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Legal news from Monday, December 17, 2012 |
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Credit union agency files largest suit to date against Wall Street firms
Alison Sacriponte on December 17, 2012 2:27 PM ET

[JURIST] The National Credit Union Administration (NCUA) [official website] filed suit [complaint, PDF] on Monday against against Bear, Stearns & Company, now acquired by JPMorgan Securities [corporate website]. The NCUA brought suit acting in its capacity as Liquidating Agent of multiple credit unions: US Credit, Western Corporate, Southwest Corporate and Members United Corporate. Defendants, as underwriters, sellers and/or issuers of certain residential mortgage-backed securities, allegedly violated federal and state laws in the sale of $3.6 billion of these securities by offering untrue statements, misrepresenting and omitting material facts. This suit is the largest the agency has filed to date and claims the misrepresentations caused the credit unions to believe there was a minimal risk of loss. NCUA Board Chairman Debbie Matz stated [press release]:Bear, Stearns was one of several Wall Street firms that sold faulty securities to corporate credit unions, leading to their collapse and enormous losses across the industry. Firms like Bear, Stearns acted unfairly by ignoring the rules for underwriting. They packaged these securities and then told buyers the paper was sound. When the securities plunged in value, we learned the truth. NCUA is now working to hold these underwriters accountable and secure recoveries on behalf of federally insured credit unions. ... NCUA and credit unions have successfully worked together to restore stability to the credit union system. Now we are holding responsible parties like Bear, Stearns accountable for their actions. It’s the right thing to do. The NCUA has a statutory duty to seek recovery from responsible parties and has eight similar actions pending against firms like Bear Stearns.
These firms have faced numerous lawsuits regarding their business practices. In July JPMorgan agreed to a $100 million settlement [JURIST report] in a suit brought by customers claiming unreasonable fees and a three percent increase on monthly minimum payments by credit card holders. In early June the firm was granted [JURIST report] permission to pay $44.6 million to resolve allegations of fraudulent bidding practices for state and local government investment securities at taxpayers' expense. The settlement followed JPMorgan's agreement [JURIST report] last July with the US Department of Justice [official website] to pay $228 million to federal and state authorities. One month earlier JPMorgan again settled [JURIST report] at $153.6 million for fraud charges brought by the SEC for misleading investors during the housing crises. In July 2010 Goldman Sachs [corporate website] agreed to a $550 million settlement [JURIST report] with the SEC to resolve similar charges.


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Libya declares martial law in southern region
Michael Haggerson on December 17, 2012 12:33 PM ET

[JURIST] The Libyan government closed the country's southern border [Libyan News Agency report, in Arabic] with Algeria, Niger, Chad and Sudan on Sunday and declared southern Libya as a military zone. The move was in response to growing lawlessness [Al Jazeera report] in Libya's southern provinces of Ghadames, Ghat, Obari, Al-Shati, Sebha, Murzuq and Kufra. Representatives of the southern provinces had been boycotting legislative sessions due to the government's failure to assist them in curbing the lawlessness in the region. Government officials indicated that the closure would only last until order has restored to the region. There was indication that some of the problems in the southern provinces were due to deteriorating conditions in Mali [JURIST report] and the expected resulting international military response.
Violence and abuse in Libya has been a concern in the aftermath of the Libya conflict [JURIST feature]. In November Amnesty International (AI) reported that undocumented foreign nationals in Libya are at risk of facing mental and physical exploitation [JURIST report] and abuse that may include torture due to the Libyan perception that foreigners were mercenaries that supported the ousted regime. Earlier in November the International Criminal Court (ICC) [official website] urged the Libyan government [JURIST report] not to grant amnesty to war criminals. In March AI released a report accusing the ruling National Transitional Council (NTC) [official website] of allowing the abuse and torture [JURIST report] of supporters of former leader Gaddafi by unofficial militias. Last year, AI released a report detailing similar abuses faced by prisoners [JURIST report] in Libya. The ICC also announced that it would not grant immunity [JURIST report] to any person perpetrating crimes against humanity in Libya.


