I’m going to look in my crystal ball and predict that the next big consumer protection fiasco will be food labeling. Last year we saw the “pink slime” scandal result in the product’s removal from a lot of hamburgers. Consumer outrage over discovering the presence of pink slime in our beef supply was so strong… Continue Reading
Tag Archives: New York Times
Whistleblower Files Suit and, Suddenly, Former Employer is Willing to Talk
Posted in Banks and Financial Services, In the CourtsWhistleblowers often risk retaliation in their quest to report wrongdoing. Retaliation can take the subtle form of poor performance reviews or another “just missed promotion,” or the more extreme form of outright firing someone. As the New York Times reports, Mr. Jason Williams experienced retaliation in the form of reduced pay and verbal abuse. Williams… Continue Reading
The Insider Trader Circle Tightens Around Billionaire Steven Cohen and His Hedge Fund, SAC Capital
Posted in Banks and Financial ServicesAn article in the New York Times’ Dealbook shines a spotlight on a situation I’ve been keeping a close watch on for some time now: billionaire Steven A. Cohen and his group/company/fund, SAC Capital Advisors. This is the hedge fund that was found to have achieved 30% investment returns for the past two decades, or,… Continue Reading
Not-Guilty Plea Could Lead to Courtroom Showdown and Spotlight on SAC Capital
Posted in Banks and Financial Services, In the CourtsThis could get interesting. In November of last year Mathew Martoma, a former SAC portfolio manager, was charged with insider trading in Federal District Court of Manhattan. The facts surrounding his case are shocking and exposed an entire industry that almost seems to be based exclusively on what looks suspiciously like facilitating insider trading. Martoma… Continue Reading
Criminal Charges for Criminal Activity in the Financial Industry: Finally
Posted in Banks and Financial ServicesWell its about time. For the first time in over twenty years, a major financial institution pleaded guilty to criminal charges brought by the DOJ (the last time was in 1989 when Drexel Burnham Lambert pleaded guilty to six counts of fraud). Yesterday, the DOJ announced that: “UBS Securities Japan Co. Ltd. (UBS Japan), an… Continue Reading
Wal-Mart’s Shockingly Corrupt Behavior Looks Familiar
Posted in CorporationsYesterday I expressed my disappointment in the DOJ for their Deferred Prosecution Agreement with HSBC bank, for its terrorist-financing, money-laundering activities. Today it looks like the DOJ just might get another chance to prove that it isn’t afraid to crack down on corporate bad guys. Thanks to some impressive investigative reporting at the New York… Continue Reading
Federal Judge Offers Sharp Rebuke to Wall Street and Praise to the CFTC
Posted in Banks and Financial Services, In the CourtsYesterday I wrote about how Wall Street is starting to move away from lobbying against Dodd-Frank, to actually implementing it. Today, I find myself writing about another sign that Wall Street is losing its battle against Dodd-Frank, and this time it comes from a federal judge. For Wall Street, used to winning in court, this… Continue Reading
Insider Trading in Four Easy Steps: “Network” with Experts for $1000 an Hour
Posted in Banks and Financial ServicesBet you saw this one coming. The plot thickens. We learned last week that SAC Capital Advisors conducted “the most lucrative insider trading scheme ever,” allowing the fund to produce returns of 30% for the last twenty years. As a result of the scheme’s discovery, Mathew Martoma, a former SAC portfolio manager, was charged with… Continue Reading
30% Returns Over Last Two Decades: Too Good To Be Legal?
Posted in In the CourtsA golden rule to avoiding scams is that if it sounds too good to be true, it probably is. So if someone tells me they can guarantee a 30% return on investment for two decades, I’d smile and politely decline while thinking, “what kind of scam does this guy have going on?” Well it… Continue Reading
UBS Banking Scandal Sheds Light on Big Bankings’ Culture Problems
Posted in Banks and Financial ServicesThis week the trial of former UBS trader Kweku Adoboli, arrested in September 2011 on charges of fraud and false accounting, takes center stage in the banking world. Adoboli was arrested in connection with a $2 Billion trading loss at UBS in 2011. Adoboli had been contacted by compliance officers with questions about some of… Continue Reading
Aiding Drug Lords, Terrorists, and Rogue Nations Should Not Be Profitable… Ever
Posted in Banks and Financial ServicesA few months ago we were astounded to see HSBC actually apologize for its money laundering scheme, in which it “aided drug lords, terrorists, and rogue nations” by helping them launder money through HSBC banks. Today’s New York Times reports that HSBC’s earnings are down $3.3 Billion for the last quarter. Some of these expenses… Continue Reading
We Need High Speed Regulation for High Speed Trading
Posted in Banks and Financial Services, Consumer ProtectionIt says something about your investment regulations when other countries are looking at you for examples of what not to do. It seems the regulators who’ve learned the most from our recent trading debacles (ie: the Flash Crash, Knight Capital) are the regulators of other countries. Electronic trading sprang up, along with the computer age… Continue Reading
Does Banking Complexity Make Your Eyes Bleed?
