
    Represented By: Mark R. Merley
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    Defendant: Visa International Service Association
    Represented By: Lee L Kaplan
    Represented By: Mark R. Merley
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    Defendant: MasterCard Incorporated
    Represented By: Tynan Buthod
    Represented By: Gary R Carney
    Represented By: Kenneth A Gallo
    Represented By: Alex M Hyman
    Represented By: Donna M Ioffredo
    Search News [ Google News | Marketwatch | Wall Street Journal | Financial Times | New York Times ]
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    Defendant: Mastercard International Incorporated
    Represented By: Tynan Buthod
    Represented By: Gary R Carney
    Represented By: Kenneth A Gallo
    Represented By: Alex M Hyman
    Represented By: Donna M Ioffredo
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    Defendant: BA Merchant Services LLC
    Represented By: Layne E. Kruse
    Represented By: Eliot Fielding Turner
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    Defendant: Bank of America Corporation
    Represented By: Layne E. Kruse
    Represented By: Eliot Fielding Turner
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    Defendant: Barclays Bank of Delaware
    Represented By: Brent Lockhart Brown
    Represented By: Brian Calandra
    Represented By: Christopher Lanzalotto
    Represented By: James Tallon
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    Defendant: Capital One, N.A.
    Represented By: Jamie Alan Aycock
    Represented By: Andrew J Frackman
    Represented By: Abby F. Rudzin
    Represented By: John Zavitsanos
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    Defendant: Capital One Bank (USA), N.A.
    Represented By: Jamie Alan Aycock
    Represented By: Andrew J Frackman
    Represented By: Abby F. Rudzin
    Represented By: John Zavitsanos
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    Defendant: Capital One Financial Corporation
    Represented By: Jamie Alan Aycock
    Represented By: Andrew J Frackman
    Represented By: Abby F. Rudzin
    Represented By: John Zavitsanos
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    Defendant: Chase Bank USA, N.A.
    Represented By: Boris Bershteyn
    Represented By: Peter E Greene
    Represented By: Noelle M Reed
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    Defendant: JPMorgan Chase Bank, N.A.
    Represented By: Peter E Greene
    Represented By: Noelle M Reed
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    Defendant: JPMorgan Chase & Co.
    Represented By: Peter E Greene
    Represented By: Noelle M Reed
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    Defendant: Citigroup, Inc.
    Represented By: Tracy N LeRoy
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    Defendant: Citibank, N.A.
    Represented By: Tracy N LeRoy
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    Defendant: Fifth Third Bancorp
    Represented By: Eliot Fielding Turner
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    Defendant: First National Bank of Omaha
    Represented By: Eliot Fielding Turner
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    Defendant: HSBC Finance Corporation
    Represented By: Roger Brian Cowie
    Represented By: Perry A Lange
    Represented By: David Sapir Lesser
    Represented By: Bradley C Weber
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    Defendant: HSBC North America Holdings, Inc.
    Represented By: Roger Brian Cowie
    Represented By: Perry A Lange
    Represented By: David Sapir Lesser
    Represented By: Bradley C Weber
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    Defendant: PNC Financial Services Group, Inc.
    Represented By: Bruce Allen Blefeld
    Represented By: Edward William Duffy
    Represented By: Frederick N Egler
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    Defendant: SunTrust Banks, Inc.
    Represented By: Jared M Slade
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    Defendant: SunTrust Bank
    Represented By: Jared M Slade
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    Defendant: Texas Independent Bancshares, Inc.
    Represented By: Dennis R Bettison
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    Defendant: Wells Fargo & Company
    Represented By: Charles Bedford Hampton
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    Defendant: Wells Fargo Merchant Services, LLC
    Represented By: Charles Bedford Hampton
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    Plaintiff: Luby's Fuddruckers Restaurants, LLC
    Represented By: Scott G. Burdine
    Represented By: David Edwards Wynne
    Represented By: David Edwards Wynne
    Represented By: Kenneth R. Wynne
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    2 months ago
  • Charles Ponzi created a new topic ' CBA Bribery Scandal Case Feb 2016' in the forum.
    CBA exec called in graft hearing

    Leo Shanahan - The Australian
    Business Spectator
    12:15PM February 18, 2016
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    Commonwealth Bank’s current and former chief information ­officers are being sought as ­witnesses in the bribery case brought against two former IT executives charged with taking kickbacks in return for delivering a multi-million-dollar contract from the CBA.

    The Australian understands witness subpoenas have been drawn up by lawyers defending former CBA technology executives, asking that current CIO David Whiteing and former IT boss Michael Harte appear for the defence case.

    A series of other CBA technology and procurement staff have also been asked to appear as witnesses.

    Keith Hunter, 62, CBA’s former manager of IT engineering, and former IT executive colleague Jon Waldron, 44, have been charged with several counts of bribery after NSW Police alleged the two took a combined total of $2.9m from US technology entrepreneur Eric Pulier in return for millions of dollars in CBA work.

    NSW police, who were aided by the FBI in the investigation, allege the pair received money from Mr Pulier around October 2014 through an US-based charity called the Ace Foundation, in return for delivering his cloud computing company ServiceMesh a multi-million-dollar contracts with CBA.

    Both men have pleaded not guilty, with a directions hearing in a Sydney court today to decide whether the case proceeds to a committal hearing.

    It understood the defence teams for the men would like Mr Harte and Mr Whiteing to appear as witnesses to speak to, among other things, the circumstances surrounding the ServiceMesh contract and the utility of the technology.

    However the Commonwealth Director of Public Prosecutions is understood to object to Mr Whiteing, Mr Harte and others being called, arguing it would be inconsistent with the pleadings.

    CBA tipped off police after the suspicious funds appeared in the men’s CBA account in late 2014, with Mr Hunter and Mr Waldron resigning soon after.

    Mr Harte — who is not accused of any wrongdoing — was the manager in charge of the two men and oversaw the billion-dollar restructure of the bank’s IT services before departing in July 2014 to take up a role with Barclays Bank in London.

    He is now the chief operations and technology officer at Barclays and sits on the bank’s executive committee.

    Mr Whiteing replaced Mr Harte as CBA’s CIO and was previously vice-president of enterprise systems at BP.

    ServiceMesh was bought by US computing giant CSC for $US260m in October 2013 and maintained Mr Pulier’s role as head of the cloud computing company, but has since dismissed him and is suing him for the purchase price of ServiceMesh.

    During his time at CBA Mr Harte was a big supporter of the cloud technology provided by ServiceMesh.

    CBA said neither Mr Harte or the CBA were ever investors in ServiceMesh.

    “Mr Harte has informed CBA that he has never had any financial interest in ServiceMesh or any related party,” CBA said in statement.

    “Commonwealth Bank’s investigations to date indicate CBA does not hold, and has not previously held, an interest in ServiceMesh, and Mr Pulier was not offered shares in CBA as part of an agreement with CBA to provide services.”

    The Australian

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    2 months ago
  • Charles Ponzi created a new topic ' FIFA: US vs Swiss Bankers: Julius Baer' in the forum.
    Banker Admits to Money Laundering in FIFA Case

    By REBECCA R. RUIZJUNE 15, 2017
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    A former executive of the Swiss bank Julius Baer is the first banker to plead guilty in a broad FIFA corruption case. Credit Michael Buholzer/Agence France-Presse — Getty Images

    Jorge Luis Arzuaga, a former managing director at the Swiss bank Julius Baer, pleaded guilty to money laundering conspiracy in Brooklyn federal court on Thursday, revealing his role in the United States’ sweeping criminal case focused on FIFA, the governing body of international soccer.

    Mr. Arzuaga, who admitted to arranging the financial transfers of more than $25 million in bribes and kickbacks from 2010 to 2015, became the first banker publicly convicted in a case that has felled dozens of soccer officials and marketing and media executives since it was announced two years ago. His conviction suggests a new phase for the case, shifting its focus to the financial institutions through which bribe money traveled.

    The Swiss have pursued similar charges against Mr. Arzuaga, the United States Justice Department said Thursday, and a resolution is expected to be announced soon. The conviction of Mr. Arzuaga, a citizen of Argentina who worked for the Zurich bank until 2015, would be Switzerland’s first in its parallel investigation into FIFA, which has its headquarters in Zurich. Switzerland’s Office of the Attorney General did not immediately respond to a request for comment Thursday.

    Over the last two years, the Swiss authorities have provided significant assistance to the United States in carrying out arrests, extraditing defendants and responding to requests for information otherwise protected by the nation’s strict privacy laws. Switzerland’s Office of the Attorney General announced its own investigation into FIFA, after early-morning raids at a five-star hotel in 2015 that resulted in the first wave of arrests and upended soccer’s global leadership.
    Continue reading the main story
    Related Coverage

    More Charges as FIFA Inquiry Widens DEC. 3, 2015
    In FIFA Inquiry, Switzerland Aids U.S. but Is Wary of Being Eclipsed DEC. 5, 2015
    FIFA, Embracing Role as Victim, Seeks to Collect Millions in U.S. Case MARCH 16, 2016

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    Appearing in United States District Court in Brooklyn on Thursday, Mr. Arzuaga, 56, promised to pay more than $1 million to the government, adding to the hundreds of millions of dollars so far pledged by the convicted defendants. Mr. Arzuaga joins dozens of international soccer officials and marketing and media executives — predominantly from South and Central America — who have been convicted to date.

