Nov 1 (Reuters) – Wells Fargo & Co withdrew from two lawsuits challenging MBIA Inc’s 2009 restructuring, leaving eight banks to pursue claims against what was once the world’s largest bond insurer.

The San Francisco-based lender’s withdrawal was disclosed in filings on Monday with the New York State Supreme Court in Manhattan. No explanation was provided.

Banks that remain plaintiffs are Bank of America Corp , BNP Paribas SA , HSBC Holdings Plc , Morgan Stanley , Natixis SA , Royal Bank of Scotland Group Plc , Societe Generale and UBS AG .

The banks are challenging the February 2009 split of MBIA’s municipal bond business from its structured finance operations, which suffered big losses from insuring mortgage debt.

They said this left the structured finance unit undercapitalized and unable to pay billions of dollars of claims. The split was overseen by New York’s insurance commissioner at the time, Eric Dinallo,

One of the banks’ lawsuits is an Article 78 proceeding, which under New York law allows challenges to state administrative rulings. A trial in that case is scheduled to begin on Feb. 27, 2012, court records show.

“We are going full speed ahead to the Article 78 trial early next year, and we are pursuing the fraudulent conveyance action vigorously,” said Robert Giuffra, a partner at Sullivan & Cromwell who represents the banks.

By Narayanan Somasundaram and Jonathan Stempel

(Reuters) – Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) has been hit with a new $1.07 billion lawsuit for having allegedly sold risky debt that it expected would tumble in value to an Australian hedge fund, causing that fund to become insolvent.

The lawsuit by the Basis Yield Alpha Fund alleges fraud, breach of contract and negligence, and seeks to recoup $67 million of losses plus $1 billion of punitive damages.

It was filed on Thursday with a New York state court in Manhattan. Basis Yield was managed by Sydney-based Basis Capital Funds Management Ltd.

Basis Yield sued three months after a U.S. judge dismissed a similar case, saying the fund could not sue in federal court under U.S. securities laws because its investment in the Timberwolf 2007-1 collateralized debt obligation did not qualify as a “domestic” transaction.

Timberwolf was cited in a scathing U.S. Senate panel report in April that faulted Goldman, Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz) and others for hawking debt they expected to perform poorly.

That report said Goldman kept marketing Timberwolf even after Thomas Montag, an executive who is now Bank of America Corp’s (BAC.N: Quote, Profile, Research, Stock Buzz) co-chief operating officer, in an email to a colleague called Timberwolf “one shitty deal.”

Oct 27 (Reuters) – A federal judge dismissed part of a U.S. securities regulator’s lawsuit against the only individual charged in a JPMorgan Chase & Co case that led to the bank’s $153.6 million settlement of civil fraud charges.

The accused executive, Edward Steffelin, did not engage in a “fraud or deceit” upon investors in a collateralized debt obligation, Squared CDO 2007-1, that JPMorgan had sold in early 2007 to clients, U.S. District Judge Miriam Goldman Cedarbaum in Manhattan ruled.

Steffelin then worked at GSC Capital Corp, a now-bankrupt firm that helped put the CDO together. The U.S. Securities and Exchange Commission had contended that marketing materials failed to reveal that the Magnetar Capital LLC hedge fund, where Steffelin was pursuing a job, helped choose securities for the CDO and was betting they would lose value.

Cedarbaum refused to dismiss other SEC charges against Steffelin in the negligence case, including one accusing him of hiding the CDO’s risks. Her order was made public on Thursday, following oral argument on Oct. 24.

Alex Lipman, a lawyer for Steffelin, declined to comment. Jan Folena, an SEC lawyer handling the case, did not immediately respond to a request for comment.

JPMorgan is one of three banks to settle major SEC fraud cases over CDOs in the last 16 months. Goldman Sachs Group Inc reached a $550 million accord in July 2010 and Citigroup Inc last week reached a $285 million accord that still requires court approval. The banks did not admit wrongdoing.

According to a transcript of the oral argument, Cedarbaum said it would have been a “big stretch” to conclude that Steffelin had a fiduciary duty to investors who bought the CDO, and should thus face the SEC charge that he defrauded them.

NEW YORK (Reuters) – A New York federal judge expressed deep skepticism about a proposed $285 million civil settlement between the top U.S. market regulator and Citigroup Inc over charges that the bank defrauded investors.

