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Financial
Wall Street Fine Tracker NEW YORK - In 2002 companies have pegged losses on factors out of their control. But when many financial services firms add up their books, they'll find red ink leading right back to them. So far this year, publicly held banks, brokers and lenders have had to pay more than $2.9 billion in major regulatory fines and court settlements. That's enough to buy 108 different companies on the S&P 500. A function of judicial schedule and bad business, the 2002 fine/settlement ledger is nearing $3 billion, ten times more than 2001. Sifting through U.S. Securities and Exchange Commission (SEC) enforcement actions, National Association of Securities Dealers (NASD) penalties, Federal Trade Commission (FTC) notices and class action settlements, we've pulled together the fines and settlements of $1 million or more handed down to public financial services companies over the past two years. Most settlements come with a provision--the assessed institution will neither admit nor deny the allegations. Regardless, the institutions are learning the hard way that the business of making money from money can be costly. A recent $262 million class action settlement by the Prudential Securities unit of Prudential Financial (nyse: PRU - news - people ) does not show up in the totals. That levy for unauthorized stockbroker trades, assessed by a court in Marion County, Ohio, is being appealed. If there are any actions missing from this list, please write and we will tack them on.
Date | Company | AmountDec. 30 | U.S. Bancorp | $32.5 millionFollowing the Dec. 20 settlement-in-principle by ten major investment banks, the Piper Jaffray unit of U.S. Bancorp (nyse: USB - news - people ) settled with state and national securities regulators.Dec. 20 | Bear Stearns, Credit Suisse Group, Deutsche Bank, Goldman Sachs, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Citigroup, UBS | $1.335 billionFollowing a $100 million fine for Merrill Lynch (nyse: MER - news - people ), national and state securities regulators announced settlement terms and figures for the year long investigation into Wall St. business practices. The agreement includes fines for relief, funds for independent research, and monies for investor education. Salomon Smith Barney, a unit of Citigroup (nyse: C - news - people ), will pay $400 million. Credit Suisse First Boston, a unit of Credit Suisse Group (nyse: CSR - news - people ), will pay $200 million. Other firms will pay between $80 million and $125 million. Fines expected for U.S. Bancorp Piper Jaffray and Thomas Weisel were not announced. The agreement must be finalized by the U.S. Securities and Exchange Commission.Dec. 3 | Goldman Sachs, Morgan Stanley, Citigroup, Deutsche Bank, U.S. Bancorp | $8.25 millionGoldman Sachs (nyse: GS - news - people ), Morgan Stanley (nyse: MWD - news - people ), the Salomon Smith Barney unit of Citigroup, the Deutsche Bank Securities unit of Deutsche Bank and the U.S. Bancorp Piper Jaffray unit of U.S. Bancorp (nyse: USB - news - people ) each agreed to pay $1.65 million in fines for allegedly violating e-mail record-keeping requirements. The fines were assessed to each company by the SEC, the New York Stock Exchange and the NASD. In accepting the penalties, the broker-dealers neither admit nor deny the allegations.Oct. 11 | Household International | $484 MillionIn the largest-ever predatory lending settlement, Household International's (nyse: HI - news - people ) HFC/Beneficial non-prime lending unit acquiesced to a consortium of state regulators. Household is providing the money to resolve borrower complaints of excessive penalties and fees.Oct. 2 | Bank Of America | $490 MillionA Missouri federal judge approved a class action settlement to send $333 million to former NationsBank shareholders and $157 million to former BankAmerica shareholders. The dispute arose over misrepresented financial statements when the two companies merged to become Bank of America (nyse: BAC - news - people ). The plaintiff's lawyers are also seeking more than $100 million.Sept. 23 | Citigroup | $5 MillionThe NASD fined Citigroup's (nyse: C - news - people ) Salomon Smith Barney unit for publishing misleading research by telecom analyst Jack Grubman. The reports concerned Winstar Communications, now a unit of IDT (nyse: IDT - news - people ).Sept. 19 | Citigroup | $215 MillionThe FTC settled predatory lending claims against Citigroup's Associates First Capital unit. Contingent upon approval by federal district court in Atlanta and a similar class action case in California, the settlement could provide up to $240 million in redress for sub-prime borrowers.Sept. 5 | Deutsche Bank | $58 MillionFormer shareholders of Bankers Trust reached a settlement in New York federal court with Deutsche Bank (nyse: DB - news - people ). The plaintiffs alleged that Deutsche Bank's chairman denied his firm was in discussion to buy Bankers Trust in order to drive the stock price down before officially announcing the acquisition.July 26 | FINOVA Group | $47.5 MillionAn Arizona federal judge approved a class action settlement exacting payment for allegedly misleading financial statements from the once bankrupt lender. FINOVA Group (otc: FNVG - news - people ), bailed out last year by Berkshire Hathaway (nyse: BRK.A - news - people ) and Leucadia National (nyse: LUK - news - people ), is in the process of shutting down.June 17 | American Express | $31 MillionThe