Financial Scams

[YMix]

It's worse everywhere else, as far as I can tell. If I could I would.

No, it's not. There are some places in this world, also known as tax havens, which are exactly the way you like them: maximum economic freedom, zero political freedom. You could always move there.

[Mr. Perfect]

It's worse everywhere else, as far as I can tell. If I could I would.

No, it's not. There are some places in this world, also known as tax havens, which are exactly the way you like them: maximum economic freedom, zero political freedom. You could always move there.

Mmm, good point. TBH many of my assets are already there in effect. Know of any that let you own unlimited guns?

[YMix]

I don't think there's any limit on gun ownership.

[Juggernaut Nihilism]

Eg, if you are not happy with the returns at a given fund you can simply change to another fund, regardless of how much in fees they take honestly or dishonestly.

Virtually every managed fund available to average people fails to beat the market return even over a short period of time. Meanwhile, prop trading desks across the hall at the same firm are raking in billions. GTFO with your defense of these worthless scammers.

[AzariLoveIran]

Eg, if you are not happy with the returns at a given fund you can simply change to another fund, regardless of how much in fees they take honestly or dishonestly.

Virtually every managed fund available to average people fails to beat the market return even over a short period of time. Meanwhile, prop trading desks across the hall at the same firm are raking in billions. GTFO with your defense of these worthless scammers.

only idiots would give their money to funds (managers) to speculate for them

funds are another scam of Wall Street folks


.

[Typhoon]

Eg, if you are not happy with the returns at a given fund you can simply change to another fund, regardless of how much in fees they take honestly or dishonestly.

Virtually every managed fund available to average people fails to beat the market return even over a short period of time. Meanwhile, prop trading desks across the hall at the same firm are raking in billions. GTFO with your defense of these worthless scammers.

Apparently this jokes is from the 1930's

Goodman was a moderately successful stockbroker who dreamed of making the big money someday.
He took his friend out for a drive, and he chose the route carefully in order to impress on him the possibilities of the brokerage business.

"Look at that yacht," he said as they drove slowly past a marina.
"That 96' beauty belongs to the senior partner at Merrill Lynch.
That one over there 104' is owned by the head of Goldman, Sachs.
And look at that huge 210' yacht out there. That's the pride and joy of the top seller at Prudential-Bache."

His friend Morris was silent. Goodman turned to look at him and saw a puzzled look on his face.

"What's the matter?" Goodman asked.
"I was just wondering," Morris said. "where are the customer's yachts?"

[Mr. Perfect]

Eg, if you are not happy with the returns at a given fund you can simply change to another fund, regardless of how much in fees they take honestly or dishonestly.

Virtually every managed fund available to average people fails to beat the market return even over a short period of time. Meanwhile, prop trading desks across the hall at the same firm are raking in billions. GTFO with your defense of these worthless scammers.

only idiots would give their money to funds (managers) to speculate for them

funds are another scam of Wall Street folks


.

That's why I have never purchased a fund of any kind.

Not defending anyone, just telling the truth Juggs. Don't be on the wrong side of the truth.

[Juggernaut Nihilism]

Eg, if you are not happy with the returns at a given fund you can simply change to another fund, regardless of how much in fees they take honestly or dishonestly.

Virtually every managed fund available to average people fails to beat the market return even over a short period of time. Meanwhile, prop trading desks across the hall at the same firm are raking in billions. GTFO with your defense of these worthless scammers.

only idiots would give their money to funds (managers) to speculate for them

funds are another scam of Wall Street folks


.

That's why I have never purchased a fund of any kind.

Not defending anyone, just telling the truth Juggs. Don't be on the wrong side of the truth.

Haha, I don't use funds. I manage my own investments and I do fine - although, admittedly, I've been mostly out of the market for awhile now. I really have no interest in pretending to understand a market that is dependent on 0% interest rates and moves on political action instead of economic fundamentals. When it gets back to something I can understand, I'll be interested again. Until then, it's Treasuries, with a few other currencies, and precious metals for insurance. And bullets. Lots of bullets.