U.S. District Judge Jed Rakoff scheduled a November 9 hearing to consider whether Citigroup’s settlement with the U.S. Securities and Exchange Commission is fair and reasonable, according to a court filing.

But Rakoff has been a prominent critic of the SEC’s handling of other enforcement cases, including a $33 million settlement in 2009 with Bank of America Corp over that bank’s takeover of Merrill Lynch & Co. He later approved a revised $150 million accord even as he called it “half-baked justice at best.”

Rakoff raised nine questions for both sides to answer in advance of the Citigroup hearing, going to fundamental issues such as the size of the fine, why no individuals were held financially responsible, and why the SEC did not demand any admission of wrongdoing for a “serious securities fraud.”

Kevin Callahan, a spokesman for the SEC, declined to comment immediately. Citigroup spokeswoman Danielle Romero-Apsilos declined to comment on the judge’s order.

The October 19 settlement was intended to resolve allegations that Citigroup defrauded investors who bought toxic housing-related debt that the bank bet would fail.

According to the regulator, the bank’s Citigroup Global Markets unit misled investors about a $1 billion collateralized debt obligation (CDO) by failing to reveal it had “significant influence” over the selection of $500 million of underlying assets, and took a short position against those assets.

NEW YORK, Oct 27 (Reuters) – A New York federal judge expressed deep skepticism about a proposed $285 million civil settlement between the top U.S. market regulator and Citigroup Inc over charges that the bank defrauded investors.

U.S. District Judge Jed Rakoff scheduled a Nov. 9 hearing to consider whether Citigroup’s settlement with the U.S. Securities and Exchange Commission is fair and reasonable, according to a court filing.

But Rakoff has been a prominent critic of the SEC’s handling of other enforcement cases, including a $33 million settlement in 2009 with Bank of America Corp over that bank’s takeover of Merrill Lynch & Co. He later approved a revised $150 million accord even as he called it “half-baked justice at best.”

Rakoff raised nine questions for both sides to answer in advance of the Citigroup hearing, going to fundamental issues such as the size of the fine, why no individuals were held financially responsible, and why the SEC did not demand any admission of wrongdoing for a “serious securities fraud.”

Kevin Callahan, a spokesman for the SEC, declined to comment immediately. Citigroup spokeswoman Danielle Romero-Apsilos declined to comment on the judge’s order.

The Oct. 19 settlement was intended to resolve allegations that Citigroup defrauded investors who bought toxic housing-related debt that the bank bet would fail.

According to the regulator, the bank’s Citigroup Global Markets unit misled investors about a $1 billion collateralized debt obligation (CDO) by failing to reveal it had “significant influence” over the selection of $500 million of underlying assets, and took a short position against those assets.

NEW YORK, Oct 27 (Reuters) – A New York federal judge expressed deep skepticism about a proposed $285 million civil settlement between the top U.S. market regulator and Citigroup Inc (C.N: Quote, Profile, Research) over charges that the bank defrauded investors.

U.S. District Judge Jed Rakoff scheduled a Nov. 9 hearing to consider whether Citigroup’s settlement with the U.S. Securities and Exchange Commission is fair and reasonable, according to a court filing.

But Rakoff has been a prominent critic of the SEC’s handling of other enforcement cases, including a $33 million settlement in 2009 with Bank of America Corp (BAC.N: Quote, Profile, Research) over that bank’s takeover of Merrill Lynch & Co. He later approved a revised $150 million accord even as he called it “half-baked justice at best.”

Rakoff raised nine questions for both sides to answer in advance of the Citigroup hearing, going to fundamental issues such as the size of the fine, why no individuals were held financially responsible, and why the SEC did not demand any admission of wrongdoing for a “serious securities fraud.”

Kevin Callahan, a spokesman for the SEC, declined to comment immediately. Citigroup spokeswoman Danielle Romero-Apsilos declined to comment on the judge’s order.

The Oct. 19 settlement was intended to resolve allegations that Citigroup defrauded investors who bought toxic housing-related debt that the bank bet would fail.

According to the regulator, the bank’s Citigroup Global Markets unit misled investors about a $1 billion collateralized debt obligation (CDO) by failing to reveal it had “significant influence” over the selection of $500 million of underlying assets, and took a short position against those assets.

By Jonathan Stempel

(Reuters) – When one distributor of corporate press releases concluded that a rival was trying to steal its secrets, it didn’t issue a press release, it went to court.