    A 236-page indictment released by the Justice Department in 2015 named numerous financial institutions, including Julius Baer, one of the banks at which Mr. Arzuaga worked, as having handled bribes paid to officials charged in the case. Mr. Arzuaga left Julius Baer that spring, shortly after the Swiss police had carried out the first surprise arrests at the behest of the United States Justice Department.

    On Thursday, William F. Sweeney, Jr., the head of the F.B.I.’s New York office, emphasized that the case was continuing.
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    “This plea shows how wide-ranging and systemic corruption once was in one of the world’s most popular sports,” Mr. Sweeney said in a statement. “Our work is nowhere near finished, and we will continue to pursue each and every corrupt member of this scheme until each is brought to justice.”

    The United States investigation — a coordinated effort of the Justice Department, the F.B.I. and the I.R.S. criminal investigation division — has relied heavily on financial forensics and the tracing of bribe payments through the international banking system to America. The 2015 indictment specifically highlighted a $5 million wire transfer to a Julius Baer bank account in the name of a company affiliated with Torneos y Competencias, an Argentine sports marketing firm that has already pleaded guilty in the American case and promised to pay the government more than $112 million.

    The indictment does little to disguise the identity of one of the soccer officials who received the payments: Julio Grondona, a longtime FIFA and Argentine soccer association official who died in 2014. The indictment said Mr. Arzuaga also arranged for money in accounts held by Mr. Grondona to be distributed to his heirs after his death.

    Julius Baer itself has been scrutinized by American prosecutors, who may have considered charging the bank for its role in helping to launder bribe money to soccer officials.

    “We are pursuing the bad actors — including soccer officials, sports marketing companies, financial institutions and their bankers — who have intentionally and criminally violated the law by laundering illegal proceeds,” said Richard Weber, chief of the I.R.S. criminal investigation division. “Prospective private bankers and relationship managers should take note of Mr. Arzuaga’s conviction and think twice about the consequences of conspiring to launder money.”

    Unrelated to the soccer case, Julius Baer is under a deferred prosecution agreement with the Justice Department after admitting last year to having helped American clients evade taxes and hide billions of dollars in offshore accounts. Under that agreement, the bank promised to pay $547 million to the United States for assisting clients with hiding money and filing false tax returns fro
    m at least the 1990s to 2009.

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    2 months ago
  • Charles Ponzi created a new topic ' Re-opening FOS Determinations: Treasury' in the forum.
    Submissions are due in 2 weeks.
    treasury.gov.au/ConsultationsandReviews/...mentary-Issues-Paper

    SUPPLEMENTARY ISSUES PAPER
    Review of the financial system external dispute resolution framework
    Consultation on the establishment, merits and potential design of a compensation scheme of last resort and the merits and issues associated with providing access to redress for past disputes
    May 2017

    © Commonwealth of Australia 2017
    ISBN 978-1-925504-48-4
    This publication is available for your use under a Creative Commons Attribution 3.0 Australia licence, with the exception of the Commonwealth Coat of Arms, the Treasury logo, photographs, images, signatures and where otherwise stated. The full licence terms are available from creativecommons.org/licenses/by/3.0/au/legalcode.

    Use of Treasury material under a Creative Commons Attribution 3.0 Australia licence requires you to attribute the work (but not in any way that suggests that the Treasury endorses you or your use of the work).
    Treasury material used ‘as supplied’
    Provided you have not modified or transformed Treasury material in any way including, for example, by changing the Treasury text; calculating percentage changes; graphing or charting data; or deriving new statistics from published Treasury statistics — then Treasury prefers the following attribution:
    Source: The Australian Government the Treasury.
    Derivative material
    If you have modified or transformed Treasury material, or derived new material from those of the Treasury in any way, then Treasury prefers the following attribution:
    Based on The Australian Government the Treasury data.
    Use of the Coat of Arms
    The terms under which the Coat of Arms can be used are set out on the It’s an Honour website (see www.itsanhonour.gov.au).
    Other uses
    Enquiries regarding this licence and any other use of this document are welcome at:
    Manager
    Communications
    The Treasury
    Langton Crescent
    Parkes ACT 2600
    Email: This email address is being protected from spambots. You need JavaScript enabled to view it.


    CONTENTS
    Consultation Process iv
    Introduction 1
    Scope 5
    Compensation scheme of last resort 9
    Problem being addressed — uncompensated consumer losses 9
    Existing framework for compensating losses in the financial system 10
    Compensation arrangements outside of the financial services industry 15
    International financial services industry compensation schemes 17
    Evaluation of a compensation scheme of last resort 19
    Potential design of a compensation scheme of last resort 22
    Legacy unpaid EDR determinations 32
    Providing access to redress for past disputes 34
    Problem being addressed — access to redress 34
    Approaches to providing access to redress for past matters 37
    Evaluation of providing access to redress for past disputes 39
    Design issues with providing access to redress for past disputes 41
    Consultation questions 47
    Appendix A — Amended Terms of Reference 51
    Appendix B — Examples of schemes outside the financial sector that provide for past matters 53


    CONSULTATION PROCESS
    REQUEST FOR FEEDBACK AND COMMENTS
    Interested parties are invited to lodge written submissions on the issues raised in this Paper by 28 June 2017.
    All information (including name and address details) contained in submissions will be made available to the public on the external dispute resolution review website at www.treasury.gov.au/ConsultationsandRevi...onsultations/2016/FS external dis
    pute resolution unless the party making the submission indicates that all or part of the submission is to remain confidential. Automatically generated confidentiality statements in emails are not sufficient for this purpose. Respondents who would like part of their submission to remain confidential should provide this information marked as such in a separate attachment. A request made under the Freedom of Information Act 1982 for access to a submission marked confidential will be determined in accordance with that Act.
    To ensure that the privacy of third parties is protected, and that the Commonwealth complies with its own legal obligations, some submissions may be published with some details removed or may not be published. In addition, all or parts of submissions may not be published: if they promote a product or a service; contain offensive language or the sentiments expressed are liable to offend or vilify sections of the community; or for reasons other than those outlined.
    Submissions should include the name of the organisation (or name if the submission is made by an individual) and contact details including an email address and telephone number where available. While submissions may be lodged electronically or by post, electronic lodgement is strongly preferred. For accessibility reasons, please email responses in a Word or RTF format. An additional PDF version may also be submitted.
    Closing date for submissions: 28 June 2017
    Address written submissions to:
    Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
    Mail: EDR Review Secretariat
    Financial System Division
    Markets Group
    The Treasury
    Langton Crescent
    PARKES ACT 2600
    Enquiries: Enquiries can initially be directed to the EDR Review Secretariat by emailing This email address is being protected from spambots. You need JavaScript enabled to view it..


    INTRODUCTION
    1. The Review’s amended Terms of Reference require the Panel to:
     make recommendations on the establishment, merits and potential design of a compensation scheme of last resort; and
     consider the merits and issues involved in providing access to redress for past disputes.
    WHY REDRESS MATTERS
    2. These issues are of significant public interest given the scale of financial losses suffered by Australian investors in recent years. Estimates suggest that over 80,000 people have been affected with losses totalling more than $5 billion (or $4 billion after compensation and liquidator recoveries).
    3. For those individuals who have suffered losses, the effect on their lives can be devastating. Additionally, where those individuals have not been able to receive compensation or even have their case heard, this undermines trust and confidence in the financial system.
    4. In April 2017, the Panel made 11 recommendations to enhance the financial system’s dispute resolution framework, recognising that consumers and small business should have effective access to redress. On 9 May 2017, the Government accepted all of these recommendations.
    5. The Panel’s view is that implementation of these recommendations will help to ensure that financial firms will provide compensation for wrongful losses through the EDR system. However, in a limited number of cases this may not occur, for a number of reasons. This Issues Paper seeks feedback on these situations, and possible models to resolve them.
    BACKGROUND
    6. In recent years, a number of inquiries have considered the causes of financial failures and the issue of compensating investors for their losses, including:
     the Parliamentary Joint Committee on Corporations and Financial Services Report, Inquiry into financial products and services in Australia (November 2009);
     Mr Richard St. John’s report, Compensation arrangements for consumers of financial services (2012);

     the Senate Economics References Committee Report, Agribusiness managed investment schemes: Bitter harvest (March 2016);
     the Parliamentary Joint Committee on Corporations and Financial Services Report, Impairment of customer loans (May 2016); and
     the Australian Small Business and Family Enterprise Ombudsman Report, Inquiry into small business loans (December 2016).
    7. Consumers currently have a number of avenues for obtaining compensation, including:
     internal dispute resolution (IDR) — individuals can approach the firm directly to seek a resolution;
     external dispute resolution (EDR) — individuals can approach the Financial Ombudsman Service (FOS), Credit and Investments Ombudsman (CIO) or the Superannuation Complaints Tribunal (SCT) to have their complaint resolved;
     self initiated private action — individuals can sue in court or obtain an outcome through private negotiation, mediation or arbitration;
     private class action — individuals can start or join a class action where people who have suffered loss from the same type of misconduct bring a group action;
     the winding up process of a financial firm (external administration); and
     action taken by the Australian Securities and Investments Commission (ASIC) to obtain compensation for consumers — ASIC can take action through negotiations with the firm, legal or other enforcement action, or by leading a class action.
    8. In its Interim Report, the Panel observed that where consumers are denied access to justice due to a financial firm’s lack of resources to pay a determination issued by an EDR scheme, this has serious and significant consequences for the individual consumer and undermines trust and confidence in the broader financial system.
    9. This Supplementary Issues Paper continues the Panel’s examination of the EDR framework by seeking the views of interested stakeholders on the establishment, merits and potential design of a compensation scheme of last resort and the merits and issues involved in providing access to redress for past disputes.