[Typhoon]

Colonel,

Not clear to me what steelworkers and firemen have to to with anything.

I apologize for my inaccurate off the cuff metonym. I used it because it means to me what it means to everyone, you included according to your obvious interpretation of it. The labor movement.

What the labor movement has to do with the slow decline of government today, from cities in California to nations in Europe, is that promises were made to and because of the labor movement that are now being paid to everyone. And the existence of those promises, and particularly that they are the 'third rail' of every government that cannot be addressed in a timely fashion no matter how large their expense, are the sign of the influence of the mob, in the kyklos sense.

That was how my comment on steelworkers and firemen related to what I was discussing.

No worries.

[YMix]

GM Ramps Up Risky Subprime Auto Loans To Drive Sales

By DAVID HOGBERG, INVESTOR'S BUSINESS DAILY

President Obama has touted General Motors (GM) as a successful example of his administration's policies. Yet GM's recovery is built, at least in part, on the increasing use of subprime loans.

The Obama administration in 2009 bailed out GM to the tune of $50 billion as it went into a managed bankruptcy.

Near the end of 2010, GM acquired a new captive lending arm, subprime specialist AmeriCredit. Renamed GM Financial, it has played a significant role in GM's growth .

he automaker is relying increasingly on subprime loans, 10-Q financial reports shows.

Potential borrowers of car loans are rated on FICO scores that range from 300 to 850. Anything under 660 is generally deemed subprime.

Subprime Key Driver

GM Financial auto loans to customers with FICO scores below 660 rose from 87% of total loans in Q4 2010 to 93% in Q1 2012.

The worse the FICO score, the bigger the increase. From Q4 2010 to Q1 2012, GM Financial loans to customers with the worst FICO scores — below 540 — shot up 79% to more than $2.3 billion. The second worst category, 540-599, rose 28% from about $3.4 billion to $4.3 billion.

Prime loans, those above 660, dropped 42% to $676 million.

GM Financial provides just over 8% of GM's financing. Prior to 2006, GM's captive lending arm was GMAC, but GM sold a controlling stake in 2006. GMAC later renamed itself Ally Financial and continues to provide the bulk of GM's financing.

At the peak of the credit crisis and recession in late 2008, Ally announced that it would move away from subprime lending.

By spring 2010 GM's new management, led by North American executive Mark Reuss, wanted to move back into subprime, fearing that GM couldn't compete.

Subprime lending in cars is not as risky as in housing. Car loans are cheaper, so customers have an easier time making payments. When they do go into default, the cars can be repossessed and sold to recover some of the loss.

"The subprime market grew as a result of the recession," said GM spokesman Jim Cain. "Our experience, however, is that with proper management they are very good risks."

He points to GM's credit losses which have not risen above 5.5% since late 2010.

Nevertheless, since it acquired GM Financial, GM has seen its subprime loans grow from about 4.8% of sales in Q4 2010 to 8.2% in Q1 2012. The industry average is about 6%.

[YMix]

Nomura Chief Resigns Over Insider Trading Scandal

TOKYO — A Japanese bank’s ambitions to become a global competitor to the giants of Wall Street and Europe faded on Thursday as two top executives quit in an insider trading scandal.

Kenichi Watanabe, the chief executive of the bank, Nomura — and the architect of its boldest expansion move, the 2008 acquisition of the Asian and European operations of Lehman Brothers — resigned, as did his chief lieutenant, Takumi Shibata, the chief operating officer. Their departures follow those at the other bank that swooped in during the financial crisis to grab some of the bankrupt Lehman’s businesses: Barclays of Britain, whose chief executive, Robert E. Diamond Jr., along with other top officers, quit this month after a settlement over interest-rate manipulation.

Nomura’s departing executive offered no apology at a news conference on Thursday. “Now it is time for a new era with new people,” Mr. Watanabe said.

The appointment of his successor, Koji Nagai, whose career has focused almost exclusively on the domestic market, may signal a retreat to Japan after the costly global ambitions of his predecessor. On Thursday, Mr. Nagai hinted at changes to come, saying that he hoped to rework Nomura’s global franchise “to an appropriate size.”

