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HomeFROM THE ARCHIVES: Attorney Claims Wall Street’s Cop, FINRA, Invested in Madoff
Posted by Larry Doyle on January 29th, 2010 8:31 AM |
Time.
The policies implemented in Washington are trying to buy time in hopes that our economy recovers. Japan took the ‘buying time’ approach and twenty years later they are still waiting for real recovery.
Moving forward.
The approach being taken by those within our financial regulatory structure (SEC and FINRA) is to ‘move forward.’ Well, unless the critically unanswered questions and issues embedded within these organizations are fully exposed and addressed, America can never truly move forward with confidence in the markets and those overseeing them.
President Obama wants real financial regulatory reform. Then Mister President, compel your chair of the SEC, Mary Schapiro, to open the books and records of FINRA. Mr. President, compel Ms. Schapiro to unseal documents regarding the very formation of FINRA itself.
America knows something still smells on Wall Street. What is it? (more…)
Will 2010 Bring Real Financial Regulatory Reform?
Posted by Larry Doyle on January 4th, 2010 12:04 PM |
Will the change in the calendar bring about change in the prospects for real financial regulatory reform? Will Wall Street and Washington recycle the streamers and party hats used for New Year’s Eve celebrations and declare that the market is up so all is well? If the general media allows the charlatans in Washington and their consorts on Wall Street to frame the regulatory reform debate, America should expect little to no change on this front. In the process, a tremendous opportunity will have been squandered and real risks for our collective future will remain.
The haggling over regulatory turf continues again with Ben Bernanke’s declaration yesterday that our housing crisis resulted not from excessively easy monetary policy but rather lax regulatory oversight of mortgage lending. Whose domain is that to regulate? Oh right, that is the charge of the Federal Reserve. The joke on the American public continues, given that Bernanke is not called on the carpet for that sort of grandstanding. (more…)
Chris Dodd Has an Epiphany
Posted by Larry Doyle on November 11th, 2009 8:58 AM |
Senator Chris Dodd (D-CT)
Senator Chris Dodd (D-CT) is in a fight for his political life. Dodd continues to trail his primary Republican opponent Rob Simmons in recent polls. More disturbing than the actual polls versus his competition is the fact that fully 51% of those polled do not consider Dodd honest and trustworthy.
What happens to individuals faced with a potential death sentence? Come to Jesus. Faced with the prospect of death, literally or professionally, individuals often will undertake drastic changes in appearance and demeanor in an attempt to stave off that deep, dark descent. In that light, I am never amazed by actions, statements, and positions put forth by politicians.
What is Chris Dodd’s epiphany? Dodd clearly smells the wrath of the American populace toward Washington and Wall Street. Few politicians have been more closely linked with these two worlds than Senator Chris Dodd. After a year’s worth of debate and discussion on financial regulatory reform, Dodd is now proposing the most sweeping and all encompassing overhaul across the entire financial industry. Is this a Hail Mary pass in an attempt to pull victory from the jaws of political defeat? The American Banker provides a wide angled view of Dodd’s desperation pass in writing, Dodd Goes for Broke with Tough Reform Bill:
A draft version of his bill introduced on Tuesday was so far-reaching it would pick a fight with virtually every entrenched interest involved in the debate, including community banks, large financial institutions, the Obama administration, House Democrats, the Federal Deposit Insurance Corp. and the Federal Reserve Board.
Mortgage Fraud Deserves Jail Time
Posted by Larry Doyle on November 3rd, 2009 10:34 AM |
Fraudulent actions must have consequences.
How is it that with trillions in financial losses and a variety of financial frauds readily apparent, very few individuals have been held accountable? FL, a loyal reader of Sense on Cents, has banged this drum repeatedly.
Why hasn’t this fraud been more aggressively combated? The influence of the banking lobby, primarily over the federal regulatory oversight of the financial industry.
What a shame. Are there some new sheriffs, those being state attorneys general, getting ready to ride into this mess? It would appear they are. I immediately thought of our friend FL upon reading The New York Times report, States Are Pondering Fraud Suits Against Banks.
The banking industry at large has worked in concert with its lobbyists and trade associations to keep regulators and law enforcement at bay. At the federal level, the banks have largely been successful. That success begs the question as to how deeply embedded the lobbyists are in the regulatory community. (more…)
Sheila Bair Trumps Tim Geithner
Posted by Larry Doyle on October 29th, 2009 9:52 AM |
FDIC Head Sheila Bair
“Too big to fail.”
Do you think the American public is sufficiently sickened by that phrase? No doubt.