American Express Financial Advisors unit of American Express (nyse: AXP - news - people ) agreed to settle a class action suit brought by 16 female employees who claimed they were discriminated against in hiring, assignments and promotions. The class, approved by a Washington, D.C., federal judge, consists of almost 4,000 current and former advisors.May 30 | The Metris Companies | $5.6 MillionThe Metris Direct and Direct Merchants Bank unit of Metris Companies (nyse: MXT - news - people ) settled three separate lawsuits, consolidated in Hennepin County, Minn. Customers of the direct credit card marketer claimed they were assessed unauthorized fees and charges.May 21 | Merrill Lynch | $100 MillionThe largest U.S. brokerage house paid the penalty for publishing misleading research. As part of the agreement with the New York attorney general and other state securities regulators, Merrill Lynch (nyse: MER - news - people ) agreed to increase research disclosure and work to decouple research from investment banking.March 27 | Providian Financial | $38 MillionIn a Pennsylvania federal court, Providian Financial (nyse: PVN - news - people ) agreed to settle a class action suit regarding allegations of false and misleading statements by executives in the beginning of 1999.Jan. 17 | Credit Suisse Group | $100 MillionCredit Suisse First Boston, the investment bank for Credit Suisse Group (nyse: CSR - news - people ), settled stock spinning allegations with the U.S. Securities and Exchange Commission and NASD. The regulators alleged that CSFB was charging extraordinary commissions on stock trades linked to allocations for initial public offerings.Jan. 7 | Knight Trading Group | $1.5 MillionKnight Trading Group's (nasdaq: NITE - news - people ) Knight Securities unit, the largest market maker of Nasdaq stocks, agreed to pay $700,000 in fines and $800,000 in client restitution. The fines, levied by NASD Regulation, cover various trading violations over four years. The restitution settlement covered one instance of mishandled trading.
Dec. 7 | American Express | $15 MillionA Minnesota federal judge approved a settlement brought by a class against the American Express Financial Advisors unit of American Express seeking restitution for taxes and benefits. Certain advisors were misclassified as independent contractors but served as full-time employees.Nov. 7 | Providian Financial | $105 MillionIn a Pennsylvania federal court, Providian National Bank, the lending arm of Providian Financial, and other Providian subsidiaries settled class actions claims concerning unfair business practices. Consumers raised complaints about fees, credit line increases, and unauthorized add-ons to their credit cards. In 2000, Providian settled a similar complaint with the Office of the Comptroller of the Currency for $300 million.Oct. 12 | Bank of Bermuda | $65 MillionA Florida federal judge approved an SEC-determined class action settlement for Ponzi scheme allegations. The commission alleged that Bank of Bermuda (nasdaq: BBDA - news - people ) raised more than $300 million dollars through Cash 4 Titles. The money was supposed to go to the bank's title and pay day lending business, but instead went to pay other expenses.July 13 | Charles Schwab | $10 MillionU.S. Trust, owned by Charles Schwab (nyse: SCH - news - people ), agreed to pay $5 million to both the Federal Reserve Board and the New York State Banking Department to settle alleged violations of the Bank Secrecy Act, which contains safeguards to prevent money laundering and fraud.June 1 | Bank One | $45 MillionIn an Illinois federal court, Bank One (nyse: ONE - news - people ) agreed to settle a class action suit alleging false and misleading statements by Bank One executives concerning its First USA credit card business.May 30 | Mellon Financial | $20.5 MillionIn an agreement with state and federal courts, Mellon Financial's (nyse: MEL - news - people ) Dreyfus asset management unit agreed to settlement and restitution over front-running claims. Plaintiffs alleged that the company was complicit in concealing illegal actions by a Dreyfus fund manager from 1995 to 1998.April 5 | Bank One | $1.8 MillionThe NASD fined Bank One's Banc One Capital Markets unit for inadequate net capital, insufficient customer reserves and inaccurate records.Feb. 2 | Bank One | $40 MillionIn an Illinois federal court, Bank One's First USA Bank settled class action claims brought by credit-card customers. The complaint sought restitution for late fees and other charges related to delays brought about by First USA's payment processor.Sources: NASD, SEC, FTC, OCC, company and state and federal court documents. Additional information from ClassActionAmerica.com and the Stanford Securities Class Action Clearinghouse.
Home Depot Slows As Lowe's Grows - 1/3/03 7:32:50 AM ET The big orange box stumbles as its competitor targets women to boost sales. Tech Deals Signal All Clear--And Caution - 1/3/03 7:00:00 AM ET When acquisitions are done for cash, the buyers and sellers aren't always on the same page. GM Rolls Out New Incentives, Reduces SUV Deals - 1/3/03 12:58:07 PM ET General Motors is scaling back on interest-free loans on trucks, while raising cash rebates elsewhere. The Best And Worst Stocks Of 2002 - 1/3/03 8:30:00 AM ET Here are the ten large-cap winners and losers of 2002. A Look Ahead - 12/20/02 7:45:00 PM ET Forbes editors and writers lift the lid on the big trends for 2003.
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