The SEC gets a bad rap. This is because they richly deserve it. For years they have concentrated on petty frauds at the expense of actually uncovering massive, systemically dangerous shenanigans, even when led directly to them. However, it would be rude to call them irredeemable. They do, after all, provide very entertaining copy on occasion:
The Securities and Exchange Commission has charged eight participants in a penny stock manipulation ring that allegedly pumped the market prices of at least four stocks and generated more than $6.2 million in illicit profits when they dumped shares on the market.
The SEC alleges that Pawel Dynkowski, who resided in Newark, Del., carried out the market manipulation schemes with others he met through a penny stock web site InvestorsHub.com, which is operated by Matthew Brown of Aliso Viejo, Calif.
We have to admit, we were somewhat bored reading these materials, until some details emerged. To wit:
The SEC alleges that Dynkowski personally saw to it that the manipulative trading was coordinated with misleading press releases from the company, and in some instances he wrote the press releases for Asia Global himself. According to the SEC’s complaint, Dynkowski instructed Brown on Aug. 24, 2006, to have Asia Global issue a press release hyping the company’s second quarter 2006 financial results and to “make it sound ENORMOUS.” On September 1, Asia Global issued a press release claiming that its profits for July 2006 were 745 percent greater than its profits for July 2005.
Or perhaps:
Furthermore, according to the SEC’s complaint, Asia Global issued a press release on Feb. 6, 2007, claiming that its subsidiary had just received a license to produce 104 episodes of “Who Wants to Be a Millionaire” in China.
We don’t know about the rest of you, but we sleep better at night knowing the SEC people are on the wall somewhere. Locked and loaded.
SEC Charges Eight Participants in Penny Stock Manipulation Ring [SEC.gov]
Thought you were alone in your quiet shame of needing a discrete place to bang a prostie or pal, the trading floor bathroom no longer being an option? Think again! Your Japanese counterparts (and colleagues there on business) are in the same posish and the economy yonder over there is benefiting. Bloomberg reports that Japanese “love hotels,” which would be hotels you take someone you with whom you only want to spend a few hours and not be charged for 24, are make making money money, take taking money money. “It’s a recession-proof industry,” says Steve Mansfield, chief executive officer at New Perspective, formerly of Citadel, where he opened the firm’s Tokyo office and headed its Asian private investment strategy and no doubt learned a thing or two. If any of you enterprising young pups are considering opening a chain of these establishments, please note that this isn’t your father’s p-town palace. Provide accordingly.
Many love hotels have abandoned the red velvet sofas, revolving beds and mirrored ceilings that made them famous in the 1960s and 70s. A renovation at the Bonita hotel in Sendai, north of Tokyo, recently bought by Japan Leisure, has rooms more akin to a boutique hotel, with 42-inch flat-panel televisions, black modern sofas and king size beds.
Customers choose their room from a display with pictures of the suites. There’s no check-in form and you pay a cashier hidden behind a screen.
“It can feel embarrassing to take people back home and so love hotels are popular,” said Mitsuo Seki, a 32-year-old bartender in Tokyo, who visited love hotels three to four times a month. “They have lots of extras as well that are very entertaining.”
Some stories, you just have no idea how to improve on. The irony and satire is so implicit in the fact pattern that any commentary seems somewhat strained by comparison. One struggles to unify the themes, only to find them so intricately locked in a matrix that to move them is to detract from the whole. For instance:
A law
Invented at Disney World
Requiring medium and larger firms
To offer paid vacation
To make the economy more efficient
Behold:
Rep. Alan Grayson was standing in the middle of Disney World when it hit him: What Americans really need is a week of paid vacation.
So on Thursday, the Florida Democrat will introduce the Paid Vacation Act — legislation that would be the first to make paid vacation time a requirement under federal law.
The bill would require companies with more than 100 employees to offer a week of paid vacation for both full-time and part-time employees after they’ve put in a year on the job. Three years after the effective date of the law, those same companies would be required to provide two weeks of paid vacation, and companies with 50 or more employees would have to provide one week.
The idea: More vacation will stimulate the economy through fewer sick days, better productivity and happier employees.
This is, of course, why French industry dominates the European continent.