    REVIEW PROCESS TO DATE
    10. On 20 April 2016, the Government announced this review of the financial system’s EDR and complaints framework (EDR Review). On 8 August 2016, the Terms of Reference for the Review were released.
    11. On 9 September 2016, the Panel released an Issues Paper and received 127 submissions from stakeholders. These submissions informed the Panel’s Interim Report, which was released for consultation on 6 December 2016 and sought stakeholder views on 11 draft recommendations. Fifty-six submissions were received.
    12. Among other issues, the Review’s original Terms of Reference directed the Panel to make observations, but not recommendations, on the establishment of a statutory compensation scheme of last resort. In their responses to the first Issues Paper, a number of stakeholders made submissions on this issue which informed the Panel’s observation in the Interim Report that there is considerable merit in establishing an industry funded compensation scheme of last resort.
    13. On 2 February 2017, the Minister for Revenue and Financial Services amended the Review’s Terms of Reference to include recommendations on the establishment, merits and potential design of a compensation scheme of last resort. The Panel was also asked to consider the merits and issues involved in providing access to redress for past disputes. The amended Terms of Reference are contained in Appendix A.
    14. On 3 April 2017, the Panel provided to the Government its Final Report on matters covered by the original Terms of Reference (other than that relating to a compensation scheme of last resort).
    Final Report
    15. On 9 May 2017, the Government released the Panel’s Final Report on the matters covered by the original Terms of Reference (other than that dealing with a compensation scheme of last resort) and the Government’s response to that Report. The Report makes 11 recommendations which represent an integrated package of reforms that will see the EDR framework well placed to address current problems and ensure it is designed to withstand the challenges of a rapidly changing financial system. The Government has accepted the Panel’s 11 recommendations.
    16. The Panel’s central recommendation is the establishment of a new single EDR body for all financial disputes (including superannuation disputes) to replace FOS, CIO and SCT. This is to be implemented via the establishment of the new Australian Financial Complaints Authority.

    17. The Government has also, relevantly, accepted the Panel’s recommendations that:
     consumers and small businesses are provided with enhanced access to redress through higher monetary limits and compensation caps;
     the single EDR body be subject to enhanced accountability measures, including an independent assessor to review complaints about its handling of disputes;
     ASIC be provided with a general directions power to allow it to compel performance from the single EDR body if it does not comply with legislative and regulatory requirements; and
     improvements be made to increase the transparency and accountability of IDR processes.
    Next steps
    18. The Panel is to report to the Government on the matters covered by the amended Terms of Reference in the second half of 2017. The table below outlines the chronology of events.
    19. The purpose of publishing this Supplementary Issues Paper is to seek the views of interested stakeholders on matters covered by the amendment to the Review’s Terms of Reference.
    20. The Panel encourages stakeholders interested in the matters raised in this Supplementary Issues Paper to make a submission by 28 June 2017.
    21. The Panel will consider information provided in submissions and will conduct further consultations before providing an additional report to the Government in the second half of 2017.
    Event Date
    Issues Paper on original Terms of Reference released 9 September 2016
    Interim Report on original Terms of Reference released 6 December 2016
    Minister for Revenue and Financial Services amended the Review’s Terms of Reference 2 February 2017
    Final Report on matters covered in the original Terms of Reference provided to Government 3 April 2017
    Final Report and Government response released 9 May 2017
    Issues Paper on matters covered in amended Terms of Reference released 31 May 2017
    Additional Report on matters covered by the amended Terms of Reference to be provided to the Government Second half of 2017
    SCOPE
    22. The amended Terms of Reference require the Panel to undertake two separate but related tasks:
     make recommendations on the establishment, merits and potential design of a compensation scheme of last resort; and
     consider the merits and issues involved in providing access to redress for past disputes.
    23. The Panel considers that these tasks raise different issues, which might involve different policy considerations, funding models and administrative arrangements. The Panel is, therefore, approaching them as separate and distinct pieces of analysis.
    24. Given the Review’s Terms of Reference focus on the EDR system, this has been the Panel’s main focus in setting out issues surrounding a compensation scheme of last resort and access to redress for past disputes. However, the Panel is also interested in views on whether judgments and decisions from other dispute resolution processes, such as courts and tribunals, should also be considered.
    25. The Panel has outlined below its understanding of the scope of the amended Terms of Reference, and the issues that fall within that scope.
    26. However, the Panel wishes to make clear that it has not made a final decision on any of the issues contained in this Supplementary Issues Paper and welcomes all stakeholder comments and feedback, including on whether the Panel’s scoping of issues is appropriate.
    REVIEW PRINCIPLES
    27. In undertaking its review, as required by its Terms of Reference, the Panel will have regard to the Review’s core principles of efficiency, equity, complexity, transparency, accountability, comparability of outcomes and regulatory costs.
    PRINCIPLES GUIDING THE REVIEW
    Efficiency
    Any framework should provide outcomes in an efficient manner. This requires ensuring the framework possesses adequate coverage, powers, remedies, resources (that is, funding and skilled staff) to enable issues to be resolved quickly and with a minimum of resources.
    Equity
    Individuals should be treated fairly and be able to easily access any framework.
    Complexity
    Any framework should have minimal complexity. It must be easy to navigate and use, with a focus on informality.
    Transparency
    Any framework should be transparent and open. Users should have access to appropriately tailored information, including about what outcomes they can reasonably expect from the process.
    Accountability
    Relevant information should be made publicly available. There should also be scope for periodic independent reviews and responses to these reviews.
    Comparability of outcomes
    Any framework should ensure that individuals receive comparable outcomes, both procedurally and substantively.
    Regulatory costs
    The regulatory settings should, as appropriate, utilise market forces and avoid creating moral hazards. The framework should impose the minimum amount of regulatory costs necessary to ensure effective user outcomes. These costs should, where appropriate, be borne by those who create the requirement for regulation, with incentives for costs to be minimised.


    28. The diagram below depicts how the Panel sees the amended Terms of Reference in relation to a compensation scheme of last resort and access to redress for past disputes interrelating:


    Compensation scheme of last resort
    29. The Panel takes as its starting point the premise that a compensation scheme of last resort is to be considered in the context of a dispute which:
     has been the subject of a decision; and
     has remained unsatisfied because, for example, the firm is insolvent, has ceased trading or otherwise has insufficient assets to pay the claim.
    30. Although the Review’s Terms of Reference are focused on the EDR system, as part of its analysis, the Panel will be considering whether a compensation scheme of last resort should be available in situations where a court or tribunal has ordered that a consumer or small business be compensated and this has not occurred.
    31. The Panel views the issue of a compensation scheme of last resort in a prospective way which means that should a scheme be established, it would be open to claimants who in the future receive a decision in their favour, but which is not ultimately paid.
    32. The Panel considers that separate arrangements may need to be put in place to address legacy uncompensated losses, such as existing unpaid EDR determinations.
    33. These matters are discussed in more detail in the ‘Compensation scheme of last resort’ section of this Issues Paper.
    Redress for past disputes
    34. The question of providing access to redress for past disputes is very complex.
    35. The Panel considers that consumers and small businesses that have obtained a decision from any dispute resolution process (including from a tribunal or a court) have had access to redress and therefore are outside the Review’s amended Terms of Reference. (If as part of that decision the consumer or small business was awarded compensation but this has not been paid, this will form part of the Panel’s consideration of a potential compensation scheme of last resort.)
    36. In this Issues Paper, the Panel has primarily focussed its consideration of this issue on situations where consumers or small businesses with disputes of a type that could be resolved through EDR have, for various reasons, not been able to resolve their disputes to date. However the Panel is interested in views about the proposed scope.
    37. The Panel considers that potential scenarios could include where:
     the financial firm no longer exists (for example, because of insolvency) and therefore the dispute was either never lodged with an EDR scheme or was lodged but unable to proceed to determination;
     the monetary value of the dispute exceeded the EDR scheme’s monetary limits at the time, but could potentially fall within the monetary limits of the new Australian Financial Complaints Authority (once established);
     the dispute was outside of the EDR scheme’s time limits; or
     the consumer or small business did not pursue their dispute with the EDR scheme for other unspecified reasons (for example, because of personal circumstances, the costs of pursuing the dispute or emotional distress).
    38. These matters are discussed in more detail in the ‘Providing access to redress for past disputes’ section of this Issues Paper.
    Questions — Scope and principles
    1. Is the Panel’s approach to the scope of these issues appropriate? Are there any additional issues that should be considered?
    2. Do you agree with the way in which the Panel has defined the principles outlined in the Review’s Terms of Reference? Are there other principles that should be considered?

