DealBook: Europe Accuses 13 Banks of Blocking Entrants to Default Swaps Market

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DealBook: Suit Accuses Corzine of a Failure at the Helm

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Ticketmaster Accuses 21 of Fraudulent Ticket Buying

In the lawsuit, filed on Tuesday at United States District Court in Los Angeles, Ticketmaster accused Joseph Shalom, a producer of live entertainment events in New York, of being the central figure in a coordinated series of attempts over the last two years to obtain large numbers of tickets and resell them at a profit.

According to the suit, Mr. Shalom and his associates used “bots,” or specialized computer programs, to bypass online features like Captchas — series of distorted letters or numbers — that test whether a potential ticket buyer is a person.

Ticketmaster, a division of Live Nation Entertainment, says Mr. Shalom and others linked to him used these systems to gain access to as many as 200,000 tickets a day ahead of the public, aiming for the most desirable tickets.The suit claimed Mr. Shalom and the others violated Ticketmaster’s terms of use, which prohibit bots and limit the number of tickets a customer may request in a single day. It also accuses them of committing several offenses as part of the ticket-buying process, including copyright infringement and the assumption of false identities.

Ticketmaster seeks unspecified damages in the suit and does not say how many tickets were bought by the 21 people. It also says the use of bots damages Ticketmaster’s reputation and harms the public.

As a result of the behavior outlined in the lawsuit, the company says, “the inventory of tickets available to consumers who do not use such devices is substantially diminished, which has led some consumers to question Ticketmaster’s ability to ensure a level playing field for the purchase of tickets.”

Bots have become a major source of consumer and industry complaints about the ticketing market. Consumers grow frustrated when concerts often sell out moments after tickets go on sale, and listings then appear for those tickets at inflated prices through online secondary markets like StubHub, owned by eBay, or TicketsNow, part of Live Nation.

The concert industry has also been frustrated at the difficulty of cracking down on the use of bots. Three years ago, federal authorities charged a group of men with using similar tactics to make $25 million in profit. But the men were sentenced to probation, which music executives say has not served as a deterrent. Concert promoters and others have said that the use of bots has become increasingly common, particularly for the most popular shows.

In a statement, Ticketmaster said: “We care about protecting fans and the integrity of our business. We are doing exactly what we have repeatedly said we do: stand up for the fans who use our site in the proper manner.”

Mr. Shalom did not respond to an e-mail requesting comment.

Suit Accuses JPMorgan Unit of Broad Misconduct on Mortgage Securities

The civil suit against Bear Stearns & Company, now a unit of JPMorgan Chase, was brought in New York State court by Eric T. Schneiderman, the state attorney general, who is also a co-chairman of the task force, known as the Residential Mortgage-Backed Securities Working Group.

The complaint contends that Bear Stearns and its lending unit EMC Mortgage defrauded investors who purchased mortgage securities packaged by the companies from 2005 through 2007. The firms made material misrepresentations about the quality of the loans in the securities, the lawsuit said, and ignored evidence of broad defects among the loans that they pooled and sold to investors.

Moreover, when Bear Stearns identified problematic loans that it had agreed to purchase from a lender, it was required to make the originator buy them back. But Bear Stearns demanded cash payments from the lenders and kept the money, rather than passing it on to investors, the suit contends.

Unlike many of the other mortgage crisis cases brought by regulators such as the Securities and Exchange Commission, the action does not focus on a particular deal that harmed investors or an individual who was central to a specific transaction. Rather, the suit contends that the improper practices were institution-wide and affected numerous deals during the period.

A spokesman for Mr. Schneiderman declined to comment on the filing. A representative of JPMorgan, which acquired Bear Stearns in a fire sale in March 2008, said it would contest the allegations. “We’re disappointed that the New York A.G. decided to pursue its civil action without ever offering us an opportunity to rebut the claims and without developing a full record — instead relying on recycled claims already made by private plaintiffs,” said Joseph Evangelisti, the bank’s spokesman. He added that the allegations all predate JPMorgan’s acquisition.

To be sure, the allegations in the suit against Bear and EMC are not new. The task force complaint closely echoes legal arguments made in recent years by numerous private litigants trying to recover losses in mortgage securities. Most of these cases continue to inch their way through the courts.

Late last week, for example, JPMorgan lost a round in one of these battles when Jed S. Rakoff, a federal judge in Manhattan, rejected the bank’s request to dismiss a complaint brought by Dexia, a Belgian-French bank. The European bank had bought $1.6 billion in mortgage securities issued by Bear Stearns and Washington Mutual, another institution taken over by JPMorgan during the credit crisis.

Nevertheless, some lawyers who are battling the large banks and investment firms on behalf of mortgage investors said they welcomed the action by the task force. Jerry Silk, a lawyer at Bernstein Litowitz Berger & Grossmann in New York, said: “The government’s action represents a complete validation of the cases brought by investors who were duped by the fraudulent sale of mortgage-backed securities by JPMorgan, WaMu and Bear Stearns.”

The suit encompasses work begun by Mr. Schneiderman’s office in the spring of 2011, according to people briefed on the investigation. The attorney general subpoenaed documents from JPMorgan Chase and from large mortgage insurers that had also brought cases against the banks for failing to live up to their promises about the types and quality of mortgages placed in loan pools and sold.

New York investigators also capitalized on a cooperation agreement struck by Andrew Cuomo, the previous attorney general, with Clayton Holdings, a major firm in the business of evaluating mortgages. The firm provided documents and e-mails showing that Bear Stearns routinely ignored major defects on loans it was purchasing and pooling so that it could preserve its relationship with mortgage originators.

After the mortgage fraud task force was created in early 2012, Mr. Schneiderman’s office combined its efforts with the Department of Housing and Urban Development, the S.E.C., the inspector general of the Federal Housing and Finance Agency, the Federal Bureau of Investigation and the Department of Justice.

The lawsuit’s filing, just days before the first presidential debate and a little over a month before the election, may be a way for the Obama administration to try to convince voters that it is working to hold mortgage miscreants accountable for wrongdoing. But, lawyers say, filing a case is not the hard part; winning it is.

The complaint contends that Bear Stearns defrauded investors when it assured them of the stringent reviews being made of the loans the firm was bundling. “Rather than carefully reviewing loans for compliance with underwriting guidelines,” it said, “defendants instead implemented and managed due diligence review that was superficial and that often, and improperly, gave way to originators’ demands.”

Bear Stearns and EMC took other steps to keep mortgages flowing and their originators happy. Even after the loans it was bundling began failing at monumental rates, the complaint said, Bear Stearns did not require originators to buy them back as they were obligated to do. Instead, the firm allowed the originators to settle the put-back claims confidentially “by making cash payments that were a fraction of the contractual repurchase price,” according to the lawsuit.

During 2007 and the first quarter of 2008, the complaint said, Bear Stearns resolved claims relating to $1.3 billion of unpaid mortgage principal balances; it received $367 million in recoveries from the sellers.

The suit was brought against Bear Stearns under New York’s Martin Act, the state law that gives the attorney general wide latitude to bring fraud cases without demonstrating a defendant intended to defraud. The lawsuit does not seek specific damages but asks for restitution for investors victimized by the deceptive practices and disgorgement of money received in connection with the fraud.