Tag: USA

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Article: Common currency: a forex scandal that epitomises the blindness in the banking crisis

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Common currency: a forex scandal that epitomises the blindness in the banking crisis

Andre Spicer, 16 November 2014

The biggest open secret in the financial world has been confirmed. Regulators in the UK, the US and Switzerland have announced massive fines for some of the world’s largest banks for a manipulation of global currency markets that in its callous ubiquity says so much about the banking behaviours that sparked the global financial crisis.

Fines levied by the UK regulator add up to £1.1 billion. The US regulator announced fines of $1.4 billion. Banks hit by these fines include UBS, Citi, JP Morgan, HSBC and RBS. Barclays is yet to come to a settlement on the back of the investigations.

The probe uncovered individuals traders within large banks who were working together in trading clubs which had names you would expect from the “ruthless narcissists” on BBC TV show, The Apprentice. These included “the players”, “the 3 musketeers” and “1 team, 1 dream”.

These clubs worked together to influence the WM Reuters 4pm fix – essentially the official number used to fix currency rates. It shapes everything from how much we pay for currency when we go overseas to how much our pension fund pays when it wants to buy into an offshore investment. This is one of the core numbers in global finance.

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Article: Criminal investigation into possible price rigging in London foreign exchange market

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Criminal investigation into possible price rigging in London foreign exchange market

Merco Press, 22 July 2014

The United Kingdom Serious Fraud Office (SFO) has launched a criminal investigation into allegations of price rigging in the £3tn-a-day foreign exchange market. The probe will look into allegations of “fraudulent conduct”, the director of the SFO said in a statement.

Around 15 international agencies are investigating allegations of collusion and price manipulation. It is alleged that traders used online chat-rooms to plan the fixing of benchmark prices.

The Financial Conduct Authority (FCA) said in October it had joined other regulators around the world in scrutinizing firms over the potential manipulation of the foreign exchange market.

Several investment banks, including Barclays and HSBC have already suspended currency traders due to the investigation by the FCA. And in March this year the Bank of England suspended one member of staff over the probe.

At the time the head of the Financial Conduct Authority, Martin Wheatley, said that currency manipulation was “every bit as bad” as the Libor scandal, where banks including Barclays, Royal Bank of Scotland and UBS paid fines totaling 6bn dollars relating to Libor fixing.

For the criminal probe the SFO will work in co-operation with the FCA and the US Department of Justice, which announced its own criminal investigation last October.

Earlier this year US prosecutors flew to London to question individuals over allegations of market manipulation.

The Serious Fraud Office is an independent UK government department responsible for investigating and prosecuting serious and complex fraud, bribery and corruption. It is headed by the Director, David Green CB QC, who exercises powers under the superintendence of the Attorney General. These powers are derived from the Criminal Justice Act 1987.

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Article: Florida state professors settle naked short-selling case

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Florida state professors settle naked short-selling case

Sarah N. Lynch, 01 February 2014

WASHINGTON (Reuters) – Two Florida State University professors who specialize in financial markets and physics will pay more than $670,000 to settle civil charges that they carried out an illegal short-selling scheme using an elaborate options strategy, U.S. regulators said on Friday.

Gonul Colak and Milen Kostov settled with the Securities and Exchange Commission without admitting or denying the charges. Continue reading “Article: Florida state professors settle naked short-selling case”

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Article: 49 Russian Diplomats and Spouses Charged with Medicaid Fraud, But Diplomatic Immunity Bars Their Arrest

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49 Russian Diplomats and Spouses Charged with Medicaid Fraud, But Diplomatic Immunity Bars Their Arrest

Steven A. Meyerowitz, 06 Decembet 2013

A total of 49 current or former Russian diplomats and their spouses have been charged by U.S. prosecutors with participating in a widespread health care fraud scheme from 2004 to August 2013 to illegally obtain nearly half a million dollars in Medicaid benefits. Not one of the people charged was arrested, because of diplomatic immunity.