For months, the bank has been embroiled in an insider trading investigation. Nomura has acknowledged that employees leaked information on at least three public offerings in 2010 to favored fund managers, who then profited from short-selling ahead of the expected drop in the share price.

[...]

[Typhoon]

FT | HP should have known all about Autonomy

Dissection anatomy of Autonomy

[YMix]

http://www.rollingstone.com/politics/bl ... y-20130206

[Azrael]

FT | HP should have known all about Autonomy

Dissection anatomy of Autonomy

HP has been built on nothing but hype since they slashed their research budget and started jumping from trend to trend.

They should have been experts at spotting hype.

[Typhoon]

mavB1lbtIow

[YMix]

A Tale of Two Londons

A long, but interesting read about real estate, tax havens and wealthy people in a London setting.

When the British Empire crumbled in the mid-1950s, London replaced the cozy embrace of gunboats and imperial trading preferences with a new model: tempting the world’s hot money through lax regulation and lax enforcement. There was always a subtle balance, involving dependable British legal bedrock fiercely upholding U.K. domestic rules and laws while turning a blind eye to foreign law-breaking. It was a classic offshore-tax-haven offering that tells foreign financiers, “We won’t steal your money, but we won’t make a fuss if you steal other people’s.”

The term “tax haven” is something of a misnomer, because tax havens offer escape routes not just from taxes but potentially from any of the rules, laws, and responsibilities of other jurisdictions—whether those be taxes, criminal laws, disclosure rules, or financial regulation. Tax havens are usually about parking your money “elsewhere,” in jurisdictions such as the Cayman Islands, beyond the reach of your home country’s regulators and taxmen. Or you park it in London: which is why some investment bankers have called it the Guantánamo Bay of finance. “The British think they do finance well,” says Lee Sheppard, a tax and banking specialist at the U.S. trade publication TaxAnalysts. “No. They do the legal stuff well. Most of the big investment banks there are branches of foreign operations. . . . They go there because there is no regulation whatsoever.”

Perhaps the most striking fact about One Hyde Park and the London super-prime property market is what it tells us about who the world’s richest people are. Many people think the greatest winners of globalization today are financiers. A decade or so ago, that may have been true. But today another class sits above even them—the global commodity plutocrats: owners of mineral rights, or dominant players in mineral-rich countries in sectors such as construction and finance that benefit from commodity booms. Hollingsworth notes in Londongrad that the oligarchs he studies became rich “not by creating new wealth but rather by insider political intrigue and exploiting the weakness of the rule of law.” Arkady Gaydamak, a Russian-Israeli oilman and financier, explained his elite view of accumulating wealth to me in 2005. “With all the regulations, the taxation, the legislation about working conditions, there is no way to make money,” he said. “It is only in countries like Russia, during the period of redistribution of wealth—and it is not yet finished—when you can get a result. . . . How can you make $50 million in France today? How?”

Russia’s former privatization czar Anatoly Chubais put it less delicately: “They steal and steal. They are stealing absolutely everything.”

London real-estate agents confirm that these commodity plutocrats dethroned the financiers some time before the financial crisis hit. “I can’t remember the last time I sold a property to a banker,” says Stephen Lindsay, of the real-estate agency Savills. “It’s been hard for anyone to compete with the Russians, the Kazakhs. They are all in oil, gas—that is what they do. Construction—all that kind of stuff.”

Even the Arab money has taken a backseat to the new buyers, says Hersham. “The wealth of the ex-Soviets is incredible,” he says. “Unless you are talking about [Goldman Sachs C.E.O. Lloyd] Blankfein or [Stephen Schwarzman], the head of Blackstone, or the head of one of the very big banks, there is no driver from the City of London at these levels anymore.”

On a side note, it's funny as hell to see that Arkady Gaydamak is a thieving Russian-Israeli oilman.