Posted in Banks and Financial ServicesI’ve heard a lot of people describe the current state of our country’s largest financial institutions. I frequently hear things like “too complex,” “too big,” or “in desperate need of an overhaul.” But Sallie L. Krawcheck, former head of Bank of America’s wealth management division, gave a description yesterday that takes the cake: “It is… Continue Reading
Bank Officer: “Will No One Rid Me of This Troublesome Mortgage-Backed Security?!”
Posted in Banks and Financial Services, CorporationsThe decision by both the Justice Department and the SEC to close investigations into various questionable actions taken by Goldman Sachs reveals an interesting tension in our regulatory laws: between what we think is the “right” or “moral” code of conduct for the banking industry verses what is legal under existing laws and regulations. In… Continue Reading
Senators Propose a “Sliding Scale” For Regulating Banks
Posted in Banks and Financial ServicesI’m glad to read that it is not just me that has noticed the abnormally high number of bank-related scandals that have broken over the past couple months. I’ll do a quick highlight review to refresh our memory. First, we had JP Morgan (the biggest U.S.-based bank with $2.29 trillion in assets) reveal an increasingly… Continue Reading
The Silver Lining to Failure on Wall Street?
Posted in Banks and Financial ServicesScanning headlines today, I saw words that I never thought would go in the same sentence together: “In $440 Million Trading Error, Upside of Wall St. Failures.” An upside? To a Wall Street Failure? Well, this New York Times article argues that failure in the financial system actually helps to improve the financial system, a… Continue Reading
Too Bad the SEC Can’t Put Citigroup in Jail
Posted in Banks and Financial Services, In the CourtsI’m still trying to understand the SEC’s decision making process in deciding to charge Mr. Brian H. Stoker, former Citigroup banker, in connection with a subprime mortgage-related debacle at Citigroup. In this offering, Citigroup bet against one of its own securities, which subsequently lost most of its value and has since been described using bad… Continue Reading
Software Problems Are Market Problems: A Dangerous Gap in SEC Regulations
Posted in Banks and Financial ServicesI know, it doesn’t seem possible, but it looks like Wall Street investment firms are getting even better at losing money. Trading firms are even developing computer program that lose money for them. At least that’s what happened when Knight Capital released their new trading platform, containing a major bug, earlier this week. The bug… Continue Reading
Can We Stop History From Repeating Itself?
Posted in Banks and Financial ServicesI came across a quote from a speech F.D. Roosevelt gave in 1936 while reading an opinion piece by Jesse Eisinger in the New York Times and was struck by how timely it seemed. So I read FDR’s entire speech and now I think you should too. The phrase “history repeats itself” is a phrase… Continue Reading
Breaking News: Regulators Knew About Libor Rate Manipulation—And Did Nothing
Posted in Banks and Financial ServicesBreaking news. The Regulators knew as far back as 2008 that the LIBOR rate was being manipulated. This latest development in the metastasizing Libor scandal is mighty disturbing. The esteemed New York Federal Reserve Bank, on the regulatory “front line” for policing the banking industry, released documents that showed regulators in both the US and… Continue Reading
The Food and Drug Administration’s Surveillance of Employee E-mails: Intimidating Whistleblowers While Invading Employees’ Privacy
Posted in WhistleblowersAs Senator Charles E. Grassley puts it, “the FDA is discouraging whistle-blowers.” How? By monitoring their employees using a computer program called SpectorSoft. Much like parents would monitor the internet usage of their young children, the FDA is screening personal email of a select few employees who raised safety concerns about certain medical devices in… Continue Reading
Meet the Newest Insider Trading Method: Research Analyst Surveys
Posted in Banks and Financial ServicesMost everyone knows insider trading is illegal. We want our markets to be equal opportunity – where big banks base their trading decisions on the same information as the little guy. We’ve seen movies about how far people will go to get insider information, such as Bud Fox and Gordon Gekko in Wall Street’s expose… Continue Reading
Libor Rate Manipulation Scandal: Why American Cities Are the Real Victims
Posted in Banks and Financial ServicesWe haven’t heard the last of the Libor rate scandal yet. As the days pass, the victims of Libor rate fixing are coming forward. Cities, municipalities, pension funds, and hedge funds are lining up to sue more than a dozen of the banks that are involved in setting Libor. These include, of course, Bank of… Continue Reading
Private Companies Sending Citizens to Jail
Posted in In the Courts, Social PolicyWe’ve covered it before, private citizens going to jail for failure to pay minor debts. Sadly, it seems debtor’s prison remains alive and well in the United States. Making matters worse, The New York Times reports that private probation companies, with an array of tricks up their sleeves, are popping up across the country and… Continue Reading