Each of the defendants is a current or former Russian diplomat or the spouse of a diplomat employed at either the Russian Mission to the United Nations, the Russian Federation Consulate General in New York, or the Trade Representation of the Russian Federation in the USA, New York Office. Continue reading “Article: 49 Russian Diplomats and Spouses Charged with Medicaid Fraud, But Diplomatic Immunity Bars Their Arrest”

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Article: HSBC scandal further erodes credibility of UK banking industry

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HSBC scandal further erodes credibility of UK banking industry

AFP, 22 July 2012

London: A scandal erupting at Europe’s biggest bank HSBC has added to concerns over the state of Britain’s financial sector amid the Barclays rate rigging affair and as the industry faces a major shake-up.

HSBC last week apologised and its head of compliance David Bagley resigned after US lawmakers accused the London-based bank of failing to apply anti-laundering rules, benefitting Iran, terrorists and drug dealers.

The HSBC affair follows hot on the heels of the Libor interest rate rigging scandal that has brought down top executives at Britain’s Barclays bank — most notably its chief executive Bob Diamond and chairman Marcus Agius.

Regulators are reportedly investigating HSBC, as well as Credit Agricole, Deutsche Bank and Societe Generale, over alleged manipulation of the Libor rate after Barclays was recently fined £290 million (Dh1.66 billion) over the affair.

Britain’s financial regulator, the Financial Services Authority (FSA), has said its Libor probe is looking at seven groups, which are not only British institutions.

Bank of England governor Mervyn King has meanwhile proposed that central bank governors and regulators discuss Libor reform at their upcoming meeting in Basel, Switzerland, on September 9.

Barclays has admitted attempting to manipulate the Libor and Euribor rates between 2005 and 2009.

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Article: Barclays guilty of market manipulation

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Barclays guilty of market manipulation

moneyweek, 27 June 2012

Barclays Bank is to pay a 290 million pound fine following an investigation by UK and US regulators into manipulation of inter-bank lending rates.

The bank’s top executives, including Chief Executive Bob Diamond, have agreed to waive their bonuses this year as a result. City watchdog, the Financial Services Authority (FSA), said Barclays’ regulation breaches were “serious, widespread and extended over a number of years”.

It accused the bank of having inadequate systems and controls in place until June 2010 and of failing to review its systems and controls at a number of appropriate points. Continue reading “Article: Barclays guilty of market manipulation”

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Article: SEC charges OptionsXpress over naked short selling

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SEC charges OptionsXpress over naked short selling

Reuters Staff, 16 April 2012

April 16 (Reuters) – The online brokerage OptionsXpress and five individuals were charged by the U.S. Securities and Exchange Commission with involvement in an abusive naked short-selling scheme.

The SEC on Monday said the scheme involved a series of sham transactions, violating a regulation requiring that equity securities be delivered when due.

Four OptionsXpress officers and a customer were charged by the SEC. Three of the officials settled without admitting or denying the regulator’s findings.

The SEC said the misconduct lasted from at least October 2008 to March 2010. Charles Schwab Corp bought OptionsXpress last year.

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Article: “Naked” ban deals further blow to CDS

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“Naked” ban deals further blow to CDS

Christopher Whittall, 04 April 2012

A ban on “naked” sovereign credit defaults swaps trading will be stricter and more far-reaching than market participants had previously thought and could severely damage market liquidity, analysts have warned.

The European Union recently published the final version of new regulation prohibiting participants from using CDS to take outright short positions in sovereigns. The regulation developed in the aftermath of various European politicians blaming sovereign CDS for peripheral bond yields widening during the euro zone crisis, despite a lack of empirical evidence to support these claims.

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Article: United States: Open-Market Manipulation Under SEC Rule 10b-5 And Its Analogues: Inappropriate Distinctions, Judicial Disagreement And Case Study: FERC’s Anti- Manipulation Rule

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United States: Open-Market Manipulation Under SEC Rule 10b-5 And Its Analogues: Inappropriate Distinctions, Judicial Disagreement And Case Study: FERC’s Anti- Manipulation Rule

Maxwell K. Multer,  01 September 2011

Regulators have addressed market manipulation with Rule 10b-5 since its promulgation under the Securities Exchange Act in 1942. While Section 9 of the Securities Exchange Act addresses manipulation of securities prices, it requires the specific intent “for the purpose of inducing the purchase or sale of such security by others”1 or “for the purpose of creating a false or misleading appearance [of market activity] . . ..”2 It is likely for that reason that prosecutors rarely use Section 9, choosing instead to bring manipulation proceedings under Rule 10b-5.3 But as the tools available for accomplishing market manipulation have evolved, the judicially narrowed contours of Rule 10b-5 may be such that certain new schemes escape liability. With modern advances in trade execution, market platforms and derivatives, it is now possible to accomplish a profitable market manipulation without engaging in any overtly fraudulent or illegal behavior.