From Wikipedia: Ukrainian: Гайдамаки, Haidamaky, from Turkish haydamak, "to pursue". The equivalent to haidamaka is opryshok in Ukrainian Galicia, and hajduk in the Balkans. Hajduk is also used in Polish language. Hajduk (or ajduk, haydut, haiduk, haiduc, hayduck, hayduk) is a term most commonly referring to outlaws, highwaymen or freedom fighters in the Balkans, Central- and Eastern Europe.

[Typhoon]

A Tale of Two Londons

. . .

Good article.

A nondescript residence from an architectural point of view.

The commodity kleptocrats theft was probably helped by the fact that most of their countrymen were too drunk to notice.

A bit ironic that one can probably view Speaker's Corner from the upper levels of One Hyde Park.

[YMix]

Bernanke shifty on US depositors.

The global roll-out of thieving from citizen savers continues. I missed this three days ago, but I’m grateful to a US Slogger for pointing it out to me: on March 22nd, Federal Reserve Chairman Ben Bernanke refused to say that the United States will not use Cypriot techniques of taxing the people by confiscating a percentage of their savings accounts.

During a press conference held to explain his view on economic conditions in the United States, Bernanke said his meetings with the Federal Open Market Committee drew him to the conclusion that the economic outlook is “following its own pre-established expectations”….which could of course mean down a mineshaft or up in an Atlas rocket.

However, when pressed about whether an EC-style approach to Cyprus (involving taking money from savers) might be on the cards in the US, Bernanke spoke less than plainly.

The government of Cyprus last week accepted the principle of stealing funds from private citizens as a condition to get a so-called ‘bailout’ from the five-humped camel of eurozone aid. “I was wondering if you can tell me,” one reporter asked optimistically, “how if a run on the banks happens in Cyprus, how that might affect U.S. markets. And also is it possible for the U.S. to levy a tax on regular deposits here? Or why not?”

Bernanke replied somewhat oddly, “the only trigger for actions such as the ones taken in Cyprus would be if depositors panicked”. I say ‘oddly’ because surely the catalyst for panic would be, um, if news leaked that the US Government was indeed about to rob depositors.

Either way, by not stating clearly whether it could happen in the U.S. or not, Bernanke effectively suggested that the door is open for money-seizing in the U.S.

Bernanke added that he believed it to be unlikely that a Cyprus’ scenario could replicate in the United States. He then reminded the audience that in the U.S. the FDIC insures savings and that this fact is an assurance for depositors who may be concerned. However, as The Slog revealed two days ago, the FDIC recently wrote a paper jointly with the Bank of England openly suggesting depositor haircuts.

Indeed, in February 2012 President Obama expressed concern about the FDIC’s ability to meet its obligations, suggesting that the entity could easily become insolvent. On March 4, Congresswoman Chairman Sheila Bair went further in saying that the FDIC was on its way to becoming insolvent, and that its job to insure bank deposits must therefore be in danger.

In the case of Cyprus, its own government’s word came to nought, because European bankers had that government by the balls: it is they who decided what would be done in Spain, Greece, Portugal, Italy, and latterly in Cyprus.

The lesson from this and previous posts on the subject is crystal clear: we can no longer trust any banking institution to defend our savings against State rape. Indeed – when in dire straits – they will actively encourage it.

Sadly, even the bankers are leftists.

[Mr. Perfect]

It was never not so. It's like you guys don't even listen.

[YMix]

JP Morgan Gets an Award for London Whale Fiasco

A JPMorgan Chase employee stepped onstage at a black-tie gala on Wall Street last week to accept a "best crisis management" award given by an investor relations magazine. The bank, which was recently the subject of a U.S. Senate investigative hearing and an ongoing FBI probe into $6.2 billion in trading losses known as the "London Whale" fiasco, is not the subject of ridicule -- but praise -- from its cronies on Wall Street.

Kathy Hu, from JPMorgan's investor relations department, accepted the award and quipped: "Crisis? What crisis?"