    COMPENSATION SCHEME OF LAST RESORT
    39. The amended Terms of Reference require the Panel to make recommendations on the establishment, merits and potential design of a compensation scheme of last resort.
    40. In its Interim Report, the Panel expressed the view that in circumstances where the market is unable to provide a solution to the problem of uncompensated consumer losses, there is considerable merit in introducing an industry funded compensation scheme of last resort. In light of the amendment to the Terms of Reference, the Panel is seeking additional information from stakeholders on these issues.
    41. In this section of the Issues Paper, the Panel first considers the problem which a compensation scheme of last resort seeks to address: the issue of uncompensated consumer losses. This is followed by a discussion of the financial system’s existing framework for compensating consumer losses and the compensation arrangements in other sectors and internationally. The Issues Paper then describes the arguments which are made for and against a compensation scheme of last resort, and discusses the potential design issues with such a scheme. Finally, the issue of legacy unpaid determinations is considered.
    PROBLEM BEING ADDRESSED — UNCOMPENSATED CONSUMER LOSSES
    42. Under the existing EDR framework, there are situations where an EDR body orders that a claimant be paid compensation, but that compensation is not paid.
    43. As at 2 May 2017, $13,909,635.50 (excluding interest) and $399,862 (excluding interest) in determinations made in favour of complainants by FOS and CIO, respectively, had not been paid.
    44. These uncompensated losses are relevant to the Panel’s Terms of Reference in two ways. First, they indicate a problem that is likely to recur, creating further unpaid determinations in the future (which is the focus of most of this section). Secondly, it raises the question of whether complainants who have an existing unpaid determination should be compensated (which is considered in more detail at paragraphs [116]-[123]).

    45. The impact of uncompensated consumer losses can be significant and wide ranging, including:
     individuals will often experience severe emotional distress and financial hardship;
     costs may be imposed on the wider Australian community as individuals are forced to rely on other forms of support, including the social security system; and
     there is an undermining of trust and confidence in the EDR framework and the financial services sector more generally.
    46. The wide-ranging nature of these losses is relevant when considering how to define ‘compensation’. For example, the Panel has heard from a stakeholder that compensation should include restitution and compensation for non economic impacts, as well as direct financial losses.
    EXISTING FRAMEWORK FOR COMPENSATING LOSSES IN THE FINANCIAL SYSTEM
    47. Where an individual suffers financial loss, they can seek compensation from the relevant firm and, in certain circumstances, from targeted compensation schemes. These schemes, which are considered in further detail at paragraphs [64] [72], cover losses associated with:
     where a market participant of the Australian Securities Exchange becomes insolvent and fails to meet its obligations to a person who had previously entrusted property to it;
     bank deposits and general insurance policies related to an Australian Prudential Regulation Authority (APRA) regulated entity in the event of insolvency; and
     fraudulent conduct or theft related to APRA regulated superannuation funds.
    48. Given the existence of unpaid EDR determinations, it is clear this framework is not delivering effective outcomes for some of its users.

    Firm level compensation arrangements
    49. The Corporations Act 2001 requires that if a financial services licensee provides a financial service to a person as a retail client, the licensee must have arrangements for compensating the person for loss or damage suffered because of breaches of the relevant obligations under Chapter 7 of the Act by the licensee or its representatives.
    50. Financial services cover a range of activities including:
     providing financial product advice;
     dealing or making a market in a financial product;
     providing custodial or depository services; and
     operating a registered managed investment scheme.
    51. Similarly, the National Consumer Credit Protection Act 2009 provides that a licensee must have adequate arrangements for compensating persons for loss or damage suffered because of a contravention of the Act by the licensee or its representatives.
    52. The objective of these requirements is to reduce the risk that losses cannot be compensated because of a licensee’s lack of financial resources.
    53. The justification for these compensation requirements include that consumers and small businesses:
     are not always in a position to assess the information provided by a licensee or the worth of the service provided;
     can incur severe financial hardship through losses resulting from the licensee’s conduct; and
     expect the level of comfort provided by a compensation regime.
    54. ASIC has stated in its regulatory guidance on the compensation and insurance arrangements for financial services licensees that the compensation requirements imposed by the Corporations Act 2001 are not intended to cover:
     product failure or general investment losses;
     all possible consumer losses relating to financial services;
     claims for loss solely as a result of the failure (for example, through insolvency) of a product issuer (that is, it is not intended to underwrite the products of a product issuer); or
     a return on a financial product that has not met expectations.
    Compensation arrangements involving professional indemnity insurance
    55. The requirement to have arrangements in place to compensate consumers is, unless the financial services licensee is an exempt licensee, subject to the requirement that the licensee hold ‘adequate’ professional indemnity insurance cover. Exempt licensees include:
     a general insurance company regulated by APRA under the Insurance Act 1973;
     a life insurance company regulated by APRA under the Life Insurance Act 1995; and
     an authorised deposit taking institution regulated by APRA under the Banking Act 1959.
    56. This exemption results in a large number of EDR scheme member firms not relying on professional indemnity insurance to compensate their customers where they suffer financial loss.
    57. For those firms required to hold professional indemnity insurance, the question of whether an insurance policy is adequate depends on a number of factors, including:
     the amount and scope of cover;
     whether the terms and conditions of the cover undermine the objective of providing compensation; and
     whether the licensee has sufficient financial resources to enable the professional indemnity insurance policy to work in practice.
    58. In relation to having sufficient financial resources available, ASIC has observed that firms should assess what financial resources are required (to cover the excess and gaps in cover due to various exclusions) and ensure they have appropriate financial resources available.
    59. Before granting an Australian Financial Service (AFS) Licence, ASIC asks licence applicants about their professional indemnity insurance arrangements and will not grant a licence until it is satisfied that the applicant has the necessary arrangements in place. However, ASIC does not approve professional indemnity insurance arrangements, nor does it have data about the renewal of advice licensees’ professional indemnity insurance cover.
    60. The Panel notes there is currently a paucity of data about the professional indemnity insurance market, in particular, the policies held by financial services licensees and credit licensees. This raises particular challenges for the Panel.
    61. The objective underpinning the professional indemnity insurance requirement is to reduce the risk to a firm that compensation claims cannot be satisfied by the firm due to a lack of financial resources. It is not to provide compensation directly to consumers.
    62. ASIC, in its December 2015 report, Professional indemnity insurance market for AFS licensees providing financial product advice, identified a number of the inherent limitations of using professional indemnity insurance as a compensation mechanism, including:
     ‘[professional indemnity] insurance is designed to protect AFS licensees against business risk. It is neither intended nor designed to provide compensation directly to consumers. Therefore, even if a consumer is successful in their claim made to an EDR scheme, it is the AFS licensee that must make a claim on its PI insurance to compensate the consumer as required. The consumer cannot claim directly on the PI insurance’; and
     ‘[w]hile ASIC provides detailed guidance to AFS licensees, [it] cannot regulate for a market driven product. [It] cannot require insurers to extend or limit cover, nor can [it] prescribe key product features or policy terms, or influence price or the operation of exclusions and excesses’.
    63. Submissions to the Panel’s Issues Paper of 9 September 2016 also indicated there are significant limitations in relying upon professional indemnity insurance to provide compensation to consumers, which are outlined below.
    Limitations of using professional indemnity insurance as a compensation mechanism
    Stakeholders responding to the Panel’s Issues Paper indicated there are significant limitations in using professional indemnity insurance as a compensation mechanism, including:
    • the total funds available under a policy may not cover all of the compensation awarded against the insured;
    • the policy may not cover the conduct which gave rise to the order for compensation (for example, fraud);
    • the amount of compensation payable may be less than the policy’s excess; and
    • cover may not have been taken out at all and self certification often means this is only discovered after the firm is insolvent.

    Compensation schemes for specific losses in the financial system
    64. A number of targeted compensation schemes currently operate in the financial system to protect consumers from specific types of losses.
    National Guarantee Fund
    65. The National Guarantee Fund (NGF) is a compensation fund available to meet certain claims which arise from dealings with participants of the Australian Securities Exchange (ASX) and, in limited circumstances, participants of ASX Clear Pty Limited, which provides clearing and settlement services. A range of claims can be paid under the NGF, but of particular relevance are claims relating to compensation for loss that results if a market participant becomes insolvent and fails to meet its obligations to a person who had previously entrusted property to it.
    66. The NGF is open to both wholesale and retail clients. There is no cap on claims of compensation for loss arising where a market participant fails to complete a sale or purchase of securities, makes an unauthorised transfer of securities, or cancels or fails to cancel a certificate of title to quoted securities. The scheme is funded by ASX participants.
    Financial Claims Scheme
    67. The Financial Claims Scheme is an Australian Government scheme that protects retail clients of authorised deposit taking institutions (ADIs) and policy holders of APRA regulated general insurance companies from potential loss due to the failure of these institutions.
    68. For banks, building societies and credit unions incorporated in Australia, the Scheme provides protection to depositors up to $250,000 per account holder per ADI. The Scheme seeks to provide depositors with timely access to their protected deposits in the unlikely event of the failure of their ADI.
    69. For general insurers, the Scheme provides compensation to eligible policyholders with valid claims against a failed general insurer. Under the Scheme, most policyholders with the affected general insurer are covered for valid claims up to $5,000. For any valid claims of $5,000 and over, the policyholder or claimant must be eligible under certain criteria.
    70. The Scheme is funded by recovery action through insolvency proceedings, and if the assets are insufficient, through an industry levy on other ADIs or general insurers.
    Part 23 of the Superannuation Industry (Supervision) Act 1993
    71. Part 23 of the Superannuation Industry (Supervision) Act 1993 makes provision for the grant of financial assistance to APRA regulated superannuation funds that have suffered loss as a result of fraudulent conduct or theft. The loss must also have caused a substantial diminution of the superannuation fund leading to difficulties in the payment of benefits.
    72. Compensation limits are at the Minister’s discretion with previous grants ranging from 90 to 100 per cent of the eligible loss. If the Minister, after seeking the advice of APRA, is satisfied that the loss has caused a substantial diminution of the superannuation fund and that the public interest requires action, a financial grant may be made by government to the fund. The scheme is industry funded through a levy on APRA regulated superannuation funds and approved deposit funds.
    COMPENSATION ARRANGEMENTS OUTSIDE OF THE FINANCIAL SERVICES INDUSTRY
    73. Compensation schemes for particular types of losses have also been established from time to time in other sectors. Several examples are described below.
    Fair Entitlements Guarantee
    74. The Fair Entitlements Guarantee is an Australian Government funded scheme of last resort that provides financial assistance for unpaid employee entitlements to eligible employees who lose their job due to the liquidation or bankruptcy of their employer. To be eligible, employees need to lodge a claim with the Government within either 12 months of losing their job or the liquidation or bankruptcy of their former employer, whichever is later. Directors of companies (and their spouses or relatives) and contractors are excluded from the scheme.

