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Post by alrich on Nov 9, 2011 13:41:26 GMT -5
SEC Enforcement Division Produces Record Results in Safeguarding Investors and Markets Agency’s Fiscal Year Totals Show Most Enforcement Actions Filed in Single Year FOR IMMEDIATE RELEASE 2011-234 Washington, D.C., Nov. 9, 2011 — The Securities and Exchange Commission today announced that the agency filed a record 735 enforcement actions in the fiscal year that ended September 30. This record number includes many cases involving highly complex products, transactions, and market practices, including those related to the financial crisis as well as insider trading by market professionals. “We continue to build an unmatched record of holding wrongdoers accountable and returning money to harmed investors,” said SEC Chairman Mary L. Schapiro. “I am proud of our Enforcement Division’s many talented professionals and their efforts that resulted in a broad array of significant enforcement actions, including those related to the financial crisis and its aftermath.” In 2009 and 2010, the SEC’s Enforcement Division underwent its most significant reorganization since it was established in the early 1970s. In an effort that greatly strengthened its enforcement capacity, the Division flattened its management structure, revamped the way it handles tips and complaints, facilitated the swift prosecution of wrongdoers through a formal program that encourages cooperation from individuals and companies in SEC investigations, and created national specialized units in five priority areas involving complex and higher risk areas of potential securities laws violations, among other things. In the first complete fiscal year (FY) since these and other reforms took place, markets and investors alike benefited substantially. This is evidenced by the filing of more enforcement actions in FY 2011 than ever filed in a single year in SEC history, and more than $2.8 billion in penalties and disgorgement ordered in FY 2011 SEC enforcement actions. “The Enforcement Division responded to Chairman Schapiro’s leadership with a record-breaking performance during a period of resource constraints,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This remarkable accomplishment has its roots in the talent, grit, and determination of the staff, as well as their creativity and willingness to consider new tools and approaches to stopping and deterring fraud and misconduct.” Financial Crisis-Related Cases Among the cases filed by the SEC in FY 2011 were 15 separate actions naming 17 individuals, including 16 CEOs, CFOs and other senior corporate officers, involving wrongdoing related to the financial crisis. These cases included enforcement actions involving collateralized debt obligations (CDOs) against J.P. Morgan for misleading investors in a CDO as the housing market began to plummet, Wachovia Capital Markets for misconduct in the sale of two CDOs tied to the performance of residential mortgage-backed securities, and two firms (Stifel, Nicolaus & Co. and RBC Capital Markets) involved in the sale of unsuitable CDO investments to five Wisconsin school districts. The SEC also charged six executives at Brooke Corporation and three executives at mortgage lender IndyMac Bancorp for misleading investors about the deteriorating financial condition at their respective companies. Separately, Morgan Keegan & Company this year paid $200 million to settle charges brought in FY 2010 that it falsely valued subprime mortgage securities in five funds managed by an affiliate. During the last 2½ years, the agency has filed 36 separate actions in its financial crisis-related cases against 81 defendants – nearly half of whom were CEOs, CFOs and senior corporate executives, resulting in approximately $1.97 billion in disgorgement, penalties, and other monetary relief obtained. In addition to the cases described above, this includes enforcement actions against Goldman Sachs and Citigroup, as well as senior executives from Countrywide Financial, New Century and American Home Mortgage. Insider Trading Cases Insider trading cases also are on the upswing with 57 actions filed in FY 2011 by the SEC, a nearly eight percent increase over last year’s total. Among those charged in SEC insider trading cases in the past fiscal year were various hedge funds managers and traders involved in a $30 million expert networking trading scheme, a former NASDAQ Managing Director, a former Major League Baseball player, and an FDA chemist. The SEC also brought insider trading charges against a Goldman Sachs employee and his father who traded on confidential information learned at work on the firm’s ETF desk, and a corporate board member of a major energy company and his son for trading on confidential information about the impending takeover of the company. In FY 2011, the SEC obtained judgments in 18 actions arising out of its investigation of hedge fund manager Raj Rajaratnam, the founder of Galleon Management, who was recently convicted of multiple counts of insider trading. The SEC obtained a record financial