Several courts have elected to distinguish between these alleged schemes and schemes which do include illegal behavior, employing a higher level of scrutiny and requiring proof of additional elements in the former situation. Manipulative schemes are referred to as “open market manipulations” when the alleged scheme is accomplished solely through the use of facially legitimate open market transactions. That is, where the manipulator has not engaged in any conduct that is inherently or otherwise illegal, such as fictitious transactions, wash sales or by disseminating false reporting. The transactions are seemingly legitimate, but for their manipulative intent and effect in combination. Continue reading “Article: United States: Open-Market Manipulation Under SEC Rule 10b-5 And Its Analogues: Inappropriate Distinctions, Judicial Disagreement And Case Study: FERC’s Anti- Manipulation Rule”

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Article: Investing for Profit in the Russian Mafia States Stock Market, Goodbye Chinese Century?

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Investing for Profit in the Russian Mafia States Stock Market, Goodbye Chinese Century?

Wikileaks recently released U.S. Embassy cables that contained accusations of Russia being a defacto Mafia State that has ceased to be a democracy and is run by the secret services on behalf of an Oligarchy. Much of which comes as nothing of a surprise to either the Russian people, business men or foreign investors who know that whilst doing business with Russia can prove highly profitable,

however investors and business people have to be nimble footed by being prepared to pull their funds out at short notice, which mean investors need to be invested in highly liquid funds that aim to track or better the general Russian stock indices such as the RTS stock market index rather than in illiquid individual stocks.

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Article: UPDATE 1-SEC, Connecticut charge fund manager with fraud

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UPDATE 1-SEC, Connecticut charge fund manager with fraud

Jonathan Stempel, 25 October 2010

NEW YORK, Oct 25 (Reuters) – A Connecticut hedge fund firm was sued on Monday by U.S. and state regulators for allegedly inflating the value of its holdings, allowing it to fraudulently collect millions of dollars of undeserved fees.

Southridge Capital Management LLC and its Chief Executive Stephen Hicks, 52, were sued by the U.S. Securities and Exchange Commission and Connecticut Banking Commissioner Howard Pitkin over their management and financial reporting of several funds.

The SEC said Hicks falsely valued Southridge’s largest holding, speech recognition company Fonix Corp, at $30 million or more based almost entirely on a 2004 transaction in which Fonix bought two companies from an entity he controlled.

It also said Hicks raised $78.9 million over the 2004 to 2007 period after falsely promising investors that more than 75 percent of assets would be put in liquid investments or cash.

Connecticut alleged the overvaluing of fund assets allowed Ridgefield-based Southridge to fraudulently collect more than $26 million in fees from 2004 to 2007. Continue reading “Article: UPDATE 1-SEC, Connecticut charge fund manager with fraud”

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Article: Currency wars and the emerging-market countries

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Currency wars and the emerging-market countries

Richard Portes, 04 November 2010

The headlines shout “currency wars”. The US believes China engages in “currency manipulation”. The authorities hesitate to declare this to the US Congress, and the Secretary of the Treasury says “competitive non-appreciation” instead. China accuses the US of excessively loose monetary policy, flooding the world with liquidity. There is some truth in both charges, but some exaggeration.

This is one of the key issues facing the G20. Exchange-rate pressures, global imbalances and rebalancing, spillovers and the desirability of policy coordination – these are at the centre of the economic interdependence between the developed and emerging market countries. All this is in the context of weak US and European recoveries from the Great Recession, the risk of deflation, and the likelihood of more quantitative easing (QE) by major central banks. Domestic issues and inability to get direct action on exchange rates has led the US to propose internationally agreed targets for current-account imbalances. The wheel goes round – these proposals bear some resemblance to those of Keynes at Bretton Woods, which the US then opposed.

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THE DOLLAR HAS NO INTRINSIC VALUE : DO YOUR ASSETS?