Financial Fraud and Regulatory Failure
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The LIBOR Scandal
The civil suit against & Company, now a unit of , was brought in New York State Supreme Court by , the 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, 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.
Goldman Sachs and Morgan Stanley are now out of the mortgage-servicing business. NEW YORK (CNNMoney) Under the deal, Morgan Stanley ( MS , Fortune 500 ) will offer $97 million in direct cash payments to borrowers and $130 million worth of other relief, including loan modifications and the forgiveness of deficiency judgments. Goldman ( GS , Fortune 500 ) will pay $135 million to borrowers and offer $195 million worth of relief. The agreement covers more than 220,000 borrowers whose homes were in foreclosure in 2009 and 2010 and whose mortgages were serviced by the two banks' former subsidiaries: Goldman's Litton Loan Servicing and Morgan's Saxon Mortgage Services. It follows the $8.5 billion settlement announced last week by the Federal Reserve and the Office of the Comptroller of the Currency with 10 other banks over foreclosure issues.
December 15th, 2012 An open letter to David Cameron, the Prime Minister of the United Kingdom of Great Britain and Northern Ireland, from Mrs N Turner Dear Mr Cameron, I and many other people were stunned by the quotes from Mr Andrew
But what if it turns out that the selective release of views of analysts is more the rule on Wall Street than the exception? Gretchen Morgenson reported in The Times this week that a handful of top hedge funds appear to be taking an early peek at views from research analysts, allowing them to trade on the information while other investors are still in the dark. The tips come from surveys that the hedge funds send to research analysts, either monthly or quarterly, asking about possible earnings surprises or the competitive position, management or innovations of companies. Among hedge funds using the surveys are those run by BlackRock, the money manager; Marshall Wace, a large British hedge fund operator; and Two Sigma Investments, an American hedge fund company. Among analysts that have participated in the surveys are those from Citigroup, Goldman Sachs, JPMorgan Chase, Merrill Lynch and several large European banks.
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Why Aren't Lawbreaking Bankers Behind Bars? Matti Taibbi has a devastating piece on how the soon-to-be-departed head of the Department of Justice (DOJ) criminal division, Lanny Breuer, admits that the DOJ won't prosecute banks too big to fail, such as HSBC and UBS – among many others. Why? Because as Taibbi quotes Breuer: "Our goal here is not to destroy a major financial institution." Breuer also justified overlooking criminal activity at HSBC (and by implication other banks that have been given fines that amount to slaps on the wrist) with the reasoning that criminal activity must be tolerated to ensure that the international financial/banking system is not disrupted: "Had the U.S. authorities decided to press criminal charges," said Breuer "HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized."
On January 22, Frontline airs a program asking why the executives on Wall Street who oversaw the economic meltdown in 2007 have remain unprosecuted. According to a Frontline release, "In 'The Untouchables,' premiering Jan. 22, 2013, at 10 P.M. on PBS (check local listings), FRONTLINE producer and correspondent Martin Smith investigates why the U.S. Department of Justice (DOJ) has failed to act on credible evidence that Wall Street knowingly packaged and sold toxic mortgage loans to investors, loans that brought the U.S. and world economies to the brink of collapse
It's bad enough that Bernie Madoff's Ponzi scheme left thousand of lives in financial ruin.
Illustration by Victor Juhasz April 25, 2013 1:00 PM ET C onspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.
July 11, 2012 | Like this article? Join our email list: Stay up to date with the latest headlines via email. The following piece is a co-exclusive with Wall Street on Parade.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for. It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients.
First up: Peregrine Financial Group. This long-running fraud , which has apparently been going on almost as long as the Bernard Madoff Ponzi scheme, came to light when the firm’s founder and longtime chief executive, Russell Wasendorf Sr., tried to commit suicide a few weeks ago. (He failed.) Helpfully, he left a lengthy note that laid out what he had done. Peregrine, you see, is a commodities broker, and Wasendorf had been stealing the money that customers had on deposit with the firm. As you’ll no doubt recall from the very similar MF Global scandal, where $1.6 billion in supposedly segregated customer funds went missing as the firm careened toward bankruptcy, this is supposed to be the sin of sins for a commodities brokerage.
From top: Gregory Bull/Associated Press; Paul Sancya/Associated Press; Michael Reynolds/European Pressphoto Agency Top, mortgage abuses contributed to the collapse of the housing market; middle and bottom, after years of dismal job prospects, Americans are losing trust in many institutions, like Congress. The misconduct of the financial industry no longer surprises most Americans. Only about one in five has much trust in banks, according to Gallup polls , about half the level in 2007.
Could You Blow The Whistle? New York, NY (July 10, 2012) – Labaton Sucharow today announced the results of its survey of 500 financial services professionals across the United States and United Kingdom. Conducted by Populus in June, Wall Street, Fleet Street and Main Street: Corporate Integrity at a Crossroads reveals startling data on corporate ethics, the regulatory landscape, and individuals' willingness to blow the whistle on wrongdoing. The survey is being released in conjunction with the launch of the firm's SEC Whistleblower Eligibility Calculator , an innovative web-based tool to enable users to assess their eligibility for the SEC Whistleblower Program. According to the survey, 24 percent of respondents reported a belief that financial services professionals may need to engage in unethical or illegal conduct in order to be successful, while 26 percent of respondents indicated that they had observed or had firsthand knowledge of wrongdoing in the workplace.
Feature Interest rate swap deals have allowed the big banks to hold local governments and agencies hostage for tens of millions of dollars. By Darwin BondGraham