penalty of $92.8 million against Rajaratnam in its civil action for widespread insider trading. The SEC provided significant assistance to the U.S. Attorney’s Office for the Southern District of New York in its successful criminal prosecution of Rajaratnam. Other Enforcement Matters The SEC brought 89 actions in FY 2011 for financial fraud and issuer disclosure violations. Those cases included actions against Satyam Computer Services Limited for fraudulently overstating its financial results by more than $1 billion over five years, the India-based affiliates of PricewaterhouseCoopers for their audit failures related to Satyam, and DHB Industries Inc. – a major supplier of body armor to the U.S. military and law enforcement agencies – for engaging in a massive accounting fraud. The SEC also filed separate fraud charges against DHB’s former outside directors and audit committee members for facilitating the company’s fraud. The SEC’s Cross Border Working Group, a proactive risk-based initiative focusing on U.S. companies with substantial foreign operations, brought many important actions in FY 2011 including the first-ever stop orders for post-effective registration statements due to the resignation of a company’s independent auditor, several trading suspensions of securities based on the accuracy and completeness of their publicly filed information (HELI, CHJI, RINO, ARFR, HIET, and DYOUF), and a subpoena enforcement action against Deloitte Touche Tohmatsu CPA Ltd. for failing to produce documents related to an investigation into possible fraud by the Shanghai-based public accounting firm’s client Longtop Financial Technologies Limited. The SEC also brought enforcement actions against individuals and firms targeting vulnerable investors such as three senior executives at Akron, Ohio-based Fair Finance Company who orchestrated a $230 million fraudulent scheme involving thousands of investors, many of them elderly. The SEC also charged Internet-based investment company Imperia Invest IBC for operating a scheme targeting many members of the deaf community. The SEC increased its number of enforcement actions related to investment advisers and broker-dealers during the past fiscal year. The agency filed a total of 146 enforcement actions related to investment advisers and investment companies, a single-year record and 30 percent increase over FY 2010. The SEC also brought 112 enforcement actions related to broker-dealers, a 60 percent increase over last year. Among those charged in SEC investment adviser and broker dealer actions were Charles Schwab entities and executives for making misleading statements to investors regarding a mutual fund heavily invested in mortgage-backed and other risky securities, AXA Rosenberg Group LLC and its founder for concealing a significant error in the computer code of the quantitative investment model that they used to manage client assets, and Merrill Lynch for misusing customer order information to place proprietary trades for the firm and for charging customers undisclosed trading fees. The Schwab entities paid more than $118 million to settle the SEC’s charges, while AXA Rosenberg paid $217 million to cover investor losses and a $25 million penalty. Additional data on the SEC’s FY 2011 enforcement results will be available as part of the agency’s Performance and Accountability Report that will be published at a later date. # # # www.sec.gov/news/press/2011/2011-234.htm
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Post by alrich on Nov 9, 2011 20:11:50 GMT -5
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Post by alrich on Nov 9, 2011 21:01:52 GMT -5
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Post by alrich on Feb 28, 2012 9:39:12 GMT -5
www.thekomisarscoop.com/2012/02/new-film-about-naked-short-selling/ New film about naked short selling Filed under Blog. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry By Lucy Komisar Feb 27, 2012 A new documentary, “The Wall Street Conspiracy” by Kristina Leigh Copeland of Brown Saddle Films, has its premiere in New York March 1st. It exposes the massive scam of naked short selling. Short selling is when traders sell shares short — they sell shares they don’t own in the hopes the price will go down before they have to buy and deliver the shares according to SEC rules in three days. They hope they will buy the shares more cheaply and make a profit when sending them to the buyer at a price lower than the buyer paid them. But NSS is a scam in which the sellers never buy the shares and send them to the owners. The owners think they have the shares because they have “book entries” saying they have the shares, and the big broker dealers cooperate in not “buying in” — not demanding the delivery of the real shares. This creates counterfeit shares in the market place — more shares are sold than exist — and lines the pockets of short sellers, most of them hedge funds. It also profits the banks/broker dealers who get commissions on the fake trades. I was interviewed about how the offshore system is used to enable fraudsters dealing in naked shorts.