    75. Once entitlements are paid to an employee under the Guarantee, the Government stands in the shoes of the employee as a subrogated creditor and is entitled to claim the amount paid, and is given priority over other unsecured creditors. The Government may also provide funds to liquidators to enable recovery efforts of the Guarantee from entities, including initiating legal proceedings to recoup any funds paid.
    Travel Compensation Fund
    76. The national licensing rules for travel agents, which were in place until 30 June 2014, required participation in the Travel Compensation Fund (TCF) as a precondition for being licensed. The TCF’s purposes were to:
     ensure that only persons who had sufficient financial resources could join, or continue to participate in, the fund and therefore carry on business as a travel agent; and
     provide compensation to eligible consumers who had suffered financial loss as a result of the bankruptcy or insolvency of a registered travel agent.
    77. The TCF, which closed at the end of 2015, provided for compensation to be paid to consumers in circumstances where they had paid a licensed travel agent for travel or travel related services, and that agent subsequently failed to arrange the services requested by the consumer.
    78. The TCF was funded, relevantly, through: initial contributions by new participants; initial administration fees by new participants; and ongoing annual renewal fees.
    NSW Law Society Fidelity Fund
    79. Administered by the NSW Law Society, the Fidelity Fund receives annual contributions from solicitors as part of their Practising Certificate requirements. The money received is used to pay compensation to members of the public who successfully claim financial loss due to a solicitor’s or firm’s dishonest failure to pay or deliver trust money or property.

    80. Upon receipt of a claim, the Law Society may make further enquiries. The Fidelity Fund Management Committee decides the claim and it can allow, disallow, compromise or settle it. For almost all claims, there is a limit on payments of a total of $1,000,000 for all claims against a particular solicitor or firm. The Law Society may increase this amount, but is not obliged to do so.
    Motor Car Traders Guarantee Fund
    81. The Motor Car Traders Guarantee Fund operates in Victoria to, relevantly, meet the cost of successful claims made by consumers who have suffered a loss after purchasing a car, motorcycle or commercial vehicle, as a result of the trader failing to comply with certain conditions of the Motor Car Traders Act 1986 (Vic) (such as compliance with warranty provisions or transferring title to the car).
    82. Claims for compensation from the Fund are heard by the Motor Car Traders Claims Committee. Attempts must have first been made to resolve the complaint directly with the motor car trader (IDR). Making a claim is free of charge, with the maximum amount awarded being $40,000. The Fund is funded through motor car traders’ licensing fees and penalties paid for breaches of the Motor Car Traders Act 1986 (Vic). The Fund seeks to recover amounts paid out against the licensee.
    INTERNATIONAL FINANCIAL SERVICES INDUSTRY COMPENSATION SCHEMES
    83. Compensation schemes have been established in the financial services industry in other jurisdictions to address issues associated with consumers who have suffered financial losses (see table below).
    84. While a number of the schemes in these jurisdictions are targeted at specific types of loss, similar to the existing approach in Australia, the United Kingdom has introduced a single, comprehensive scheme covering a broad range of losses, including those not currently covered by Australia’s targeted compensation schemes, such as losses associated with poor quality financial advice.

    Table: International financial services industry compensation schemes
    United Kingdom Canada United States European Union
    Range of claims covered The scheme covers banks and building societies, credit unions, insurance, home finance, investments, pensions and endowments Provides protection for cash, securities and other property held by investment firms on behalf of clients Protects against the loss of cash and securities held by clients of a brokerage firm Provides protection where an investment firm is unable to return money or instruments belonging to its investors
    When can an applicant apply? When the scheme is satisfied the firm is unable, or likely to be unable, to pay claims against it When the firm becomes insolvent When the firm becomes insolvent When the authorities have determined the firm is unable to meet its obligations arising out of investor claims
    Who can apply? Individuals and small businesses All investors are eligible All investors (with limited exceptions) Normally retail investors
    Level of compensation awarded For investment claims, up to £50,000 per person per firm Up to C$1 million Up to US$500,000 for securities and cash (including a $250,000 limit for cash only) The Directive requires minimum compensation of €20,000 per investor, but Member States can provide higher levels
    Funding Industry funded Industry funded Industry funded Industry funded
    Administration Independent scheme but accountable to the regulators Independent scheme Independent scheme Independent schemes

    Questions — Existing compensation arrangements
    3. What are the strengths and weaknesses of the existing compensation arrangements contained in the Corporations Act 2001 and National Consumer Credit Protection Act 2009?
    4. What are the strengths and weaknesses of the National Guarantee Fund, the Financial Claims Scheme and Part 23 of the Superannuation Industry (Supervision) Act 1993?
    5. Are there other examples of compensation schemes of last resort that the Panel should be considering?

    EVALUATION OF A COMPENSATION SCHEME OF LAST RESORT
    85. In response to the Panel’s Issues Paper of 9 September 2016 and Interim Report of 6 December 2016, the Panel received a large number of submissions which supported establishing a compensation scheme of last resort, although there were different views expressed in relation to the scheme’s design. Stakeholders submitted that the current compensation arrangements for consumers were inadequate and that a scheme was important to:
     ensure that consumers who suffer loss from misconduct are compensated;
     build trust and confidence in the current EDR arrangements; and
     ensure trust and confidence in the financial services sector more generally.
    86. Consistent with the view that the existing compensation requirements should be strengthened, the Australian Bankers’ Association (ABA) submitted that it supported establishing a mandatory, prospective compensation fund that covers individuals and small businesses who have received poor financial advice, and have not been paid a determination made by an ASIC approved EDR scheme due to the validated insolvency or wind up of a financial advice business, where all other redress avenues have been exhausted. Further information on the ABA’s proposal is set out later in this section.

    87. The ABA also stated that a scheme should be accompanied by other reforms to reduce the likelihood of unpaid determinations, including:
     a greater professionalisation of financial advice (the Panel notes the Government’s recent reforms to lift the professional, education and ethical standards of financial advisers);
     expanding the availability and coverage of professional indemnity insurance, including run off cover, insolvency, fraud and other misconduct;
     ensuring the scheme is well understood by consumers of financial products so that it is clear it is a last resort scheme, and not intended to cover investment losses; and
     ASIC requiring an annual assurance statement from all AFS licensees that they have met their licence obligations, including compliance with ASIC’s Regulatory Guide 126: Compensation and insurance arrangements for AFS licensees and Regulatory Guide 166: Licensing: Financial requirements.
    88. The Panel also received submissions from stakeholders who held concerns about a compensation scheme of last resort, stating amongst other matters that:
     all taxpayers would be required to subsidise the scheme, as even with risk mitigation strategies, risk would not be fully priced into the market, with market participants and regulators taking on extra risk;
     it would be inequitable to impose the costs associated with a compensation scheme of last resort on compliant financial firms;
     appropriate professional indemnity and capital requirements would reduce the likelihood of unpaid FOS determinations in the first place and these should take priority; and
     any increase in levies or other funding would increase the costs for firms, with many of those costs ultimately borne by consumers.
    89. A number of submissions also referred the Panel to the 2012 report prepared by Mr Richard St. John, Compensation arrangements for consumers of financial services.

    Richard St. John report: Compensation arrangements for consumers of financial services
    In April 2010, Mr Richard St. John was asked by the Australian Government to consider the need for, and costs and benefits of, a statutory compensation scheme for financial services.
    In April 2012, the report was published and it concluded that it would be inappropriate, and possibly counter productive, to introduce a more comprehensive last resort compensation scheme to underpin the current relatively light compensation regime for financial advisers and other providers of financial services. Given the limited regulatory measures to protect retail clients from the risk of licensee insolvency, it was found that it would be inappropriate to require more responsible and financially secure licensees to underwrite the ability of other licensees to meet claims against them for compensation.
    The report made a number of recommendations aimed at strengthening the existing compensation requirements, including:
    • licensees providing additional assurances to ASIC in relation to their professional indemnity insurance cover; and
    • for ASIC to take a more proactive stance on monitoring licensee compliance with compensation requirements.
    In April 2013, the then Australian Government released its response accepting the report’s recommendations.

    90. The Panel is also aware that there are claims that moral hazard issues may arise with the existence of a compensation scheme of last resort. Moral hazard can arise where individuals assume risks as they know someone else is protecting them against possible financial loss.
    91. The introduction of a scheme may, for example, encourage consumers to become complacent about the risks of dealing in the market and induce riskier behaviour by financial firms. Further, it may reduce the incentive for stringent regulation or rigorous administration of the existing compensation arrangements.

