Bank of America, BAT, TCW, Total, UBS, CIBC in Court News

Bank of America Corp. has held settlement negotiations with some states over home foreclosures separately from talks with a larger group of state and federal officials, two people familiar with the matter said.

The proposed deal would give the bank liability releases from state and federal claims over its mortgage practices in exchange for reducing loan principals to help struggling homeowners, said the people, who didn’t want to be identified because the discussions aren’t public.

State and federal officials are negotiating a settlement with the five largest mortgage servicers, including Bank of America, over their servicing and foreclosure practices. Attorneys general from all 50 states began investigating the practices last year.

Bank of America, in its separate negotiations, has offered to fund more principal writedowns than what is being discussed in the larger settlement talks, one of the people said. The bank is seeking a blanket liability release that would be broader than what would be available for the other banks involved in the negotiations, the person said.

Other attorneys general were unaware of the separate talks with Bank of America, the person said.

Rick Simon, a Bank of America spokesman, declined to comment.

Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, declined to comment. Miller is leading negotiations for the 50 state attorneys general.

The other banks involved in the broader talks with state and federal officials are JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Ally Financial Inc. (ALLY)

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Bank of the West Suit Against UBS Over CDO Claims Is Dismissed

Bank of the West’s lawsuit claiming UBS AG designed a collateralized debt obligation fund to insure against its own subprime investment losses was dismissed.

Bank of the West, in a complaint filed in state court in San Francisco, said UBS created the CDO in 2007 to induce investments from other financial institutions to insure against the losses. That case was dismissed in November, according to a court filing.

Jim Cole, a spokesman for Bank of the West, said yesterday in an e-mail that the lawsuit was settled.

Christiaan Brakman, a spokesman for Zurich-based UBS, declined to comment on the case.

Bank of the West, based in San Francisco, is a unit of BancWest Corp., the U.S. consumer-banking unit of BNP Paribas SA. (BNP) BNP Paribas is Europe’s largest lender by assets.

The case is Bank of the West v. UBS, CGC-09-489590, Superior Court of California (San Francisco).

BAT Seeks Australia Documents for Fight Against Packaging

British American Tobacco Plc (BATS) urged an Australian appeal court panel to order the release of government documents to help it fight a proposed law to remove all manufacturers’ markings from cigarette packs.

The Dunhill maker needs to deploy the documents “in its efforts to persuade members of parliament that the legislation should not be passed,” Allan Myers, British American Tobacco’s lawyer, told the three-judge panel in Melbourne yesterday. A debate on the law is scheduled for next month, he said.

The Australian proposal is the first in the world aimed at banning logos and color variations on cigarette packages. New Zealand, Canada and the U.K. had considered the move but dropped it out of concern it would be illegal, British American Tobacco said. The proposal may infringe international trademark and intellectual property laws, said the producer of Pall Mall and Australia’s best-selling cigarette brand, Winfield.

Australia had considered plain packaging for cigarettes in the mid 1990s and on Dec. 14, 1995, the government received a 13-page report from a commission that studied the proposal, Myers said. The government released a summary and in 1997 it also issued a response to a separate Senate report, he said.

The background documents that led to the government’s decision not to go ahead with the earlier plan weren’t released and the government says they’re privileged and must remain confidential.

The judges reserved a decision and both the company and the government agreed to provide additional written submissions before Aug. 10.

The case is British American Tobacco Australia Ltd. v. Secretary, Department of Health and Aging. VID314/2011. Federal Court of Australia (Melbourne).

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Stanford Liquidators Seek $20 Million Held in U.K.

Stanford International Bank’s liquidators are seeking the release of $20 million frozen in the U.K. to fund their efforts to recover other assets for victims of R. Allen Stanford’s alleged Ponzi scheme.

Grant Thornton LLP, the accounting firm that replaced Vantis Plc as liquidator of the Antigua-based bank in May, needs the cash to cover a legal claim as well as the marketing and sale of the bank’s real estate assets, its lawyers told a London court yesterday.

The U.K. Serious Fraud Office wants the $100 million in total U.K. assets held by the bank, most of which is invested in hedge funds, to remain untouched and eventually be handed over to the U.S. Justice Department.

Stanford International Bank’s U.K. assets have been the subject of a legal battle between Antiguan liquidators and U.S. authorities seeking to return money to investors. Judge Elizabeth Gloster will decide whether the $20 million can be released by tomorrow.

Andrew Mitchell, a lawyer representing the SFO, said the agency made an application to “repatriate” the assets to the U.S.

Without the U.K. money, Grant Thornton would have to rely on a hedge fund to pay for its proposed legal claim, the firm’s attorney Andrew Bodnar said. Under the deal, the hedge fund would then claim up to $74 million of any money recovered, Bodnar said, without giving further details or naming the fund.

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Trials/Appeals

TCW Employee Says She Smuggled External Hard Drive in Bra

A TCW Group Inc. vice president said she smuggled an external hard drive in her bra to a managing director at the firm the day he was put on leave together with investment chief Jeffrey Gundlach and escorted from the building.

