The direction the “new SEC” is heading is becoming clearer and clearer. Instead of asserting itself as the protector of legitimate financial markets, the SEC appears content to simply act as toll booth collector for those who play fast and loose with the law. This week alone has demonstrated the new motto of ‘settle and move on’ is firmly entrenched in Mary Schapiro’s troops. Between Hank Greenberg’s $15 million and BAC’s $33 million parking tickets, the agency is making it crystal clear that it has taken a page out of the government’s auto industry playbook and has turned itself into a pre-packaged settlement factory. Far from preventing fraud, the SEC is providing price discovery for those looking to engage in it.
SEC Settlement Tactic Raises Questions [WSJ]
Archive for August 2009
True, French bankers are masters of the disdainful frown, delivered with great poise and bitterness even when breaking the news that the client’s entire fortune was, in fact, invested with Bernie Madoff. But even among these captains of the curmudgeon, occasionally a standout emerges. In the case of the SocGen insider trading probe, we are introduced to the art’s newest grandmaster: Jean-Pierre Mustier, and behind-the-scenes side-kick, Robert Day.
Who can make the rating agencies seem credible? The Spitz can. On today’s installment of financial Romper Room, the good ex-governor teamed up again with D-Rat and Sherrod Small to explain the intricacies of rating MBS. After his trademark call for greater integrity, the guy partly responsible for a brothel promotional campaign got to the heart of the matter and addressed RA fee agreements. Quid-pro-quo arrangements don’t sit so well with the Spitz. In fact just mentioning them led him to have a momentary flashback when remarking that the agencies cleverly hid those agreements as “the secret we don’t want anybody to know”.
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If you’re in the business of oil market manipulation, the FTC wants you to know that you have a 3 month grace period to get all of the gaming juices out of your system before your costs of doing business go up. Starting November 4th, if you fall into one of the FTC’s new booby traps, they’ll come after you for up to $1 million/day.
“This new rule will allow us to crack down on fraud and manipulation that can drive up prices at the pump,” FTC Chairman Jon Leibowitz said in a written statement. “We will police the oil markets — and if we find companies that are manipulating the markets, we will go after them.”
So the message is clear- if you’re trying to get into the oil market manipulation game, you’ve got one quarter’s worth of penalty-free trial and error time; after that, you better be right.
Tax evasion, insider transactions, Oil, Senate committees, potential corruption. Could be a prime-time dramatization of the Tim Geithner story (true, we haven’t found the Turbo Tax angle yet, but give the story some time to germinate), or just another bit of BRIC background noise.
Petroleo Brasileiro SA, struggling to meet output targets and finance a $174 billion spending plan, faces a new challenge today as Brazil’s Senate probes claims it evaded taxes and funneled cash to government allies.
Shocking. Of course, in jurisdictions with large extraction economies, political power and scandal, natural resources and opposition parties all roll into one big slime pool. Of course, that seems to be the case in jurisdictions with large financial services economies as well.
The investigation, prompted by opponents of Brazilian President Luiz Inacio Lula da Silva, focuses on allegations Rio de Janeiro-based Petrobras evaded 4.4 billion reais ($2.4 billion) of taxes, overpaid for goods and may have favored the president’s supporters when it made charitable donations. Chief Executive Officer Jose Sergio Gabrielli denies the claims.
When the largest oil company in a commodity driven economy finds itself in the crosshairs of the Brazilian President, it doesn’t take much to wonder after the BRIC perma-bulls.
Petrobras Probe Starts as Gabrielli Faces ‘Crisis’ [Bloomberg]
It looks like we’ll see just how much the powers that be (in DC) want banks to lend. The trade off is simple- you want corporate lending to go on, you’re going to have to accept CDS as a fact of life. Some of the usual suspects (JPM, BAC, and C among others) have been busy throwing mud in the eye of every Mad Max and Michael Capuano disciple by linking corporate credit lines to short term interest rates as well as CDS. So as regulators continue to struggle with the idea that those who hold the money hold the leverage, corporate borrowers such as UPS are learning what happens when you poke the bear.
“It wasn’t our idea,” says a UPS spokesman. “The banks pulled back from offering set rates.”
Who knew Maxie would help save the CDS market and spur innovation?
King Ponz and Sir Allen may not know just how lucky they are that the US has the misfortune of calling them native sons. As Stanford fights for his right to five-star incarceration, half a world away, two other cons recently met their maker for promising returns of up to 10%/ mo. Two Chinese executives were executed for defrauding investors out of a rounding error-esque $120 million through a real estate scam. While China does top the global league table in executions, death is typically reserved for violent crimes. If we sent every $100 million scam artist to the funny looking chair,there would be a real demand for T. Boone’s wind farm.
How the hell are we supposed to mount a recovery if we can’t grease a few palms here and there? And, if that isn’t enough, keeping businesses honest abroad might create a split-world economy. Black and white. Bribery friendly, and otherwise.
Since bribery is such a complex and opaque topic, we decided to take a peek at the “Layperson’s Guide to the FCPA,” an abbreviated and simplified guide for… the layperson. With curt, to the point passages like:
A “domestic concern” is any individual who is a citizen, national, or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship which has its principal place of business in the United States, or which is organized under the laws of a State of the United States, or a territory, possession, or commonwealth of the United States.
…we are betting compliance is going to soar.
So are beltway types:
“The FCPA is the benchmark for where we think other governments should be,” says Nancy Boswell, president of anti-bribery group Transparency International-USA, based in Washington. “What’s essential is consistent, concerted action by all exporting nations to enforce bribery prohibition.”
Next up: World peace.
In Antibribery Law, Some Fear Inadvertent Chill on Business [The Wall Street Journal]
Judge Halts Payout On BAC Settlement (NYT)
Judge Jed Rakoff has refused to approve the payouts because he believes they may be unfair to the public. As it’s all government money, I tend to agree.
Former Head Of Amex Frontrunner For AIG Chairman Role (FT)
“Mr Golub, who joined AIG’s board in June, has the edge over other candidates, including Dennis Dammerman, the former General Electric executive who is also a director of the government-controlled insurer, people close to the situation said”
Related, it looks like the breakup of the former giant is going to generate somewhere in the neighborhood of $1B in fees across sectors.
Murdoch Pulls The Plug On Free Shit (BBC)
The news mogul Rupert Murdoch has decided to pull the plug on the free shit as News Corp sees a $3.4B loss.
NYT Offers Up Statistics As A Career Path (NYT)
Tired of getting laid? Have a penchant for hating yourself and others? Then statistics might just be for you, and it turns out people need the poor bastards to do it.
Schapiro Pushes For Self-Funding (FT)
“The US Securities and Exchange Commission should fund itself directly from industry fees, a system that would allow it to tackle more complex investigations and invest more in technology and skilled people, Mary Schapiro, its chairman, told the Financial Times.”
$$$ Close to 1 out of every 2 mortgages is headed underwater [Bloomberg]
$$$ Goldman employees have to cool it; Goldman wives, not so much [Cityfile]
$$$ US credit markets still too tight for you? Try China. [WSJ].
$$$ A Random Walk Down Stimulus Street [CNBC]
How do you limit executive compensation without politically difficult limits? Don’t use limits, of course. Thanks SheBair! We were worried there for a minute!
Banking agencies should become more active in setting compensation standards that are “principles-based” without setting specific amounts for pay, Bair said today in an interview with Bloomberg Television in Washington.
How big is too big? Where does value added end? She knows it when she sees it (so to speak).
Bair Says Regulators Should Set Banker Pay Standards [Bloomberg]