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Post by alrich on Feb 29, 2012 23:28:10 GMT -5
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Post by siriusnews on Mar 1, 2012 10:12:16 GMT -5
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Post by alrich on Mar 1, 2012 17:09:28 GMT -5
STRANGE March 16th isn't hear yet: Screening 16 March Friday, March 16, 2012, 5:45 pm Round Hill Community Church, 395 Round Hill Rd, Greenwich, CT The documentary, The Wall Street Conspiracy, explores a pernicious form of fraud called illegal naked short selling that had an enormous impact on the 2008 collapse of the U.S. economy. Produced by Greenwich Filmmaker, Kristina Leigh Copeland, the film will have its World Premiere at the Tribeca Film Festival on March 1, and will be shown at the Round Hill Community Church on Friday, March 16. Copeland founded the company Brown Saddle Films, to expand upon her desire to raise awareness about issues she feels are important in our world today. Having spent decades fund raising on behalf of organizations to help spread their message, Copeland decided the most effective way to reach the global community was through the medium of film. She hopes her films’ subjects bring awareness to a global audience and stimulate the necessary changes required to provide a fair world now and for future generations. The Wall Street Conspiracy is the latest production to come from Brown Saddle Films. Following the screening, there will be a special Q & A with the film's producer and Dr. Kathryn Tanner, the Frederick Marquand Professor of Systematic Theology at Yale Divinity School. Tanner’s most recent work, an analysis of current-day financial markets, aims to show that Christian faith and practice can speak to the global economic system, its values and malfunctions. She says it’s time to muster the theological imagination to offer an urgent Christian critique of current financial excesses and propose an alternative “social architecture” that can nurture the human spirit beyond competitiveness and fear. There will be a welcome reception at 5:45 and the film will begin at 6:30 p.m. At 8, there will be a special panel Q & A followed by dessert. greenwich.patch.com/events/the-wall-street-conspiracy-documentary-screening
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Post by alrich on Mar 12, 2012 9:36:40 GMT -5
Grassley Asks DOJ Again if They've Taken Action Against Wall Street Updated 1:31 p.m. Sen. Chuck Grassley (R-Iowa) is pushing the Department of Justice for details on what it has done to pursue criminal charges against the major Wall Street banks and executives who he says are responsible for the nation’s financial crisis. In a letter to Attorney General Eric Holder Jr. issued today, Grassley asked for a list of cases that detail which convictions were obtained against CEOs, CFOs, board members, presidents and other executives of Wall Street firms and banks. The letter comes two days after Grassley criticized the DOJ response to the financial crisis during a Senate Judiciary Committee hearing. And it comes in direct response to reaction from the DOJ posted on the Blog of Legal Times, according to a Grassley spokeswoman. At a Capitol Hill hearing Wednesday on foreclosure abuse and lending discrimination practices, Grassley said the DOJ has done a “terrible job” of prosecuting financial crimes. He said: “The Justice Department has brought no criminal cases against any of the major Wall Street banks or executives who are responsible for the financial crisis.” In response to a Legal Times request, DOJ issued a written statement on the criticism. “The Department of Justice, through our U.S. Attorneys’ Offices and litigating divisions, has brought thousands of mortgage fraud cases over the past three years, and secured numerous convictions against CEOs, CFOs, board members, presidents and other executives of Wall Street firms and banks for financial crimes," DOJ spokeswoman Laura Sweeney said. Grassley requested the list by the end of the month. A DOJ spokesman said the agency is reviewing the letter. legaltimes.typepad.com/blt/2012/03/grassley-asks-doj-again-if-theyve-taken-action-against-wall-street.html
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Post by siriusnews on Mar 12, 2012 11:00:21 GMT -5
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Post by siriusnews on Mar 12, 2012 11:20:16 GMT -5
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Post by siriusnews on Mar 12, 2012 11:23:06 GMT -5
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Post by siriusnews on Mar 12, 2012 11:54:50 GMT -5
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Post by alrich on Mar 12, 2012 11:59:47 GMT -5
Appreciate the video of Faulk news.
