Eric Schneiderman

What to Eric Schneiderman’s naked eye appears as fraud, Barclays customers apparently understand is just totally legitimate ways of doing business, according to the bank. Therefore, it wants this dark pools lawsuit dismissed and never mentioned again. Not once! Read more »

  • 02 May 2014 at 3:07 PM

SEC Official: You’re Not Dealing With Morons Here

Gregg Berman of the Securities and Exchange Commission has a message for those doubting that the regulator understands the U.S. stock market in the era of light-speed trading: You’re wrong. Berman, one of the SEC’s top advisers on high-frequency firms, dark pools and other elements of computerized markets, is facing pressure to respond to claims his agency has failed to police exchanges and has permitted speed traders to put other investors at a disadvantage. Other authorities, including New York Attorney General Eric Schneiderman, have announced their own probes into the issue. In remarks today at an Options Industry Conference near Austin, Texas, Berman aimed a rebuttal at critics and “maybe an attorney general” who might think “regulators are very behind the times and can’t keep up with market participants.” [Bloomberg]

  • 02 May 2014 at 1:28 PM

Michael Lewis Finds A Fan Among Securities Regulators

Mary Jo White may not think that high-frequency trading constitutes “unlawful insider-trading.” But New York Attorney General Eric Schneiderman is wondering whether it mightn’t be Insider Trading 2.0®. Read more »

Eric Schneiderman’s determination to follow in Eliot Spitzer’s footsteps (to a point) is bad news for analysts who answer their phones. Read more »

The practice of paying for an early peak at market-moving news isn’t just insider-trading, according to Eric Schneiderman: It’s Insider Trading 2.0®. Read more »

The Financial Times has an article today called “Greece reaches agreement with ‘troika’ on bailout tranche” and I’m not going to tell you about it but you can go read it if you want. If you’re an FT subscriber just click on this link and there you are. If not, maybe try typing that title into Google and clicking on the first result you get; that’ll probably work, no guarantees. Or, like, go buy a copy of the paper?

That’s the way a lot of news works: if you have an internet connection and a desire to get it, you probably can, but if for idiosyncratic reasons you want to get it quickly and reliably – say, you invest in Greek debt and need to know what’s going on for trading purposes – the way to do that is to pay for it. As a corollary, the way to get more of it more quickly and reliably is to pay more for it. If you clicked that link and you’re not a subscriber you probably saw something like this: Read more »

This New York Attorney General lawsuit against Credit Suisse is mostly the same as all the other lawsuits by all the other regulators against all the other banks. Here is a summary, based on the complaint:

  • Some mortgage originators made crappy loans, because that was the style at the time.
  • They sold them to Credit Suisse to bundle into MBS.
  • Credit Suisse’s due diligence was of the form “hi, is this a loan? APPROVED,” in part because they sucked or whatever but mostly because there were competitive pressures where if they didn’t buy the loan someone else would1 and if you’re the guy whose job is to buy loans and you buy zero loans and say “well the thing is, they were all bad loans,” you are fired, so your incentives are not socially optimal.
  • The offering documents for the MBS said things like “ooh our due diligence is so good, so good,” though no specific falsifiable claims are made about the quality of the mortgages or the diligence, and every claim of the form “we only approve good mortgages” is followed immediately by “unless we decide to approve bad ones.”2
  • Dumb emails were sent because, you know how mortgage traders are with their email.3
  • The MBS lost value for an assortment of reasons, some due to Credit Suisse’s bad diligence, some not.
  • That all certainly seems fraudy, so New York is suing CS “for making fraudulent misrepresentations and omissions to promote the sale of residential mortgage­-backed securities (RMBS) to investors.”
  • Credit Suisse has a nontrivial argument that it didn’t break the letter of the law, fraudulent-misrepresentation-wise, since it never specifically said “these loans are good” but only things of the form “we have pondered the goodness of these loans in our heart, except when we haven’t.”
  • But its loans, and its diligence process, and its emails, are all sufficiently dumb that there’ll probably be a settlement with a high-8/low-9-figure dollar amount and no admission of guilt.

Whatever, boring, the end. But then I came to this: Read more »