    Questions — Evaluation of a compensation scheme of last resort
    6. What are the benefits and costs of establishing a compensation scheme of last resort?
    7. Are there any impediments in the existing regulatory framework to the introduction of a compensation scheme of last resort?
    8. What potential impact would a compensation scheme of last resort have on consumer behaviour in selecting a financial firm or making decisions about financial products?
    9. What potential impact would a compensation scheme of last resort have on the operations of financial firms?
    10. Would the introduction of a compensation scheme of last resort impact on competition in the financial services industry? Would it favour one part of the industry over another?
    11. What flow on implications might be associated with the introduction of a compensation scheme of last resort? How could these be addressed to ensure effective outcomes for users?
    12. What other mechanisms are available to deal with uncompensated consumer losses?
    13. What relevant changes have occurred since the release of Richard St. John’s report, Compensation arrangements for consumers of financial services?

    POTENTIAL DESIGN OF A COMPENSATION SCHEME OF LAST RESORT
    92. The Review’s Terms of Reference require the Panel to make recommendations on the potential design of a compensation scheme of last resort. Some of the potential design features are outlined below.
    Types of claims covered
    Inclusion of small business disputes
    93. The Corporations Act 2001 requires financial services licensees to have dispute resolution and compensation arrangements in place for financial services provided to a retail client in accordance with the Corporations Act 2001. A retail client, relevantly, includes consumers and small businesses. Under the National Consumer Credit Protection Act, licensees must be a member of an approved external dispute resolution scheme and have in place adequate compensation arrangements. As a matter of principle, there are strong policy grounds for small businesses having access to any compensation scheme of last resort.
    Financial advice disputes vs all disputes
    94. Disputes relating to the provision of financial product advice currently make up the largest proportion of unpaid FOS determinations. These are followed by disputes with operators of managed investment schemes and credit providers.
    95. In terms of the types of disputes covered by a compensation scheme of last resort, a broad compensation scheme would provide the greatest possible protection for consumers and small business. However, it would also increase the potential costs for those responsible for funding the scheme, who may then seek to pass those costs on, for example, to their customers and shareholders.
    Accessing the scheme
    Qualifying conditions
    96. Before a claimant can access a compensation scheme of last resort, there is the potential for imposing qualifying conditions. For example, the claimant may have to prove they have received an EDR determination in their favour and the relevant firm (which is a member of the compensation scheme) is insolvent, has stopped trading or has insufficient assets to meet the claims made against it. Claimants may also have to wait for a specified period of time before making a claim or prove they have taken particular steps to satisfy the EDR determination from the firm.
    97. An additional issue is how an individual could access a compensation scheme of last resort where the financial firm is insolvent and unable to defend a matter which is brought before an EDR body. Under the existing EDR scheme arrangements, there is the potential for complaints to be closed early in the process where there is no reasonable prospect of any order for compensation being met.
    Court judgments
    98. If a compensation scheme of last resort was established, it could apply only in relation to unpaid EDR determinations, or it could also apply where court-ordered compensation had not been paid. If a scheme were to include court judgments, it would be necessary to consider whether this should be subject to any restrictions—for example, whether any payments from the scheme should be subject to the monetary limits and compensation caps that apply in the EDR system.
    99. Class action litigation would raise further questions—such as whether claimants with a right to compensation arising from a class action should have access to the scheme at all; whether payments from the scheme should include payments for legal costs or only compensation; and whether litigation funders should be able to recover from the scheme, either directly or indirectly through their contracts with the class of claimants.
    Reviewing an EDR scheme’s determinations
    100. Where an individual has received an EDR determination in their favour, a question arises in relation to whether any compensation scheme of last resort is able to independently review the EDR determination or whether it should simply accept the EDR scheme’s determination of the merits of the dispute.
    101. In the United Kingdom, after an individual has made a claim to the Financial Services Compensation scheme (FSCS), the FSCS investigates and decides for itself, based on its own rules and liability standards, whether an individual should be paid compensation. That is, it is not bound by an EDR determination. For example, in relation to claims made against certain investment businesses, the FSCS may pay compensation “only to the extent that the FSCS considers that the payment of compensation is essential in order to provide the claimant with fair compensation”.
    Funding
    102. Internationally, compensation schemes of last resort in the financial sector are industry funded. However, there is also the possibility of other funding models, such as those which have a degree of government involvement.
    103. Under an industry funding model, there are a variety of ways to allocate the scheme’s cost amongst contributors. For example, the United Kingdom’s FSCS adopts a funding class model to cover its compensation costs. A participant firm’s permissions to conduct activities determine which class, or classes, it belongs to. If a firm is a member of more than one funding class, they are required to contribute to both classes. Each of the relevant funding class has a threshold to try to ensure that firms’ contributions to the FSCS are affordable and sustainable. If compensation and specific costs in a funding class are so high that the threshold is breached, firms in other classes are called upon to contribute.
    104. While grouping firms based on the types of activities they carry on can create incentives for firms to work together at an industry level to improve practices, it can result in levies being subject to high degrees of volatility where those activities are subject to a high number of claims.

    105. By contrast, while a single class funding model may reduce volatility, it raises issues around cross subsidisation as firms in one sector who are operating consistent with their legal obligations are required to subsidise the actions of firms in other sectors who are not.
    106. The Panel notes that the United Kingdom’s Financial Conduct Authority is currently consulting on options for changing the funding of the FSCS and the coverage it provides to consumers, and specific proposals to change rules around the scope and operation of FSCS funding.
    Compensation caps
    107. In compensation schemes of last resort, caps are often placed on the total size of claims that can be paid in order to manage the impact on the scheme from any one event. If any scheme was limited to unpaid EDR determinations, the compensation caps or monetary limits for the EDR scheme could act as limits for the scheme.
    Scheme administration
    108. There are a number of ways that a compensation scheme of last resort could be administered. For example, the scheme could be administered by Government with appropriate legislative backing (similar to the Fair Entitlements Guarantee, as described above).
    109. Alternatively, the scheme could be industry administered with regulatory oversight. For example, an industry administered scheme, including its terms of reference, could be introduced by legislation. Similarly to the current provisions which require particular firms to be a member of an approved EDR scheme, legislation could require particular firms also to be members of a compensation scheme of last resort.
    110. Any compensation scheme of last resort could form a part of the existing industry EDR arrangements, or operate as a stand alone scheme.
    A scheme’s ability to recover compensation
    111. In circumstances where a compensation scheme of last resort makes a payment to a claimant, the scheme may seek to recover this compensation from the firm that failed to satisfy the EDR determination. For example, as described earlier in this section of the Issues Paper, under the Fair Entitlements Guarantee program, once entitlements are paid to the employee, the Commonwealth stands in the shoes of the employee as a subrogated creditor and is entitled to claim in the liquidation and is given priority over other unsecured creditors under the Corporations Act 2001.
    112. A related issue is the role played by ASIC where an EDR scheme member fails to pay a determination. For example, ASIC may have a role in bringing regulatory action against the firm and those who control it.
    Interaction with other compensation schemes
    113. A number of compensation schemes already operate within the financial services sector. For example, the Superannuation Industry (Supervision) Act 1993 provides for compensation dealing with losses from fraudulent conduct or theft in an APRA regulated superannuation fund.
    114. The introduction of a compensation scheme of last resort would raise issues about how the new scheme would interact with existing schemes. It would be important to ensure that consumers knew which scheme to access depending on the circumstances and that firms were making appropriate financial contributions.
    Stakeholder proposals for a compensation scheme of last resort
    115. In response to the Panel’s initial Issues Paper and Interim Report, submissions were received from a number of stakeholders on this issue, with the ABA and FOS providing detailed comments. The Panel has highlighted these proposals to assist stakeholders in responding to design issues, but they do not represent a preferred view of the Panel. A summary of these two proposals is contained below.
    Australian Bankers’ Association proposal
    The ABA supports establishing a mandatory, prospective compensation fund that covers individuals and small businesses who have received poor financial advice, and have not been paid a determination made by an ASIC approved EDR scheme due to the validated insolvency or wind up of the financial advice business, where all other redress avenues have been exhausted.
    However, the ABA believes that managing the risk to consumers of unpaid determinations requires a multifaceted response. The introduction of a last resort compensation scheme must be accompanied by other measures and reforms to reduce the likelihood of unpaid EDR determinations, both to ensure the scheme is truly a last resort, and promote the long term viability and success of a scheme. These measures include reforms relating to professional indemnity insurance, AFS licensing criteria, enhanced enforcement ASIC powers, and the professionalisation of financial advice.
    Australian Bankers’ Association proposal (continued)
    Types of claims covered
    The scheme should cover failures that arise in the context of a relationship where personal advice on Tier 1 products, and/or general advice on Tier 1 products is provided to retail customers. Tier 1 products are all financial products except those listed under Tier 2. Tier 2 products are generally simpler and better understood than Tier 1 products. The failure could relate to Corporations Act 2001 breaches, fraud, negligence, misrepresentation and administrative errors connected with the advice relationship.
    The scheme should cover general advice provided by financial advisers, product manufacturers and robo advisers (who deliver financial advice online using algorithms and technology), as well as personal advice to avoid market distortions and take account of the low level of consumer understanding of the difference between personal and general advice. The scheme is not intended to cover retail bank staff providing retail banking services.
    The scheme should not cover businesses that only provide dealing or arranging services, such as securities dealers or derivatives dealers, nor should it cover research houses that publish reports containing general advice.
    Scheme membership
    The scheme should require all AFS licensees who offer personal financial product advice and certain general advice to a retail client to be a member and contribute to the scheme. The scheme should be mandatory, with compulsion underpinned by a legislative or regulatory requirement.
    Access to the scheme
    There should be a validated insolvency or wind up of the financial advice business, and all other redress avenues should have been exhausted.
    Generally, there would be an expectation that a customer would resort to the financial adviser (and through the financial adviser the professional indemnity insurer), the financial resources of the financial adviser, and would have explored legal enforcement options. Evidence will be required (possibly from a registered liquidator or administrator) that the assets of the financial advice business will not cover the determination.