Alan Grayson to introduce Paid Vacation Act [Politico]
One hears often lately that shareholders are simply incapable of “throwing the bastards out.” Even in the face of mounting losses and some very poor risk management very few corporate heads have actually been tossed by shareholders. Government, of course, has been more “effective” in this regard. Still, of the vanishingly small pool of shareholder executed CEO defenestrations CEO pay has played a major part in, again, a small fraction of cases. For the uninitiated, a small fraction of a vanishingly small pool is not much. We wonder, however, if the trend is shifting, at least in the UK:
In one of the biggest investor rebellions over directors’ pay, about 59 per cent of Shell shareholders voted down the company’s remuneration report.
The Shell ‘No’ vote was the second biggest against a UK company’s remuneration report this year, topped only by the 80 per cent of votes cast against Royal Bank of Scotland, according to Manifest, the voting agency.
Shell’s executive pay plan voted down in shareholder rebellion [The Financial Times]
Not as soon as Goldman, though that’d be nice, but about three decades earlier than anyone expected it’d get done. BAC is apparently telling people it’ll have the government out its hair by the end of the year, after raising the $35 billion in capital the Treasury claims are necessary by September, and returning the strings-attached bailout funds. This bold declaration, possibly spawned by liquid courage, has resulted in lots of laughs and many a “have another drink, Ken.” Even the FT is barely able to conceal the smirk on its face.
BofA’s desire to repay its Tarp money early will surprise the market. Most analysts expect BofA to be one the last banks to do this, partly because of the large amount of the funds it received and partly because it was found to have the biggest capital shortfall of any US bank in recent regulatory stress tests.
BofA Seeks To Repay $45bn By End Of Year [FT]
Wall Street being the lifeblood of the city and all that, the state of financial jobs is, one notices, a topic of concern. This being so, here comes the bad joss from the Independent Budget Office of New York:
Wall Street securities firms will emerge from the current recession in a down-sized mode, with few of the jobs cut replaced by 2013, even as the industry returns to profitability next year, a New York City fiscal monitor said in a gloomy report released on Wednesday.
The city faces a decline in tax revenues of $2.5 billion in the current fiscal year, and a further $2.2 billion decline in the 2010 fiscal year, due to the Wall Street job cuts, a drooping real estate market and lower business taxes, the city’s Independent Budget Office said in the report.
The projected decline for the current fiscal year ending on June 30 represents a 6.6 percent decline in tax revenues, according to the watchdog’s report.
“This back-to-back decline — which follows a year, 2008, of essentially no tax revenue growth — would mark the first time in at least three decades that the city experienced consecutive years of falling tax revenues,” the Independent Budget Office said in the report.
Of course, we already know that the collapse of revenue is both a federal and state problem at this point and after we are done bailing out California it is easy to suspect there may be nothing left in the royal purse. Then what?
Wall Street Seen Replacing Few Of Jobs Cut By 2013 [The New York Times]
Mailbag:
Supposedly many at BAC-MER are getting raises to their base compensation. It seems very widespread overseas, especially in Hong Kong and London. But back in the land of Barney Frank and Maxine Waters, less so. I’ve only heard this so far on the Merrill legacy side (at all title levels), though I would think it’d happen for the BAC-ers as well.
This, presumably, has something to do with this.
Oh, don’t think for a second this mean he’s finished with Nouriel Roubini, he’s just spreading the love/hate around. To recap: last month Cramer said that Roubs was “intoxicated” with his own “prescience and vision.” Roubini responded with “Cramer is a buffoon,” and the alleged court jester, who loves it when you tell him he sucks, invited Dr. Doom onto his show to say it to his face. Then, two weeks ago, Cramer suggested Roubini was in bed with the shorts. Perhaps ticked that the doctor hasn’t given him the satisfaction of a response, JC again attempted to provoke something, anything, at the very least a “go fuck yourself” today. Probably figuring that Roubini won’t take the bait but a certain wrestling-loving firecracker just might, he threw Meredith Whitney into the mix. Which, we have to say, was smart.