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Post by alrich on Mar 13, 2012 14:17:25 GMT -5
March 13, 2012 CFTC Orders Goldman Sachs Execution & Clearing, L.P., a Registered Futures Commission Merchant, to Pay $7 Million for Supervision Failures in Handling Accounts it Carried www.cftc.gov/PressRoom/PressReleases/pr6206-12
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Post by alrich on Mar 13, 2012 15:17:00 GMT -5
Two Ameriprise advisers traded on info gleaned from AA meeting, SEC says Allegedly learned about upcoming insurance company merger during Alcoholics Anonymous meeting; shares rose 64% www.investmentnews.com/
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Post by siriusnews on Mar 13, 2012 21:04:21 GMT -5
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Post by alrich on Mar 14, 2012 10:27:42 GMT -5
FOR IMMEDIATE RELEASE March 14, 2012 CONTACT: Steve Hudak 703-905-3770 www.fincen.gov/news_room/nr/html/20120314.htmlImportant Notice for Money Services Businesses FinCEN Releases the New Registration of Money Services Businesses (RMSB) March 14, 2012 The Financial Crimes Enforcement Network (FinCEN) has released the new Registration of Money Services Business (RMSB), FinCEN Report 1071 , through the BSA E-Filing System. This report will fully replace the most recent FinCEN Form 107, hereinafter the "legacy RMSB." The new report, which will be used by all money services businesses (MSBs), facilitates registration by foreign-located MSBs and providers of prepaid access. On July 18, 2011, FinCEN issued the final rule, Definitions and Other Regulations Relating to Money Services Businesses, which clarified that certain foreign-located persons engaging in MSB activities within the United States fall within FinCEN's definition of an MSB, and therefore, must comply with FinCEN requirements.2 Consistent with the rule, certain foreign-located persons engaging in MSB activities within the United States are required to register with FinCEN. The compliance date for this rule was January 23, 2012. The new RMSB facilitates filings by foreign-located MSBs; now that it is available, such persons should register as soon as possible. On July 26, 2011, FinCEN released the final rule, Definitions and Other Regulations Relating to Prepaid Access.3 Consistent with this rule, and with the subsequently released FinCEN Notice 2011-34 , registration requirements for providers of prepaid access take effect on March 31, 2012. The new FinCEN Report 107 RMSB is only available electronically. The legacy FinCEN Form 107 does not accommodate electronic filings by foreign-located money service businesses and providers of prepaid access. Accordingly, with the availability of the new FinCEN Report 107, foreign-located MSBs and providers of prepaid access must file the new RMSB electronically within the compliance deadlines. All other MSBs may continue to file the legacy FinCEN Form 107 as required5 by FinCEN until March 31, 2013. The issuance of the new RMSB does not change any underlying registration requirements or timing for renewals of a registration. In order to submit the new RMSB, institutions must register for the BSA E-Filing System. The registration process can take between 5 and 7 business days. Questions or issues regarding the BSA E-Filing System may be directed to the BSA E-Filing Help Desk at 1-866-346-9478 or via email to BSAEFilingHelp@fincen.gov. The Help Desk is available Monday through Friday from 8 a.m. to 6 p.m. EST. Please note that the Help Desk is closed on Federal holidays. Questions pertaining to MSB regulatory requirements should be directed to FinCEN's Regulatory Helpline at 1-800-949-2732. -------------------------------------------------------------------------------- 1 See www.gpo.gov/fdsys/pkg/FR-2011-10-06/pdf/2011-25607.pdf 2 See www.fincen.gov/news_room/nr/pdf/20110715.pdf 3 See www.fincen.gov/news_room/nr/pdf/20110726b.pdf 4 See www.fincen.gov/whatsnew/pdf/20110909.pdf 5 See www.fincen.gov/news_room/nr/pdf/20120223.pdf
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Post by alrich on Mar 14, 2012 12:39:35 GMT -5
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Post by alrich on Mar 15, 2012 10:39:33 GMT -5
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Post by alrich on Mar 15, 2012 11:08:40 GMT -5
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Post by alrich on Mar 15, 2012 12:50:34 GMT -5
