Cybersecurity, BofA Accord, MF Global: Compliance

The U.S. Securities and Exchange Commission will conduct examinations of more than 50 registered investment advisers to assess “cybersecurity preparedness.”

In an announcement on its website, the agency said its Office of Compliance Inspections and Examinations will assess whether registered broker-dealers and investment advisers conduct periodic risk assessments, have chief information security officers and maintain cybersecurity incident insurance.

The announcement follows an SEC roundtable discussion last month on the exposure of stock exchanges, brokerages and other financial firms to cyber-attacks.

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In the Courts

BofA Reaches $950 Million Accord on FGIC-Backed Mortgage Bonds

Bank of America Corp. is paying $950 million to settle claims that its Countrywide unit pooled faulty mortgages into securities that helped hobble Financial Guaranty Insurance Co. and saddled buyers with losses.

The accords resolve litigation with FGIC and outstanding and potential claims that the lender is required to repurchase defective home loans backing the bonds because they failed to match their promised quality, Bank of America said yesterday in a statement. The second-largest U.S. lender entered into the deals with FGIC, which guaranteed the debt, and Bank of New York Mellon Corp., the trustee for the securities.

Chief Executive Officer Brian T. Moynihan has committed more than $50 billion to resolve disputes with regulators and investors over foreclosures and shoddy mortgages. The latest agreement reimburses FGIC and investors in nine bond deals tied to home-equity loans made by Countrywide -- which the bank bought in 2008 -- including Fir Tree Partners, a $12 billion hedge fund. Fir Tree said in a separate statement that it helped structure the accord.

The deal, announced yesterday, differs from previous settlements between lenders and bond insurers over bad home loans in that it offers cash directly to mortgage-bond investors. It also veers from previous multibillion-dollar accords between banks and investor groups because it doesn’t require court approval, so the money will flow almost immediately to the bondholders.

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MF Global Judge Narrows Customer Suit Alleging Fraud Claims

MF Global Holdings Ltd.’s independent directors won dismissal of some claims, including fraud and violations of New York business law, in a lawsuit brought by a customer of the defunct brokerage company.

Claims against J.C. Flowers & Co. tied to the conduct of former MF Global Chairman Jon Corzine also were thrown out yesterday by U.S. District Judge Victor Marrero in Manhattan, who previously narrowed claims in a related suit against Corzine.

“We are generally pleased with the decision, as it keeps the core claims against Jon Corzine and other MF Global executives intact,” Edward Pinter, a lawyer for plaintiff Sapere CTA Fund LLP, said in a phone interview. “We do remain confident that Corzine and the other defendants will be held accountable for their acts.”

MF Global filed for bankruptcy on Oct. 31, 2011, after a $6.3 billion bet on bonds of some of Europe’s most indebted nations. Customers alleged in lawsuits against Corzine and other former executives that more than $1.6 billion that should have been segregated was transferred to other parts of the company during a liquidity crisis.

Sapere was the single largest commodities customer affected by New York-based MF Global’s collapse, losing hundreds of millions of dollars, Pinter said.

Steven Goldberg, a spokesman for Corzine at Sard Verbinnen & Co., said he had no immediate comment on Marrero’s rulings.

The case is In re MF Global Holdings Limited Investment Litigation 11-cv-07866, U.S. District Court, Southern District of New York (Manhattan).

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Compliance Action

Bridgestone Executives Indicted for Auto Parts Price-Fixing

One current Bridgestone Corp. (5108) executive and two who formerly worked for the Japanese tire company were indicted by a grand jury in Cleveland and accused of conspiring to fix auto parts prices. One of the former executives, Yusuke Shimasaki, yesterday pleaded guilty, agreeing to serve 18 months in jail, according to a statement by the U.S. Justice Department.

The charges stem from a federal price-fixing investigation in the auto-parts industry. According to the Justice Department, that probe has netted more than $2.29 billion in fines. Additionally, 26 companies have either pleaded guilty or agreed to do so, the department said.

Toyo Tire & Rubber Co. (5105) agreed to plead guilty and pay a $120 million fine for similar charges in November. Mitsubishi Electric Corp. (6503), Hitachi Automotive Systems and seven other Japanese companies in September agreed to pay $740 million in fines for conspiring to fix parts prices for companies including General Motors Co. (GM), Ford Motor (F) Co. and Chrysler Group LLC.

The Bridgestone executives are accused of taking part in a scheme to allocate sales and fix prices for automotive anti-vibration rubber products, used in suspension systems and engine mounts, according to a single-count indictment charging them with conspiracy to restrain trade.

Bridgestone said it has been cooperating with the Justice Department’s investigation.

The case is U.S. v. Ryuto, 14-cr-138, U.S. District Court, Northern District of Ohio (Toledo).

To contact the reporter on this story: Ellen Rosen in New York at

To contact the editors responsible for this story: Michael Hytha at Charles Carter, Stephen Farr

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