That's the kind of jokester you get to be when you work for a "too big to jail" bank, which repeatedly misled the public, investors and regulators about the ballooning crisis in its Chief Investment Office. The firm's lies are detailed in a 301-page report and 597 pages of exhibits prepared by the Senate Permanent Subcommittee on Investigations chaired by Senator Carl Levin, only a portion of the 90,000 documents the committee gathered.

The committee's report details how America's largest bank and the largest derivatives trader in the world used "excess" deposits, including some that were federally insured, to construct a $157 billion portfolio of synthetic credit derivatives to engage in high-risk, complex, short term trading strategies. These are of the type that was supposed to be prevented by the "Volcker Rule," which was included in the Dodd-Frank Wall Street reform bill to limit proprietary trading by firms (the rule still has not been implemented).

As Senator John McCain so aptly put it: "These excess deposits should have been used to provide loans for main-street businesses. Instead, JPMorgan used the money to bet on catastrophic risk."

The Senate committee has done its job, now will New York Attorney General Eric Schneiderman finally hold JPMorgan executives accountable?

[...]

[Typhoon]

ICIJ | Secret Files Expose Offshore’s Global Impact

A cache of 2.5 million files has cracked open the secrets of more than 120,000 offshore companies and trusts, exposing hidden dealings of politicians, con men and the mega-rich the world over.

[Typhoon]

Oe0KCyyTR4I

[Parodite]

Just don't tell your investors your ship's name is The Titanic.

http://www.forbes.com/sites/stevedennin ... ig-sharks/

Big Banks and Derivatives: Why Another Financial Crisis Is Inevitable

[...] Yet, as investors in bank stocks learned in 2008, it is possible to lose a large portion of the “notional amount” of a derivatives trade if a bet goes terribly wrong. In the future, if interest rates skyrocket or the euro unravels, Wells Fargo might sustain huge derivatives losses, just as you might lose the full $70 you bet on Walmart if the company went bust. Wells Fargo doesn’t tell investors how much of the $2.8 trillion it could lose in a worst-case scenario, nor is it required to. Even a savvy investor who reads the footnotes can only guess at what the bank’s potential risk exposure to derivatives might be.[...]

[YMix]

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

[...]

The bad news didn't stop with swaps and interest rates. In March, it also came out that two regulators – the CFTC here in the U.S. and the Madrid-based International Organization of Securities Commissions – were spurred by the Libor revelations to investigate the possibility of collusive manipulation of gold and silver prices. "Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks – many other benchmarks – are legit areas of inquiry," CFTC Commissioner Bart Chilton said.

[...]

Famously, one Barclays trader monkeyed with Libor submissions in exchange for a bottle of Bollinger champagne, but in some cases, it was even lamer than that. This is from an exchange between a trader and a Libor submitter at the Royal Bank of Scotland:

SWISS FRANC TRADER: can u put 6m swiss libor in low pls?...
PRIMARY SUBMITTER: Whats it worth
SWSISS FRANC TRADER: ive got some sushi rolls from yesterday?...
PRIMARY SUBMITTER: ok low 6m, just for u
SWISS FRANC TRADER: wooooooohooooooo. . . thatd be awesome

[...]

Yet despite so many instances of at least attempted manipulation, the banks mostly skated. Barclays got off with a relatively minor fine in the $450 million range, UBS was stuck with $1.5 billion in penalties, and RBS was forced to give up $615 million. Apart from a few low-level flunkies overseas, no individual involved in this scam that impacted nearly everyone in the industrialized world was even threatened with criminal prosecution.

Two of America's top law-enforcement officials, Attorney General Eric Holder and former Justice Department Criminal Division chief Lanny Breuer, confessed that it's dangerous to prosecute offending banks because they are simply too big. Making arrests, they say, might lead to "collateral consequences" in the economy.

[...]

In any case, this all-star squad of white-shoe lawyers came before Buchwald and made the mother of all audacious arguments. Robert Wise of Davis Polk, representing Bank of America, told Buchwald that the banks could not possibly be guilty of anti- competitive collusion because nobody ever said that the creation of Libor was competitive. "It is essential to our argument that this is not a competitive process," he said. "The banks do not compete with one another in the submission of Libor."