Tim Geithner Covers for Corruption on Pennsylvania Avenue dailyreckoning.com/Mr. Secretary, federal government policies, not amnesia, were at the heart of the financial crisis. The arrogance of power revealed by your selective memory and political spin, and the expansive regulatory regime you support are now the primary source of systemic risk to the US financial system and the economic security of the American people.Regards,Charles Kadlec,for The Daily Reckoning
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Post by alrich on Mar 15, 2012 15:54:23 GMT -5
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Post by alrich on Mar 16, 2012 10:08:03 GMT -5
At Goldman, short-term greed vs. long-term greed View Photo Gallery Wall Street was abuzz Wednesday after a high-ranking Goldman Sachs executive resigned and authored a scathing essay in the New York Times about how the investment bank had lost its moral backbone. Here is a look at some criticisms hurled at Goldman in recent years and some of the harsh ways the investment bank has described its own investors. By Ezra Klein, Published: March 15The Washington Post For Goldman Sachs, the real damage of the past two days didn’t come from disgruntled trader Greg Smith’s resignation op-ed. It came from Goldman’s defenders. Many of the replies said, either explicitly or in effect, of course Goldman rips off its clients if doing so will help it make money. Only the naive would think otherwise. As an editorial in Bloomberg View put it , “It must have been a terrible shock when Smith concluded that Goldman actually was primarily about making money.” (Disclosure: I’m a contributor to Bloomberg View.) Goldman Sachs executives responded to a blistering essay, written by a former executive who announced his resignation in the New York Times. Greg Smith claimed bank employees trampled on client interests in their pursuit of profits. Gallery A look at the billionaires who top Forbes’s list of the richest people in the world. This response, amazingly, was popular within Goldman, too. Ben White, author of Politico’s Morning Money, wrote that “perhaps half” of the employees at 200 West Street — Goldman’s address — sent him the editorial in order to defend their firm. But Smith never suggested that Goldman should be run as a charity. Rather, he argued something very different. Something that gets to the heart of what Goldman Sachs, and Wall Street, has become. “Take it in its historical sweep for a moment,” says William Cohan, author of “Money and Power: How Goldman Sachs Came to Rule the World” (and also a Bloomberg View contributor). “For most of the last century, Wall Street — no one knew what it was. It was a bunch of undercapitalized private partnerships. And the way it made money was taking companies public, raising debt for them, raising equity for them, advising them on merger and acquisition deals, and advising them on how to manage their money. There was very little trading. Very little risk for them. That was the business.” In that business, Cohan says, the profits came from long relationships with firms. You wanted IBM as your client for 100 years. Goldman might have been out to make money, but the particular type of greed was, in the words of former Goldman Sachs director Gus Levy, “long-term greed.” And long-term greed meant treating your clients right. Today, most of Goldman’s profits come from the trading side — which is also, incidentally, where Smith worked. “If you need IBM to be your client forever, you don’t call them a muppet,” Cohan says. “If it’s some guy on the other side of a quick trade? You don’t need him forever.” To be sure, the trading side of a bank is also able to offer service to the firm’s long-term clients. If IBM wants to trade a complex derivative quickly, Goldman’s traders can jump on the other side of that bet and then either remain on the other side or sell the derivative to someone else. That’s good for IBM. But it also exposes Goldman to vastly more risk and very different incentives. Sometimes, the firm is left holding risks no one would want, and the job of its traders is to sell those risks to someone else who doesn’t know enough to know they shouldn’t want them. That’s the sort of behavior Smith was referring to when he complained of having to persuade clients “to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit.” He also implied that the ethos of the trading side is infecting the advisory side. There’s pressure, he wrote, to “get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. “ Much in Smith’s op-ed defies belief. It’s hard to accept the idea that Goldman’s culture is more “toxic” today than it was in 2005, when it was involved in