Reviewing 5 of March’s top stories

Graphic cigarette warnings, angry interns, less-than-helpful executives and more

Grumpy Grads

In February, a group of graduates from 12 different law schools filed class action suits against their alma maters, arguing that the schools misled them about post-graduation job prospects. The accused schools included Brooklyn Law, Chicago-Kent, DePaul Law, Hofstra Law, John Marshall Law School and USF Law.

More lawsuits followed, this time filed by law students from 20 additional schools—including American University, Loyola University, St. John’s University, Syracuse University, Pepperdine University and Valparaiso University. David Anziska, a lawyer for the group, ominously predicted that “at the end of this process nearly every law school in the country will be sued.”

But at least one of these institutions can breathe easier, after a federal judge tossed a $200 million class action suit brought by nine graduates of New York Law School. Manhattan Supreme Court Justice Melvin Schweitzer ruled that graduates cannot blame the state of the economy on their law programs, though he added that these programs should be honest about employment data.

Irate Interns

A revolution is sweeping the nation, led by unpaid interns who say they are being exploited by their employers. It started when two former interns who worked on the film “Black Swan” filed a class action suit against Fox Searchlight Pictures. Government regulations stipulate that unpaid internships must have an educational component and benefit the intern—not the company.

Several months later, Harper’s Bazaar intern Xuedan Wang sued the magazine’s parent company Hearst Corp. for violating federal and state wage and hour laws. Wang reportedly worked full time, performing grunt work without compensation.

The latest target of perturbed underlings is talk show host Charlie Rose.  Former editorial intern Lucy Bickerton sued Rose and his show’s production company, claiming that she worked 25 hours a week, yet received no pay and no training. Bickerton is seeking class action status for all unpaid interns from March 14, 2006 onwards.

Sickening Signage

Would you be less likely to buy a pack of cigarettes that displayed blackened lungs, rotting teeth or a dead body? That’s what the Food & Drug Administration (FDA) was banking on when it debuted new cigarette warning labels in June 2011, arguing that the graphic photos represented “a significant advancement in communicating the dangers of smoking.”

Tobacco companies were predictably less enamored with the new marketing campaign, and sued the FDA for violating their First Amendment right to free speech. U.S. District Judge Richard Leon upheld this rationale last month, ruling that while publicizing the risks of smoking “might be compelling, an interest in simply advocating that the public not purchase a legal product is not.”

But in a separate case this month, a Kentucky federal appeals court ruled 2-1 in favor of the warning labels. The court pointed to past deception by the tobacco industry, and said that the graphic labels would provide “truthful information” to potential smokers.

Missing Money

The plot has thickened in the mysterious case of MF Global’s missing millions. The financial derivatives broker went bankrupt in October 2011—just before a proposed sale of its assets to Interactive Brokers Group Inc.—when the latter company discovered a shortfall of at least $700 million of customer money. It has since been speculated that MF Global transferred customer money to cover overdrafts.

The subsequent months brought an FBI probe and several lawsuits, as investors tried to recover their lost money. And on Wednesday, several former company executives, including GC Laurie Ferber, CFO Henri Steenkamp and assistant treasurer Edith O’Brien, appeared at a congressional hearing on the firm’s collapse.

Ferber and Steenkamp answered lawmakers’ questions, but both disavowed any knowledge of monetary transfers from customer accounts. Meanwhile, O’Brien, who allegedly authorized one such illegal transfer, invoked the Fifth Amendment in response to every question.

Lawmakers quickly tired of the executives’ evasive responses, with Massachusetts representative Michael Capuano noting that “Apparently none of you did anything wrong, but there's a billion dollars missing.”

Mortgage Muddle

Last month, five major mortgage lenders agreed to pay a record $25 billion foreclosure settlement to the states. As part of the deal, JP Morgan Chase & Co. also reached a $45 million settlement for claims that it charged hidden fees in mortgage refinancing transactions.

It was a landmark deal intended to help struggling homeowners through loan modifications and foreclosure compensations, but some early critics noted that each lender was liable for only $5 million—a relatively light financial burden.

This criticism intensified in a recent article by The New York Times, which reported that only 60 percent of this $17 billion must be used to reduce principal for borrowers whose mortgages are underwater. This means that banks will be credited for helping those with defaulted mortgages move out of their homes, or for demolishing abandoned houses—standard practices that do nothing to stop foreclosures.

“The $17 billion is supposed to be the teeth of this settlement, and yet they are getting all this credit for practices that they do every day,” Neil Barofksy, the former inspector general for the Troubled Asset Relief Program, told the Times.

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