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Washington, DC, United States (AHN) – American bank JPMorgan agreed on Tuesday to pay the U.S. Securities and Exchange Commission a $153.6 million fine to settle a fraud case filed against the company.

SEC had charged that the bank misled investors in the 2007 sales of a complex mortgage-backed security because it did not disclose to investors that the hedge fund involved in the creation of the collateralized debt obligation was betting the CDO would decline in value.

Robert Khuzami, the top enforcement officer of the SEC, said that JPMorgan promised investors that the mortgage assets of the CDO would be picked by an independent manager who would look out for investors’ interest.

The Chicago-based hedge fund, Magnetar Capital, placed the investors’ $1.1 billion money in the housing market, but by the time the deal close, Magnetar was in a $600 million short position in the CDO betting that it would decline, compared to an $8.9 million long position. The sale took place at the start of the housing market collapse when more homeowners started to default.

With the settlement, investors who lost on the deal are assured of getting all their money back, the SEC said.

Despite the agreement to pay the fine, JPMorgan did not admit or deny fault. None of the bank’s executives or employees was charged, but Edward Steffelin – an outside adviser who helped structure the deal – was charged with civil securities fraud.

The SEC said Steffelin was seeking a job at Magnetar Capital while he was helping the hedge fund select and bet against the housing assets on which the CDO was built, Khuzami said it was JPMorgan’s responsibility, not Magnetar’s, to disclose the conflict of interest on the investment.

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Gary Lynch, the former Securities and Exchange Commission enforcement head who later helped Morgan Stanley and Credit Suisse AG tackle legal disputes, is looking to repeat his success at the biggest U.S. bank.

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Washington, DC, United States (AHN) – More teeth have been added to the ongoing global efforts to curb excessive executive compensation and bonuses. Amid plans by European Union regulators to curb bankers’ bonuses, the U.S. Securities and Exchange Commission approved Tuesday new rules that grant stockholders a say on company officials’ salaries, bonuses and retirement packages.

On a 3-2 vote, SEC commissioners allowed shareholders of publicly traded firms to vote at least once a year on executive compensation. However, the vote is non-binding.

Republican commissioners Kathleen Casey and Troy Paredes cast the dissenting votes on the ground that the changes would be too costly for smaller firms.

The new rules, however, won’t be in effect until 2013. It will apply only to companies where stockholders hold less than $75 million of shares. SEC Chairwoman Mary Schapiro said the two-year deferral is sufficient time to ensure the new rules would not unduly burden smaller companies.

The new rules are a result of the Dodd-Frank Act, the regulatory overhaul enacted in July as a response to the 2008 credit crisis. Fat paychecks and compensation packages were blamed for the risky trading that lead to the collapse of major American financial institutions such as Lehman Brothers Holdings and Bear Stearns.

Law experts said that although the shareholders’ vote is non-binding, rejection by investors of executive pay would be big news and be embarrassing to a company’s board, which could prompt the directors to respond to stockholders’ opinion.

The SEC vote came a week after Wall Street paid millions of bankers their 2010 bonuses, even as the rest of the nation copes with the harder times caused by the global financial crisis.

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photo credit: epicharmus

f you are a real estate investor and need funds to finance your real estate deals, or are looking for money to cash out of deals, there is really only ONE option in today’s market conditions. That option is a private lending program where you allow private individuals who have extra money to invest in your real estate investing business.

But with the current popularity of private lending, we are seeing our coaching students and subscribers making a number of mistakes and thought we would highlight the top 4 mistakes and what to do to avoid them when borrowing money from private lenders. (more…)