inflating a housing bubble that would help crash the global economy, or in 2007 and 2008, when it began desperately offloading housing-related assets to investors who hadn’t realized that the market was going to crash. If there was a culture change, Cohan notes, it likely came when Goldman went public a decade ago, not after a financial crisis that almost wiped the firm out. That Smith chose 2012 to write his cri de coeur, as opposed to 2006, suggests that personal or professional reasons might have motivated his change of heart. And, at any rate, in a firm with 12,000 vice presidents, one vice president’s frustrations should not be taken as obviously representative of either his colleagues or his company. But the response of many of Goldman’s defenders confirmed the very trend Smith was lamenting: a change from long-term greed, which aligned Goldman’s interests with those of its clients and arguably with those of the broader market, to short-term greed, which is not quite so benign for your clients or for the broader market. If the best that can be said of Goldman today is that it’s well known that the firm will do absolutely anything to make a quick buck, then the problem with Smith’s op-ed might be that it’s late, but not that it’s wrong. For previous columns by Ezra Klein, go to postbusiness.com. www.washingtonpost.com/business/economy/at-goldman-short-term-greed-vs-long-term-greed/2012/03/15/gIQAG6k9ES_story.html?wpisrc=nl_headlines
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Post by alrich on Mar 16, 2012 15:25:42 GMT -5
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Post by alrich on Mar 16, 2012 22:58:18 GMT -5
STRANGE March 16th isn't hear yet: Screening 16 March Friday, March 16, 2012, 5:45 pm Round Hill Community Church, 395 Round Hill Rd, Greenwich, CT The documentary, The Wall Street Conspiracy, explores a pernicious form of fraud called illegal naked short selling that had an enormous impact on the 2008 collapse of the U.S. economy. Produced by Greenwich Filmmaker, Kristina Leigh Copeland, the film will have its World Premiere at the Tribeca Film Festival on March 1, and will be shown at the Round Hill Community Church on Friday, March 16. Copeland founded the company Brown Saddle Films, to expand upon her desire to raise awareness about issues she feels are important in our world today. Having spent decades fund raising on behalf of organizations to help spread their message, Copeland decided the most effective way to reach the global community was through the medium of film. She hopes her films’ subjects bring awareness to a global audience and stimulate the necessary changes required to provide a fair world now and for future generations. The Wall Street Conspiracy is the latest production to come from Brown Saddle Films. Following the screening, there will be a special Q & A with the film's producer and Dr. Kathryn Tanner, the Frederick Marquand Professor of Systematic Theology at Yale Divinity School. Tanner’s most recent work, an analysis of current-day financial markets, aims to show that Christian faith and practice can speak to the global economic system, its values and malfunctions. She says it’s time to muster the theological imagination to offer an urgent Christian critique of current financial excesses and propose an alternative “social architecture” that can nurture the human spirit beyond competitiveness and fear. There will be a welcome reception at 5:45 and the film will begin at 6:30 p.m. At 8, there will be a special panel Q & A followed by dessert. greenwich.patch.com/events/the-wall-street-conspiracy-documentary-screening
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Post by alrich on Mar 17, 2012 16:36:00 GMT -5
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Post by alrich on Mar 24, 2012 10:16:05 GMT -5
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Post by alrich on Mar 24, 2012 10:23:12 GMT -5
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Post by alrich on Mar 24, 2012 10:24:34 GMT -5
Madoff tentacles ensnare exchange One of Madoff's nieces is married to Eric Swanson, a former SEC lawyer who was key to BATS Trading winning official exchange status. By Telis Demos, writer-reporter Last Updated: December 19, 2008: 1:51 PM ET
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NEW YORK (Fortune) -- The tentacles of the story of Bernard Madoff, the investment manager who was arrested last week for allegedly defrauding investors out of billions of dollars, are reaching ever-deeper into the financial markets.