But Wise eventually outdid even that argument, essentially saying that while the banks may have lied to or cheated their customers, they weren't guilty of the particular crime of antitrust collusion. This is like the old joke about the lawyer who gets up in court and claims his client had to be innocent, because his client was committing a crime in a different state at the time of the offense.

"The plaintiffs, I believe, are confusing a claim of being perhaps deceived," he said, "with a claim for harm to competition."

Judge Buchwald swallowed this lunatic argument whole and dismissed most of the case. Libor, she said, was a "cooperative endeavor" that was "never intended to be competitive." Her decision "does not reflect the reality of this business, where all of these banks were acting as competitors throughout the process," said the antitrust lawyer Sokol. Buchwald made this ruling despite the fact that both the U.S. and British governments had already settled with three banks for billions of dollars for improper manipulation, manipulation that these companies admitted to in their settlements.

Michael Hausfeld of Hausfeld LLP, one of the lead lawyers for the plaintiffs in this Libor suit, declined to comment specifically on the dismissal. But he did talk about the significance of the Libor case and other manipulation cases now in the pipeline.

"It's now evident that there is a ubiquitous culture among the banks to collude and cheat their customers as many times as they can in as many forms as they can conceive," he said. "And that's not just surmising. This is just based upon what they've been caught at."

[...]

http://www.rollingstone.com/politics/ne ... t-20130425

[YMix]

HSBC at Risk of Drug and Terror Money Laundering Charges

HSBC could face charges of money laundering for terrorists and drug lords in court after a judge considered challenging a $2.3bn (£1.6bn) immunity deal struck with prosecutors.

Judge John Gleeson may reject the 'deferred prosecution deal' struck with the US Justice Department, meaning that the company could be barred from trading in the United States if found guilty.

The financial giant is alleged to have funneled $881 million or £534 million into the financial system from Mexican drug cartels, as well as individuals and terrorist organisations in Iran, Libya, Burma, and Sudan, all countries that are subject to US sanctions.

Gleeson made his name prosecuting organised crime and secured the conviction of Mafia boss John Gotti in 1992, but the Justice Department has challenged his right to strike down the deferred prosecution deal after he delayed making a decision on the arrangement.

When the immunity arrangement was first struck last December it generated outrage, with attorney general Eric Holder claiming that HSBC had become too big to prosecute.

Senator Chuck Grassley said that it was "inexcusable" that the justice department did not bring a prosecution last year. "What I have seen from the department is an inexplicable unwillingness to prosecute and convict those responsible for aiding and abetting drug lords and terrorists. I cannot help but agree with an editorial in the New York Times that 'the government has bought into the notion that too big to fail is too big to jail'," he wrote in a letter to Holder.

Stuart McWilliam, senior campaigner with lobby group Global Witness, said: "News that the DPA hasn't yet been signed off gives the justice department a clear opportunity to reconsider the penalties HSBC should face for its widespread money laundering failures.

"Given that over 35,000 people were brutally slain in Mexico at the hands of drug traffickers while HSBC laundered at least $880m of their money, it's shocking that the current system of sanctions does not include senior executives being held personally responsible for the actions of their institutions. Is HSBC too big to jail?"

In a statement, HSBC said that stringent new measures had been put in place to prevent criminal cash entering the system through their banks

A spokesman said: "For more than two years, our new leadership team in both New York and London has been implementing reforms and new controls, investing in compliance systems and staff, and putting in place the most effective global standards across our network to combat financial crime on a global basis.

"We are focused on taking all necessary steps to fulfill our obligation under the agreements with the US and UK governments, and on implementing effective global standards across HSBC."

However the bank has been forced to begin a fresh investigation into its accounts after campaigners exposed its links to logging companies that have felled acres of pristine rainforest in Borneo.

Television presenter Bill Oddie, who lead the campaign, said: "It's hard to get excited about a limited review of an opaque policy sold to the public as a serious commitment to the world's forests."