Dolores Talamantes testified yesterday at a trial that pits TCW, the Los Angeles-based unit of Societe Generale, against Gundlach, ex-managing director Cris Santa Ana and two other former employees who joined Gundlach’s DoubleLine Capital LP, the asset-management firm he formed within weeks after TCW fired him in December 2009.

TCW alleges that Santa Ana downloaded confidential and proprietary information on the hard drive in 2009 as he and Gundlach plotted to start DoubleLine. The former TCW employees deny having used the information at DoubleLine and claim TCW fired them to avoid having to pay hundreds of millions of dollars in performance fees to Gundlach’s group.

Talamantes said that she had been with other TCW employees from Gundlach’s group at a bar/restaurant downstairs from the firm’s office in downtown Los Angeles on Dec. 4, 2009, the day Gundlach was relieved of his duties. She said she had gone up to the office around 6 p.m. and ran into another employee, Melissa Conn, who was holding the hard drive.

“I said ‘give it to me’ and stuffed it in my bra,” Talamantes told jurors in Los Angeles state court.

Conn testified earlier yesterday that she had taken the hard drive from Santa Ana’s desk around that time and put it in her purse and that she was uncertain whether she should take it from the trading floor because it might contain TCW data as well as Santa Ana’s private files. Conn had also been at Magnolia, the restaurant downstairs, earlier that evening before going back up to the office, she said.

After she found Santa Ana, who had been escorted from the office in the afternoon, at Magnolia, Talamantes told him she had something for him and they went to his car where she gave him the hard drive, she testified.

TCW said Gundlach, Santa Ana and the others were fired because they started stealing trade secrets and confidential information, including client portfolio information, in September 2009. TCW alleges Gundlach wouldn’t have been able to set up DoubleLine as quickly as he did without its proprietary information.

Gundlach, whose group managed more than half of TCW’s $110 billion under management, says TCW owns him about $500 million in management and performance fees for the distressed-asset funds he started in 2008 and that went “through the roof.”

The case is Trust Co. of the West v. Gundlach, BC429385, California Superior Court, Los Angeles County.

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New Suits

Bank of America Sued by Investors Over Mortgage Securities

Bank of America Corp., which is seeking approval for an $8.5 billion mortgage-bond settlement, was sued by investors that want the bank to buy back loans underlying their securities.

Bank of America must buy back the loans because its Countrywide Financial unit breached representations and warranties about them, Walnut Place LLC and related entities said in a complaint filed yesterday in New York State Supreme Court.

The lawsuit comes as Bank of America is seeking court approval to pay $8.5 billion to resolve claims from mortgage investors and avoid repurchasing loans packaged into bonds by Countrywide.

Walnut Place has “serious concerns about the adequacy of the settlement and the conflicts of interest of the parties that negotiated it,” the company said in the complaint. “Countrywide and Bank of America agreed to pay only $8.5 billion as a settlement of claims that are worth many times that amount.”

Walnut Place previously sued Bank of America over a different trust that holds mortgage loans and issued securities to investors.

Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on the new complaint.

The case is Walnut Place LLC v. Countrywide Home Loans Inc, 652146-2011, New York State Supreme Court (Manhattan).

Total Chief Faces Trial in Iraq Oil-for-Food Corruption Case

Total SA (FP) and its Chief Executive Officer Christophe de Margerie will stand trial in Paris over alleged wrongdoings regarding Iraq’s oil-for-food program during Saddam Hussein’s rule, a French judicial official said.

Total is accused of bribing foreign nationals, said the official at the Paris prosecutors’ office, declining to be named in line with internal policy.

In the case filed last week, the Total CEO and 18 other people, including businessmen, former diplomats, a former politician and a journalist, will stand trial at an unspecified date, the judicial official said.

“We are confident about the trial’s outcome and that Total will be cleared of these allegations and the charges will be dropped,” the Paris-based company said in an e-mailed statement.

The case centers on claims that some people received oil vouchers in exchange for lobbying to loosen sanctions on Saddam Hussein’s regime, and that employees of Total bought that oil. In 2006, De Margerie was placed under investigation over possible violations under the oil-for-food program, which allowed Iraq to sell a certain amount of crude and spend the proceeds on humanitarian goods.

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Verdicts/Settlement

Ex-UBS Client Greeley Pleads Guilty to Hiding $13 Million

A former UBS AG (UBSN) client pleaded guilty to filing a false U.S. tax return that concealed more than $13 million in two Swiss accounts, according to the Justice Department.

Robert E. Greeley admitted in federal court yesterday in San Francisco that he filed a tax return in 2008 that failed to disclose two UBS accounts set up in the names of Cayman Islands entities.

U.S. District Judge Charles Breyer set Greeley’s sentencing for Nov. 9. Greeley agreed to pay a civil penalty of $6.8 million for failing to file a Report of Foreign Bank and Financial Accounts form.