    Australian Bankers’ Association proposal (continued)
    Funding
    Broadly, the ABA supports a levy structure comprising:
    • a prefunded establishment levy, based on borrowings from industry;
    • prefunded management levies to support the operation of the compensation scheme of last resort and repay establishment levies; and
    • prefunded compensation levies.
    Funding contributions need to be calculated taking into account different advice models, such as general advice representative models, product manufacturers that provide financial advice, and robo advice businesses. The calculation would need to balance appropriate risk weightings with the cost of administering the contributions.
    The introduction of a scheme should work in an integrated way with other regulatory, professional and risk management structures, so as to actively encourage improved practice and professionalism at the level of individual advisers and practices.
    Compensation caps
    The ABA is of the view that the size of disputes and the quantum of compensation awards considered by the scheme should align with or be no greater than that provided by the EDR scheme.
    Scheme administration
    The structure of the scheme should be developed through flexible, industry based processes, with appropriate legislative underpinning to ensure all financial advisers contribute to the scheme. A largely industry based process will ensure the scheme can be established in a timely way, and to enable flexibility to adjust its remit, terms of reference and processes over time.
    The governance arrangements should include:
    • a board, with representation including an independent chair, a legal expert and an equal number of industry and consumer representat
    2 months ago
  • Charles Ponzi created a new topic ' Whistleblower law firm Zuckerman Law' in the forum.
    Zuckerman Law Washington DC Whistleblower Retaliation and Award Law Firm

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    Image of Comey's Testimony Underscores Need for Strong Whistleblower Protections
    Comey’s Testimony Underscores Need for Strong Whistleblower Protections

    By Jason Zuckerman | June 13, 2017
    4

    For me, the most telling moment of former FBI Director Jim Comey’s June 8th testimony occurred early in the hearing, when Mr. Comey choked up as he recalled the White House’s publicly stating that the President had fired him because the “FBI was in disarray.”

    This emotional display seemed out of character for Mr. Comey. While U.S. Attorney for the Southern District of New York, he successfully prosecuted organized crime. As Deputy Attorney General during the George W. Bush Administration, Mr. Comey refused to sign an extension of the warrantless domestic spying program and defied the White House Counsel and Chief of Staff. Mr. Comey can fairly be described as a “tough guy.” So how did he go from leading the most powerful law-enforcement agency worldwide to being labeled a “leaking liar”?

    To an experienced whistleblower advocate, Mr. Comey’s predicament is not surprising. Mr. Comey’s experience, unfortunately, is like those of many whistleblowers I have represented over more than a decade. President Trump promised to bring a business approach to government—and his retaliation against Mr. Comey is straight out of the corporate defense playbook. Corporations typically take the following steps of escalating retaliation to silence whistleblowers:
    Intimidate and Silence the Whistleblower

    In his June 8th testimony, Mr. Comey described in detail how the President had asked him to drop the investigation of Michael Flynn and had conditioned Mr. Comey’s job on “loyalty” to him. Senator Rubio expressed skepticism about Mr. Comey’s feeling intimidated by the President and blamed Mr. Comey for not pushing back. But that type of Monday-morning quarterbacking ignored the power dynamics of the conversation. Mr. Comey wanted to keep his job and was understandably reluctant to accuse the President of obstructing an investigation.

    Whistleblowers often confront this intimidation tactic in the workplace. A supervisor or senior company official tells the whistleblower to “let it go,” “mind your own business,” or learn to be a “team player.” And in some cases, the whistleblower is told to shut up if he or she wants to remain employed. Threats of retaliation, whether express or implicit, are powerful tools to silence a whistleblower. When a company officer or senior manager orders a subordinate to do something unlawful or to cover up unlawful conduct, holding firm to one’s ethical values is not an easy avenue to follow. As Mr. Comey learned, refusing to carry out an unlawful order may be career suicide, at least in the short term.
    Retaliate Swiftly and Severely Against the Whistleblower

    Initially, the bizarre method of firing Mr. Comey seemed surprising for a President who perfected the art of firing on his reality show, The Apprentice. Mr. Comey was not given an opportunity to resign; he was not even notified that he had been fired. But now that we know about the President’s real motive for firing Mr. Comey, it’s clear that his tack was deliberate.

    Mr. Comey learned of his firing while addressing FBI agents at a Los Angeles field office when the announcement flashed across a television screen. The White House had announced Mr. Comey’s firing without notifying Mr. Comey himself. President Trump sent a loud and clear message to Mr. Comey and to every senior government official about the consequence of disloyalty.

    In the corporate workplace, whistleblower-employees are similarly humiliated as a warning to their colleagues. A whistleblower may be escorted out of the office with security guards while other employees are present, pulled out of a meeting and fired on the spot in front of colleagues, or simply fired via text message. When a corporation fires a whistleblower in this humiliating fashion, it ensures that all other employees know the consequence of whistleblowing.
    Badmouth the Whistleblower and Their Work History

    Firing Mr. Comey in a humiliating and offensive manner served only as phase one. President Trump then defamed Mr. Comey and asserted that he fired him because of chaos within the FBI, as well as the alleged loss of confidence in Mr. Comey among FBI agents.

    These statements stand in stark contrast to the President’s repeated, public praise of Mr. Comey before Mr. Comey refused to comply with the President’s “hope” that Mr. Comey drop the investigation of Flynn. Indeed, if President Trump believed that Mr. Comey’s leadership caused chaos within the FBI, then why did the President invite Mr. Comey to continue to serve as FBI Director?

    This patent distortion of Mr. Comey’s performance record is an all-too-common experience of whistleblowers. Prior to blowing the whistle, they receive strong performance evaluations and bonuses; they are valued members of the team. But once they blow the whistle and refuse to drop their concerns, they are suddenly deemed incompetent and unqualified for their position. And when a company realizes that it lacks any existing basis to fire the whistleblower, it creates one by subjecting the whistleblower to heightened scrutiny and setting the whistleblower up to fail. For example, a company might place the whistleblower on a performance-improvement plan that contains impossible objectives, and then fire the whistleblower for not meeting those unattainable goals.

    This tactic may backfire and enable a whistleblower to ultimately prevail at trial, but the damage to the whistleblower’s reputation is permanent. Prospective employers are reluctant to hire someone who previously fired for poor performance and are especially reluctant to hire a whistleblower. Many whistleblowers never find comparable employment and must accept lower-level positions, earning a fraction of what they did before their wrongful termination.
    Attack the Whistleblower’s Credibility

    Apparently, President Trump has no evidence to rebut Mr. Comey’s vivid account of the President’s alleged attempts to obstruct justice. So President Trump called him a “liar.”

    Desperate to defend themselves at all costs, corporations frequently employ this tactic—labeling the whistleblower a disgruntled former employee who will say anything to win his or her case. So far, this is not working well for President Trump, whose accusation merely serves to shine a spotlight on his own questionable credibility.

    Attacking a whistleblower’s credibility is an effective and pernicious tactic in many whistleblower cases. Once expelled from a company, a whistleblower is marginalized and alienated from former coworkers. The key witnesses continue to work at the company and, fearing retaliation, are reluctant to corroborate the whistleblower’s testimony. Though whistleblowers may still prevail (for example, by using documentary evidence), the attack on a whistleblower’s credibility is odious because the company fired the whistleblower precisely for having integrity.
    Create a Post-Hoc Justification for Firing the Whistleblower

    Prior to firing Mr. Comey, President Trump papered the file with a post-hoc justification for the firing. After the President decided to fire Mr. Comey, Deputy Attorney General Rod Rosenstein was tasked with drafting a memorandum to the Attorney General outlining concerns about Mr. Comey’s performance. Most of those concerns focus on Mr. Comey’s statements about the investigation of former Secretary of State Hillary Clinton’s use of a private email server. Surely President Trump knew of those public statements when he repeatedly asked Mr. Comey to remain as FBI Director (as long as he could pledge “loyalty” and drop the Flynn investigation).

    In this case, the White House’s initial reliance on the Rosenstein memo as the basis for the decision to fire Mr. Comey backfired because President Trump told NBC anchor Lester Holt that he had decided to fire Mr. Comey regardless of the memo. In many whistleblower-retaliation cases, however, these types of pretextual memos may be persuasive. Some judges even rely on such memos, which mask the real reason for a firing or other adverse action, to grant the company summary judgment and deny the whistleblower a jury trial.