Marketwire on Wednesday filed a $25 million lawsuit accusing rival PR Newswire of causing irreparable harm by hiring away its workers and inducing them to divulge confidential information and trade secrets, violating confidentiality and non-compete agreements.

In its complaint, Toronto-based Marketwire accused PR Newswire of hiring its former chief technology officer, co-defendant Shoeb Ansari, as part of a what it called a continuing campaign to steal its technology and gain access to customer data. A copy of the complaint was obtained by Reuters.

Ansari, who was terminated from his Marketwire job in June 2010 and is now PR Newswire’s chief information officer, has since lured several former colleagues to join him at New York-based PR Newswire, the complaint said.

Other defendants in the case include Ontario residents David Mariai, Vinh Ngo and Darren Tarachan, who resigned from Marketwire last week to join PR Newswire, the complaint said.

Marketwire said its proprietary technology includes a system for distributing press releases, as well as “Release Editor,” which helps its editors communicate with customers.

By Jonathan Stempel

(Reuters) – Two Florida traders were charged with operating a “free-riding” fraud in which they bought and sold tens of millions of dollars of stock with money they did not have, collecting profits on good trades and saddling brokerages with losses on bad trades.

Scott Kupersmith, 46, was arrested on Wednesday and charged with one count each of securities fraud and wire fraud, U.S. Attorney Paul Fishman in New Jersey said.

Kupersmith, who lives in Boca Raton, Florida and used to live in New Jersey, was also indicted in a parallel New York investigation on 18 felony counts including grand larceny and scheming to defraud, according to Manhattan District Attorney Cyrus Vance.

The U.S. Securities and Exchange Commission filed related civil fraud charges against Kupersmith and alleged accomplice Frederick Chelly, 42, who also lives in Florida.

“Kupersmith and Chelly engaged in a classic ‘heads I win, tails you lose’ scheme to trade risk-free at the expense of broker-dealers,” George Canellos, director of the SEC’s regional office in New York, said in a statement.

In a typical free-riding scheme, a trader sells a company’s shares in one brokerage account, and “covers” that trade by buying the same shares in an account at a different brokerage. This trader attempts to profit from short-term price fluctuations without placing personal assets at risk.

Oct 26 (Reuters) – Lehman Brothers Holdings Inc is moving closer to emerging from its record bankruptcy, and that its Chapter 11 reorganization is now backed by creditors who hold more than $160 billion of claims.

Lehman said it locked up nine new major settlement agreements, as it works toward what it hopes will be a smooth home stretch for the bankruptcy of what was once Wall Street’s No. 4 investment bank.

These settlements include six with affiliates such as Lehman Brothers International (Europe) and 56 British affiliates, and three with outside creditors such as Deutsche Bundesbank.

“The rapidly growing level of support for our plan demonstrates that our creditors understand the logic of the economic compromise we have proposed,” Lehman Chief Executive Bryan Marsal said on Wednesday.

Creditors have until Nov. 4 to vote on the plan. U.S. Bankruptcy Judge James Peck in Manhattan is expected to consider whether to approve it at a Dec. 6 hearing.

The plan would return about $65 billion to creditors holding $320 billion of claims. Payouts could be under way by early 2012 if Peck approves the plan.

In September, Lehman reached a settlement in principle with Lehman Brothers International (Europe).

Oct 25 (Reuters) – AT&T Inc has settled a nationwide lawsuit by a U.S. agency accusing it of age discrimination for refusing to rehire tens of thousands of workers who had retired from the largest U.S. telephone company.

The three-year consent decree resolves an August 2009 lawsuit by the U.S. Equal Employment Opportunity Commission, which enforces federal anti-discrimination laws.

It requires AT&T to end any prohibitions against rehiring workers who left under two retirement programs between 1998 and 2001 and one related to SBC Communications Inc’s 2005 purchase of the former AT&T Corp, which created the current company.

AT&T must also update its databases to ensure former workers are not “blocked” from being rehired and certify annually in writing it is complying with the decree.

“The revised policies will not act as a barrier to hiring as employees or engaging as non-payroll workers otherwise qualified individuals,” according to the decree, which was approved on Monday by U.S. District Judge J. Paul Oetken in Manhattan. The decree was made public on Tuesday.

The EEOC had accused Dallas-based AT&T of having no legitimate reason not to rehire workers who retired under the programs, a number it estimated as exceeding 50,000.

AT&T spokesman Marty Richter said on Tuesday the company is committed to complying fully with U.S. laws concerning employment discrimination.