Oddly, the people who are saying it tend to be the same ones who declared the recession over in March. I always have to remind these people they have it quite wrong: the depression ended in March, where deflation seemed unstoppable. That was when Citigroup (C) , Bank of America(BAC) , U.S. Bancorp(USB) and Wells Fargo(WFC) had their obituaries written by the two most implacable forces at the time in the investing universe — Professor Roubini and Meredith Whitney. (Because I am a harsh critic of the scene, I now dub them “Professor and Maryanne [sic],” who would turn the millionaire and his wife into paupers.)
Roubini And Whitney: The Professor And Maryanne? [TRB via Clusterstock]
Just, you know, in case. He’s not being escorted from the building yet, and, apparently, if Bank of Amerillwide turns a profit everything will be cool in Lewis Land, but the BAC board is supposedly “quietly preparing for the possibility [they'll have to replace KL] and will soon create a list of potential successors.” Since convincing someone to take over the place likely will not be the easiest sell, any and all suggestions are being considered. For the good of the country, let’s come up with some names now. I’ll start: Ang Moz. Now you go.
You’ve had a good run, mostly because the mall security guards that were supposed to be keeping an eye on you were in the break room daring each other to do tequila shots that involved snorting the salt, taking the shot and squeezing the lime in their eyes, and just JO&C’ing on the clock in general, but those days are over. You might as well pack up your Ponzi schemes big and small now because you don’t stand a chance. As we type, a “warning system” is being built across the pond to help UK’s Serious Fraud Office detect hedge fund fraud via a system of red flags that point to shady things going down. And it’s not just your chippie counterparts who have something to fear. Back at home, Mary Schapiro is apparently working on a similar machine being constructed in her garage by an out of work Chris Cox who just can’t quit the beat. It’s not up and running yet but early blueprints show that any detection of unusually high levels of cameltoe activate an alarm system that begins with a marble being dropped down a shoot and ends with an email marked importance: high as fuck landing in MareSchaps inbox. Basically, you’re done here.
S&P Lowers Britain’s Debt Outlook (WSJ)
S&P has lowered the outlook from stable to negative on public debt concerns (now approaching 100% of GDP), giving warning to the central bank that they need to step in to curtail the practices. S&P has noted that they’re not likely to downgrade soon, but rather that a downgrade is possible.
The U.K. Treasury noted that S&P reaffirmed the triple-A rating, at least until after the election. “There are significant uncertainties in the global economy at the present time and S&P point out that the outlook could be revised back to stable,” said a Treasury spokesman. “The Budget set out a clear plan to halve the deficit within 5 years. That judgment was based on a deliberately cautious view of the public finances.”
Greenspan Says Banks Still Have Large Capital Requirement (Bloomberg)
“Former Federal Reserve Chairman Alan Greenspan signaled that the financial crisis has yet to end even as borrowing costs tumble, warning that U.S. banks must raise “large” amounts of money.
“There is still a very large unfunded capital requirement in the commercial banking system in the United States and that’s got to be funded,” Greenspan said in an interview yesterday in Washington. He also said that “until the price of homes flattens out we still have a very serious potential mortgage crisis.”
New US Derivatives Rules Could Make Odd Partners (Reuters)
“Goldman and several other big banks own a 50-percent equity stake in IntercontinentalExchange’s clearinghouse for credit default swaps. Dealer backing pushed ICE to the fore of clearinghouses looking to clear U.S. CDS, default-insurance products blamed for worsening the crisis.
The world’s biggest exchanges, including CME Group Inc, NYSE Euronext and Nasdaq OMX, have sought partnerships with dealers and other big OTC players who would drive business to their derivative clearinghouses and exchanges.”
GM Workers Hold Out (NYT)
“Just 450 workers are left there, witnesses to the dismantling of Buick City and survivors, so far, of G.M.’s financial collapse. And even as the company gets nearer to bankruptcy, they do not want to leave.”
“They are part of the last generation of auto workers who were hired when G.M. dominated the United States market decades ago. And even with all the offers to leave, they stay, showing up for a job that is, in many cases, the only one they have ever known.
“I just get up in the morning, wash up, and drive here every day,” said O. C. Cooper, a 64-year-old machine operator at Flint North. “It’s just been a way of life.”"
Continue reading »