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Egypt rights groups call for new vote on constitution
Jaclyn Belczyk on December 17, 2012 11:32 AM ET

[JURIST] A coalition of Egyptian rights group called Sunday for a redo of Saturday's constitutional referendum, alleging widespread irregularities [press release]. The groups, including the Cairo Institute for Human Rights [advocacy website], claim that there was a lack of judicial supervision at the polling places and intentional delays at several women's polling places, rendering them unable to vote. Results from Saturday's referendum, which took place in about half of the voting districts, show a lead for the "yes" vote after the first round, with a second and final round scheduled to take place in the remaining districts next Saturday. The rights groups also, "call[ed] upon the Supreme Elections Commission to avoid these irregularities in the second round."
The draft constitution [text, PDF] is backed by the Islamists and has been extremely controversial. Last week the UN Working Group on discrimination against women [official website] expressed grave concern [JURIST report] over the draft constitution. UN High Commissioner for Human Rights Navi Pillay [official profile] has also expressed concern at the rising death toll during the ongoing political chaos in Egypt, saying that Egypt's draft constitution presents serious problems for human rights [JURIST report]. Pillay complained [UN News Centre report] that the draft constitution was passed without the participation of Christian or liberal legislators. Pillay also said that she was concerned about the draft constitution's omission of references to international human rights treaties that Egypt ratified in the past. While Pillay commended the fact that the draft constitution imposes term limits on President Mohammed Morsi [BBC backgrounder] and provides some protections for freedom of expression and religion, she noted that these protections were not strong enough.


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US government responds to targeted killings lawsuit
Jaclyn Belczyk on December 17, 2012 10:40 AM ET

[JURIST] The US Department of Justice (DOJ) [official website] on Friday filed a motion to dismiss [text, PDF] a lawsuit [complaint, PDF] challenging the US government's targeted killing of three US citizens in drone strikes. Senior al Qaeda [GlobalSecurity backgrounder] leader and US citizen Anwar al-Awlaki [BBC obituary; JURIST news archive] was killed by drone strike [JURIST report] last September along with another American, Samir Khan. Two weeks later drone strikes killed 16-year-old Abdulrahman Al-Awlaki, Anwar Al-Awlaki's son. The Center for Constitutional Rights (CCR) and the American Civil Liberties Union (ACLU) [advocacy websites] filed the lawsuit [JURIST report], naming as defendants Defense Secretary Leon Panetta, CIA Director David Petraeus, Adm. William McRaven, Commander of the US Special Operations Command and Gen. Joseph Votel, Commander of the Joint Special Operations Command. According to the defendants' motion:courts repeatedly have recognized that the political branches, with few exceptions, have both the responsibility forand the oversight ofthe defense of the Nation and the conduct of armed conflict abroad. The Judiciary rarely interferes in such arenas. In this case, Plaintiffs ask this Court to take the extraordinary step of substituting its own judgment for that of the Executive. They further ask this Court to create a novel damages remedy, despite the fact thatbased on Plaintiffs' own complainttheir claims are rife with separation-of-powers, national defense, military, intelligence, and diplomatic concerns. Judicial restraint is particularly appropriate here, where Plaintiffs seek non-statutory damages from the personal resources of some of the highest officials in the U.S. defense and intelligence communities. Under these weighty circumstances, this Court should follow the well-trodden path the Judiciaryand particularly the D.C. Circuithave taken in the past and should leave the issues raised by this case to the political branches. The ACLU issued a statement [text] condemning the government's motion.
Awlaki, a dual US-Yemeni citizen, had been approved for targeting killing by the Obama administration, an action that was challenged based on Awlaki's US citizenship. In December 2010 a judge for the US District Court for the District of Columbia [official website] dismissed a lawsuit [JURIST reports] challenging the Obama administration's ability to conduct "targeted killings" in al-Awlaki's case. Judge John Bates found that the court lacked jurisdiction over the case, filed by the ACLU and the CCR on behalf of Awlaki's father, dismissing it on procedural grounds and noting that important questions remain. Bates heard arguments [JURIST report] in the case in November 2010 on the same day Awlaki called for jihadist attacks on US citizens in a video posted on extremist websites. Earlier that month Yemeni prosecutors charged [JURIST report] Awlaki with incitement to kill foreigners, and he was later sentenced in absentia to 10 years in prison.


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