Tags: CFTC, dogs/homework, Exchanges, Gary Gensler, glitches, SEC
Luckily, Robert Greifeld was able to solve that problem faster than the problem that led to the little get-together.
SEC officials on Thursday told exchanges to work with other market players to come up with “comprehensive action plans” to ensure that the data feeds are resilient, and to ensure the soundness of other “critical infrastructure systems,” according to an SEC statement.
Thursday’s SEC meeting, attended by top executives from exchange operators Nasdaq, NYSE Euronext, BATS Global Markets Inc., Direct Edge Holdings LLC, and others, was marked by one snafu. Nasdaq Chief Executive Robert Greifeld was 40 minutes late due to transportation problems, according to people who attended.
And lest you thought that (slowly outgoing) CFTC Chief Gary Gensler was going to let Mary Jo have all the fun, think again. Read more »
Tags: fat fingers, FERC, Goldman Sachs, Investigations, JPMorgan, SEC
Half of today’s financial news stories are about how some government enforcement agency is looking into something you already knew about. This is very boring for me! Remember when Goldman lost a bunch of money by fat-fingering some options trades?1 That still happened. Remember how JPMorgan did some naughty things with California electricity markets? Those historical circumstances continue to obtain. Remember the Whale? Still a thing.
You could wonder about the substance of some of these investigations. JPMorgan’s electric boogaloo, while intensely naughty, also seems pretty clearly to have followed FERC/ISO rules to the letter, so it’s hard to imagine charging anyone with a crime, as the FBI is apparently contemplating.2 And while I don’t know much about the SEC rules re: electronic options trading, the actual thing that Goldman did was sell options really cheaply, and it would be pretty weird if there were a rule against that, so I don’t know where the SEC is going with its enforcement investigation.3 (The Whale, I’ll give you, that stuff seems bad.) But basically, yeah, sure: bad things happened, rules might have been violated, market safeguards were shown to be less robust than had previously been thought, it is altogether fitting and proper that someone look into it. Or a lot of someones I guess.
Still the stories carry a whiff of looking for the keys under the lamppost: Read more »
Tags: Chicago Stock Exchange, SEC, technology is hard
Technological ineptitude has kept some civil-servants at the SEC pretty busy this year. And entertained: Without any big-game stock exchanges screwing up lately, they’ll bide their time with one that hosts a whopping 0.4% of all U.S. stock trading. Read more »
Tags: Bank of America, DOJ, Lawsuits, mortgages, RMBS, SEC
These lawsuits against Bank of America are pretty lame, aren’t they? The SEC and Department of Justice each sued BofA yesterday for fraud in a 2008 prime jumbo mortgage securitization but it doesn’t really feel like fraud. The guns are smoke-free. The DoJ gets itself all excited because someone proposed including some bad mortgages in the deal, and a Bank of America trader said of those mortgages that, “like a fat kid in dodgeball, these need to stay on the sidelines,” but they did! The trader thought some of the mortgages were crap, and they were crap, and so they weren’t included in the deal. The system worked! It’s like if Fabulous Fab emailed his girlfriend saying “I am creating monstruosities,” and she told him to stop, and he did.
The complaints put their fraudy eggs in two main baskets. The first is that Bank of America omitted to tell investors some material facts, of which the most important is that 70% of the loans in this securitization were wholesale loans (originated through brokers), and that wholesale loans were worse – for both credit and prepayment risk – than loans originated by BofA directly. Read more »
Tags: ACA, cdos, Laura Schwartz, SEC, UBS
The SEC settled a little crisis-era CDO fraud case with UBS today and the fraud is pretty entertainingly shitty. Basically UBS provided the warehouse for a synthetic CDO where the notorious ACA was the collateral manager, and the disclosed deal was that, when the CDO closed, it would enter into (as protection seller) any CDS contracts that UBS had entered as part of the warehouse at (1) the market price of those CDS or (2) the price UBS had received for them as initial counterparty, whichever was more favorable to UBS.1 Now right there you’ve got some optionality and room for fuzziness, and you could imagine various unpleasant schemes where, for instance, UBS cherry-picks some contracts to transfer at market and some at historic price, or where UBS mis-marks some contracts to get a better deal when it transfers them.
But the actual scheme was simpler and dumber: Read more »
Tags: ABACUS, ACA, Fabrice Tourre, Paulson & Co., SEC
Fabrice Tourre testified in his SEC trial late last week and many perplexing things came out, with the most perplexing being a tie between:
Perhaps less perplexing is that Fab’s feelings about Abacus seem to have been less about bamboozling one client on behalf of another and more about just printing a trade, whichever direction it went in. John Carney reports that Goldman was taking too long getting ABN Amro to intermediate ACA’s guarantee of the super senior tranche of the deal, Paulson was getting antsy, and Fab, ever servicey, was trying to assuage their antsiness by just getting Goldman to do the deal naked: Read more »