One of Madoff's nieces, Shana Madoff, is married to Eric Swanson, a former SEC lawyer who is now the general counsel of BATS Trading, The Wall Street Journal reports.
What is BATS Trading? Located about 20 minutes south of Kansas City on Route I-35 in a suburban office park, BATS (which stands for "better alternative trading system") is a fast-growing electronic stock exchange.
Founded three years ago, BATS has quickly become a major player: It now trades one out of every ten U.S. shares, about $35 billion of transactions, every day. In October, BATS was approved by the SEC as an official stock exchange, the first since Nasdaq began in the 1970s.
BATS hired Swanson in January 2008, in part to help win exchange status with the SEC. According to his company bio, Swanson worked at the SEC from 1996 to 2006, most recently as head of its "inspection program responsible for regulatory oversight of trading on the securities exchanges and ECNs." In the interim two years, in addition to marrying Madoff's niece in 2007, he had been a VP of regulatory strategy at Ameriprise Financial (AMP, Fortune 500), a financial services firm based in St. Paul, Minn. Swanson, who got his law degree from the Hamline University School of Law, also in St. Paul, works out of BATS' New York office, located on Wall Street across from the New York Stock Exchange.
There is no evidence of Swanson being involved in an SEC investigation of Madoff that began in 2005, but the spotlight turned on Swanson after SEC chairman Christopher Cox Tuesday cryptically referred to looking into "staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by [SEC] staff regarding the firm."
The SEC has been roundly criticized for not discovering the Madoff fraud despite investigating the firm multiple times in the past nine years, and Cox is promising to get to the bottom of why.
A spokesman for Swanson did not immediately return a call for comment. Randy Williams, a spokesman for BATS, says: "Throughout his career, Eric has displayed the highest ethical standards and his reputation has been - and continues to be - above reproach." Talking to reporters Wednesday, Cox added: "There is no evidence thus far of any wrongdoing by any SEC professional."
Third largest U.S. stock exchange Despite the connection to the Madoff story, BATS was one of the few financial companies to post a banner year in 2008 - in part because it has been a beneficiary of recent market volatility. From August to October its average volume doubled; it was the only U.S. market that didn't have to halt trading last year because of having too many sells and not enough buys. In late October, it hit a record for volume, trading 2.7 billion shares. Its high volume has made it the third-largest stock exchange in the U.S., eating into the market share of leaders Nasdaq and the New York Stock Exchange.
Why all the growth? When everyone is selling, often the only buyers are market-making firms specializing in the furious buying and selling of millions of shares to make money from tiny price changes. BATS appeals to these firms - which range from anonymous 20-person shops to subsidiaries of big banks - with software that executes trades in microseconds rather than the milliseconds everyone else offers. (Though Madoff did have what he called a "market-making" operation, it was unaffected by his firm's collapse.)
BATS software is faster in part because it was built from scratch in the past couple of years, but also because the firm really is a technology company, not a financial firm. It draws engineering talent from a mini financial-tech corridor in the Kansas City area. Its whole market is overseen by 18 people watching a dozen Dell (DELL, Fortune 500) computer monitors.