Greeley, a resident of San Francisco, was a client of former UBS banker Renzo Gadola, who pleaded guilty Dec. 22 in federal court in Miami.

Greeley is one of more than two dozen former UBS clients accused of tax crimes since 2007. Zurich-based UBS avoided U.S. prosecution in February 2009 by paying $780 million, turning over the names of U.S. account holders and saying it helped Americans hide assets from the Internal Revenue Service.

The case is U.S. v. Greeley, 11-cr-374, U.S. District Court, Northern District of California (San Francisco).

Ex-CIBC Employees Suit Tentatively Settled for $10.2 Million

Canadian Imperial Bank of Commerce and its insurers tentatively agreed to pay $10.2 million to settle a 2005 U.S. lawsuit filed by two former employees over a money-losing company investment fund, according to court papers.

In a Delaware Chancery Court complaint, James Forsythe and Alan Tesche contended the bank failed to properly oversee the $561 million CIBC Employee Private Equity Fund (U.S.) Inc.

“The parties agree that the settlement consideration constitutes fair, adequate and reasonable consideration for the settlement of all claims,” lawyers for the employees and the bank said in court documents. Judge J. Travis Laster will rule on fairness of the agreement at a hearing in Wilmington Oct. 26, according to an order signed yesterday.

The lawsuit alleged that Toronto-based CIBC officials wasted millions due to “willful and wanton lack of supervision of the fund’s management.” The company reported almost $12 billion in revenue last fiscal year.

The settlement money, minus as much as $3 million in plaintiffs’ legal fees and expenses, will be deposited in the fund, court papers show.

The case is Forsythe v. CIBC, CA1091-N, Delaware Chancery Court (Wilmington).

Playboy Founder’s Son-in-Law Settles SEC Inside-Trading Suit

The son-in-law of Playboy magazine founder Hugh Hefner settled allegations of insider trading in Playboy stock, agreeing to resolve a lawsuit by the U.S. Securities and Exchange Commission for $168,352.

William A. Marovitz, who is married to former Playboy Enterprises Inc. Chief Executive Officer Christie Hefner, made $100,952 on the trades, according to the SEC complaint filed yesterday in federal court in Chicago.

“Despite instructions from his wife that he should not trade in shares of Playboy and a warning from the general counsel of Playboy about his buying or selling Playboy stock, Marovitz bought and sold shares of Playboy in his own brokerage accounts between 2004 and 2009,” the SEC said.

An attorney and former Illinois state senator, Marovitz, 66, has been married to Hefner since 1995, according to the complaint. Hefner led Chicago-based Playboy from 1988 to 2009.

Before her departure, Playboy had been negotiating its possible sale to New York-based Iconix Brand Group Inc. Hefner met with Iconix CEO Neil Cole in October and December 2008 and continued to represent Playboy in the talks after stepping down, the SEC alleged.

“Mr. Marovitz has no comment on the complaint or the settlement agreement,” his attorney, Jim Streicker of Chicago, said in a telephone interview. “He lost substantial sums of money on his investments in Playboy over the years,” he said.

While Hefner’s husband didn’t admit or deny the SEC’s allegations, he consented to a court order barring him from further violation of the SEC’s regulations, according to the commission’s statement. The settlement is still subject to court approval.

The case is Securities and Exchange Commission v. Marovitz, 11cv5259, U.S. District Court, Northern District of Illinois (Chicago).

New Jersey Doctors’ Group Loses Health-Care Law Appeal

A U.S. appeals court rejected a bid by group of New Jersey doctors to reinstate their lawsuit challenging the federal health-insurance overhaul.

New Jersey Physicians Inc., a nonprofit group, and a patient identified only as “Patient Roe” failed to adequately plead a concrete or actual injury, the U.S. Court of Appeals in Philadelphia ruled yesterday. The ruling affirms a lower-court decision tossing the case in December.

“The plaintiffs have not met their burden in pleading facts that establish the requisite injury in fact and therefore fail to demonstrate standing,” the three-member appeals panel said in a 15-page opinion.

The nonprofit sued in March 2010, along with Mario Criscito, a New Jersey doctor affiliated with the group, and Patient Roe challenging the Patient Protection and Affordable Care Act’s requirement that citizens purchase insurance. The entire act is unconstitutional because the individual mandate exceeded Congress’s authority, the group claimed in the complaint.

The ruling is a “minor setback,” Robert J. Conroy, a lawyer for the group, said in a phone interview yesterday. The nonprofit has 90 days to decide whether to re-file its complaint or petition the Supreme Court, he said.

The law, intended to create the first near-universal U.S. health-care coverage program, bars insurers from rejecting coverage for people who are already sick and from imposing limits on lifetime costs. It also requires almost every American resident to have health insurance starting in 2014 or to pay a tax penalty.

The case is New Jersey Physicians Inc. v. President of the U.S., 10-4600, 3rd U.S. Circuit Court of Appeals (Philadelphia).

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To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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