    On the other hand, creating a post-hoc justification for a retaliatory adverse action sometimes misfires by providing strong evidence of pretext and spurring a jury to award punitive damages. For instance, a former in-house counsel at Bio-Rad Laboratories recently secured more than $11 million in damages at trial in a Sarbanes-Oxley whistleblower-retaliation case. The jury awarded $5 million in punitive damages because Bio-Rad had backdated a negative performance evaluation of the whistleblower that the company drafted after it fired him.
    Focus on the Whistleblower’s Alleged Misconduct

    To distract attention from what may be obstruction of justice, President Trump and his attorney have focused on Mr. Comey’s leak to the press and have alleged that the leak was unlawful. This accusation seems frivolous because Mr. Comey did not leak classified information, grand jury material, or other sensitive information. Instead, he revealed that President Trump had conditioned his continued service as FBI Director on his agreeing to drop the investigation of Flynn. As a private citizen, Mr. Comey has a constitutional right to blow the whistle to the media about this matter of public concern. Mr. Comey did not reveal to the media information from FBI investigative files or classified information. Yet President Trump and his allies compare Mr. Comey to leakers who illegally disclosed classified information. This is an appalling accusation against the former head of a law-enforcement agency.

    But this is another standard corporate defense tactic in whistleblower cases. To divert attention from the wrongdoing that the whistleblower exposed, the company uses its substantial resources to dig up dirt on the whistleblower. The company or its outside counsel examines the whistleblower’s timesheets and expense reports with a fine-tooth comb to find any discrepancy, reviews every email to find some inappropriate communication, and places all of the whistleblower’s work under a microscope to find any shortcoming.
    Sue the Whistleblower and Initiate a Retaliatory Investigation

    Firing Comey, concocting a pretextual basis for the firing, and branding him a leaking liar apparently was not sufficient retaliation. So shortly after his testimony, President Trump’s personal attorney announced his intention to sue Mr. Comey and/or file a complaint with the Department of Justice Office of Inspector General (OIG). I am skeptical that a civil action against Mr. Comey or an OIG complaint poses any real legal threat to Mr. Comey. To the contrary, such a complaint would likely pose a greater risk for President Trump, including potential counterclaims and the risk of being deposed or questioned under oath by the OIG.

    The misuse of legal process against corporate whistleblowers, however, is an especially powerful form of retaliation in that it can dissuade a whistleblower from pursuing their claims. When I defend against this form of abuse of process, I am always struck at the seemingly endless resources that the company will spend to prosecute claims lacking any merit or value. Fortunately, these claims can go awry by spawning additional retaliation claims under the whistleblower protection laws. And a jury can punish the employer for subjecting the whistleblower to abuse of process.
    Why Whistleblowers Deserve Strong Legal Protection

    In light of Mr. Comey’s distinguished record, he will likely bounce back and rebuild his career. But most corporate whistleblowers never fully recover. Too often they find their careers and reputations destroyed. Even when whistleblowers obtain monetary relief at trial, they are usually blacklisted from comparable positions, especially if they work in a small industry.

    Mr. Comey’s experience as a whistleblower is a stark reminder of what can happen to any employee who is pressured by a powerful superior to engage in unlawful conduct or to cover up wrongdoing. When intimidation tactics succeed, the public suffers. The company could be covering up threats to public health or safety, environmental contamination, financial fraud, defective products, or any other conceivable harmful wrongdoing.

    Courageous whistleblowers who put their jobs on the line deserve strong protection. As Congress embarks on a mission to gut “job killing” agencies, let us hope it will spare the very limited resources that are spent enforcing whistleblower-protection laws. Without such a large backlog of whistleblower cases, OSHA could have, for example, addressed the complaints of Wells Fargo whistleblowers years ago, potentially curbing or halting the bank’s defrauding of its customers. And Congress should consider filling the gaps in existing whistleblower laws. If Mr. Comey “lacked the presence of mind” to explicitly reject the President’s improper demand for him to drop the Flynn investigation, then surely most employees would also be reluctant to refuse an order to commit an unethical or unlawful act.

    After Mr. Comey’s testimony, Speaker Ryan pointed out that “[t]he President’s new at this. He’s new to government.” Mr. Comey’s testimony should be a lesson for the President about how to treat whistleblowers. To make America great again, the President should abandon the Rambo litigation tactics that apparently served him well in New York real-estate disputes, and instead view whistleblowers as allies, not as enemies. As Tom Devine of the Government Accountability Project and I argue in an article in the Emory Corporate Governance and Accountability Review, Draining the Swamp Requires Robust Whistleblower Protections and Incentives.

    Jason Zuckerman represents whistleblowers nationwide in whistleblower rewards and whistleblower retaliation claims. Recently Matt Stock and Zuckerman issued an ebook titled SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.



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    Categories: Corporate Whistleblower, federal whistleblower protections, Whistleblower Protection, Whistleblower Protection Law, Zuckerman Law

    Tags: Corporate whistleblower protection, federal whistleblower protection, whistleblower protection, whistleblower protection laws
    About the author
    Avatar of Jason Zuckerman

    Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.

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    2 months ago
  • Charles Ponzi created a new topic ' APRA's new laws on Bank Directors' in the forum.
    New laws could punish 'honest if mistaken judgments': Harrison Young

    8 June 2017

    Clancy Yeates

    www.smh.com.au/business/banking-and-fina...20170608-gwn8ls.html

    The government's plan to beef up the banking regulator's powers could see executives facing stiff penalties for "honest, if mistaken, risk judgments", Commonwealth Bank director Harrison Young says.

    Amid intense debate about how banks can improve their battered public reputations, Mr Young on Thursday weighed in on the new executive accountability facing banks which will give the regulator new powers to ban senior bankers.

    It's a very difficult thing to put into place and I'm not sure how it will work," Mr Young said of the new powers

    given to APRA.

    "Language in the Treasurer's announcement suggested bankers, not just the bank, but individual bankers,

    starting with the CEO and down into the organisation, could be punished for bad judgment regarding risk."

    Mr Young said that was very different from punishing misconduct in dealing with individual customers.

    "It seems to me you're sort of mixing up what seem like criminal penalties with honest, if mistaken, risk

    judgments."

    The new regime, announced in the budget, will require the Australian Prudential Regulation Authority to approve very senior appointments and influence how they are paid.

    Treasurer Scott Morrison has said the regulator will also have the power to act more quickly against executives who are "found guilty of crimes or caught in illicit activities where it affects their ability to do their job with competence, honesty, or integrity.”

    Mr Young said that if the laws were intended to only capture flagrantly stupid choices such as some banks made

    leading up to the global financial crisis, that might be acceptable, but it would be very difficult to write

    regulations that made that clear.

    Speaking later, he said that "risk management in banks is a team sport. It's like a continuous conversation, with individuals constructively challenging each other. It would be hard to make that sort of process work if you were assigning blame for bad decisions."

    The comments came as a former senior Barclays banker highlighted mortgage pricing as another dimension of the debate about banks' ethics.

    Steve Weston, a former head of mortgages at Barclays who now chairs a local peer-to-peer lender rival to banks, said Australian banks' practice of charging new home loan customers lower interest rates than many existing clients is the type of behaviour that will increasingly fall short of society's expectations of the financial sector.

    Steve Weston, OurMoneyMarket.

    "There are things that we are doing in Australia today, that if I went back to my former colleagues in the UK and said, 'How do you feel about these intro rates, how do you feel about differential pricing on standard variable mortgages between old customers and new', and they would go 'What? You're kidding,'" he said at a conference on banking and finance ethics.

    Mr Weston, who now chairs a non-bank competitor in OurMoneyMarket, questioned if that was an ethical practice on the part of banks.

    "How do [you] look customers in the eye and go, 'Hold on, guess what, this is what happens for loyalty – you pay

    more than the new person'."

    The comparison with the UK – where banks had to be rescued by the taxpayer during the global financial crisis, and where scandals uncovered have been more widespread than Australia – was played down by the chief executive of Westpac-owned BT Financial Group, Brad Cooper.

    Mr Cooper pointed out that Australian banks had not been embroiled in the same "mis-selling" scandals as banks in the UK.

    "Yes, we've still got things to do, but I think we're at very different starting points as well here, compared to where the UK was," Mr Cooper said.

    Another difference between the two markets is that most UK home loans are fixed-rate products, which are more difficult to renegotiate mid-way through a loan term.

    Mr Weston, who also advises banks on conduct issues, said some senior bankers realised the risks associated with some behaviour, but there was no incentive to be the "first mover". This idea – in economic jargon it is known as a "collective action problem" – is a key focus among regulators.

    Australian Securities and Investments Commission deputy chair Peter Kell said this tendency, whereby no bank wanted to move first to stamp out behaviour that might be questionable but was also profitable, was "pervasive" in finance.

    "That has a corrosive impact on outcomes for consumers and for people's adherence to basic ethical standards," Mr Kell said at the same conference.

    Mr Weston said mortgages were just one example where banks priced products in a way that was hard to justify.

    He also pointed to their use of "introductory rates" – where banks offer an attractive deal for a limited time,

    before customers revert to being more profitable for the lender.

    Several major local banks, for instance, have in recent months cut interest rates paid to long-term savers while boosting introductory rates, which are prominently advertised but paid to fewer people.




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    2 months ago
  • The "Reserve Bank documents collusion in the antitrust trainwreck" list of lawyers in the Amex Settlement as at February 2009 is here at the back. See link below to Commonwealth Bank David Murray's review.

    Judge Garaufis found Amex misrepresented the RBA, Gary Friedman pointe at Keila Ravelo, Ravelo points at Feliz's scam litigation service company. The Victorian legal Services Board blames a landlord who says he was evicted, except the real landlord points his finger at scam litigation service company operators in Brighton because they boasted about the information they got from that foreign board.

    fsi.gov.au/files/2014/08/Supported_Resid...Action_Group_Inc.pdf

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    2 months ago

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