Culturally, BATS feels a world away from Wall Street. The employees are mostly geeky, family-oriented software guys who take lunch at a long table in the office. Team building is done through once-a-month midnight bowling and WhirlyBall competitions (think polo in bumper cars).
Like many startups, BATS began as an attempt to break the control of established players, in this case Nasdaq and the NYSE. Founder Dave Cummings, a trader who previously founded market maker Tradebot, was well-known for sending out e-mail blasts complaining about the monopolist practices of Nasdaq, referring to its CEO Robert Greifeld as "Bob the Bully."
Being approved an official exchange gives BATS a boost in legitimacy, plus the right to clear its own trades - shaving ever more microseconds from the time it takes to execute a transaction. Exchange status also gives BATS a larger share of the revenue that accrues to all exchanges from the sale of market data to firms and third-party services.
BATS has plenty of significant issues to deal with. Trading volumes frequently drop after a market upheaval, as traders move money into low-risk securities like Treasurys. Competition is in the offing: Direct Edge, a rival based in New Jersey, has said it is developing its own superfast platform to go after BATS's market-making customers.
But BATS is on the move: It recently launched an electronic exchange in Europe and is considering other markets like Canada and Australia. CEO Joe Ratterman even muses about getting into the IPO business. "It doesn't have to be an old boys' club, with some secret conversation between investment bankers in their executive lunchrooms," he says. "I think that model is ready to tumble for good."
First Published: December 18, 2008: 11:59 AM ET
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Post by alrich on Mar 24, 2012 11:05:06 GMT -5
BATS Seals Chi-X Deal, Looks Into Derivatives online.wsj.com/article/SB10001424052748704900004576152504056822740.html LONDON—BATS Chi-X Europe, the new pan-European stock-trading group being formed by BATS Global Markets' acquisition of Chi-X Europe, is interested in possibly launching a derivatives-trading platform, a senior BATS executive said. "Derivatives would be interesting for us," BATS Europe Chief Executive Mark Hemsley told Dow Jones Newswires. The comments came after BATS announced Friday that it will buy Chi-X Europe, its rival in pan-European stock trading. Financial details weren't disclosed, but people familiar with the matter have said the deal is valued at up to $360 million. The deal needs regulatory approval. The potential new service would be a challenge to the derivatives-trading capabilities of another exchange group that would result from Deutsche Börse AG's DB1.XE +0.04%planned acquisition of NYSE Euronext NYX -0.81%. "If you look at the Deutsche Börse-NYSE deal, you're looking at a potential monopoly in Europe on derivatives. I think what we have in BATS Chi-X Europe is exactly the sort of organization the industry could look to challenge that monopoly," Mr. Hemsley said. The London Stock Exchange Group LSE.LN +0.40%PLC plans to launch a pan-European equity-derivatives business in the second quarter. LSE CEO Xavier Rolet, who is leading the LSE's acquisition of Canada's TMX Group Inc., X.T +0.02%said previously that the derivatives market in Europe is dominated by the "duopoly" of heavyweights NYSE Liffe, which is operated by NYSE Euronext, and Eurex, run by Deutsche Börse. Liffe and Eurex have an annual combined derivatives revenue of about €1.2 billion ($1.63 billion). Mr. Hemsley said that looking more closely into derivatives trading may come only after the integration of BATS and Chi-X, as well the adoption of BATS's trading technology. "Our first priority is on the cash equities side," Mr. Hemsley said. Mr. Hemsley said he expects BATS Chi-X Europe to continue grabbing market share in European stock trading. "The idea is that we will have a trading platform that will combine the market share of the two existing organizations. And then we're able to offer more liquidity in a single location, a single trading venue, and we can offer sophisticated technology," Mr. Hemsley said. Data from Thomson Reuters show that the combined market share of stock-trading volume in the European Union for Chi-X and BATS has increased to 19.2% in December 2010 from 16.6% the year before. Mr. Hemsley said BATS also is open to further acquisitions. "We will keep our eyes open and we'll evaluate opportunities."
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