How will our ‘wizards in Washington’ handle this monstrous issue going forward? Is there any doubt that the industry itself should be held accountable to provide the necessary capital to unwind firms deemed ‘too big to fail?’ Of course not. However, the execution of that policy is where the rubber meets the road and where we learn who in Washington is truly working for the American public and who is working for the financial industry. How so? Let’s navigate. (more…)
Wiretaps on Wall Street
Posted by Larry Doyle on October 26th, 2009 11:11 AM |
“Leave the gun, take the cannoli.”
The world of organized crime evokes thoughts of payoffs, extortion, racketeering, and wiretaps. Are regulators now utilizing tools previously relegated to infiltrating the backroom dealings of the underworld to discover illegal activities on Wall Street? Yes, they are.
The news that regulators are now employing wiretaps to investigate financial frauds on Wall Street is sending a chill through Wall Street in general and hedge funds in particular. Why do regulators feel the need to utilize wiretaps?
Recall from the SEC’s and FINRA’s own internal reviews of their handlings of the Madoff and Stanford frauds that the regulators were woefully deficient in tracking and stopping these frauds. One of the greatest regulatory deficiencies highlighted is the use of technology.
Many hedge funds have spent millions upon millions of dollars on technology. These tools allow these funds to move with cat-like quickness in allocating capital and seizing investment opportunities. As we are learning, not all of these movements would seem to have been executed in a legal and ethical fashion.
How quickly can the regulators move to develop the necessary technical capabilities to track hedge fund activities? Don’t hold your breath.
Jules Kroll addressed the capabilities of the regulators relative to the tools employed by hedge funds on a Bloomberg interview this morning. Prior to my sharing Mr. Kroll’s assessment of the regulators’ capabilities, who is Jules Kroll? He recently founded a new firm, K2 Global Partners, which will look to “provide specialized risk services and solutions” to a wide array of global clients. (more…)
Bear Stearns Hedge Fund Managers ‘Facing the Music’
Posted by Larry Doyle on October 12th, 2009 12:29 PM |
Is it possible for an industry to accrue trillions in losses and nary an individual forced to truly ‘face the music?’ That reality, perhaps more than any other, is the greatest indictment of the incestuous relationship between Wall Street and its regulatory oversight in the form of the SEC and FINRA.
The music is about to start playing as Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin enter court this week for the start of their trial in which they are accused of misrepresenting the health of their two hedge funds at Bear Stearns.
This trial will attract a tremendous amount of attention. Why? The very fact that it is truly the first legitimate legal proceeding linked to the meltdown of our financial crisis. The trial will highlight incriminating statements and e-mails written by both Cioffi and Tannin. Additionally, we should expect the prosecution to present material which highlights the fact that Cioffi and Tannin seemed to intentionally misrepresent the very nature of their investment holdings.
The Wall Street Journal provides further color on this case in writing, A Case Pitting Spin Against Fraud:
A criminal trial involving two former Bear Stearns executives could help answer a key question stemming from the financial crisis: How far can Wall Street firms go to put a positive spin on bad news?
(Ralph Cioffi, a former money manager at Bear Stearns, is escorted by officials to a waiting vehicle in Manhattan on June 19, 2008.)
The two executives, Ralph Cioffi and Matthew Tannin, will fight securities-fraud charges in a widely anticipated trial beginning on Tuesday in a Brooklyn, N.Y., federal court. The money managers unsuccessfully scrambled to keep two mortgage-heavy Bear Stearns hedge funds afloat in 2007 amid sinking mortgage-market prices, the first of several blows that eventually felled Bear Stearns and marked the start of the credit crisis. J.P. Morgan Chase & Co. bought the firm in a March 2008 fire sale.
Prosecutors accused Messrs. Cioffi and Tannin of misleading investors about the health of the two funds, testing the degree to which Wall Street should disclose bad news to investors. (more…)
Harry Markopolos: “Don’t Trust Your Government”
Posted by Larry Doyle on March 1st, 2010 10:38 AM |
Harry Markopolos
In an interview on the Today show this morning (video clip after the fold), Harry Markopolos dropped a few bombshells. Harry’s statement that he had purchased a gun and mentally prepared himself to kill Bernie Madoff in self-defense if need be will likely grab the most attention. It shouldn’t.
Markopolos’ biggest bombshell this morning is his warning to America, “don’t trust your government.” No surprise that Today host Matt Lauer did not probe deeper. I am not confident that other outlets will delve deeper into Harry’s statement, either. I wonder why Harry himself is reticent to specifically point out the individuals and the instances which lead him to make that statement.
Recall that a year ago Harry defined the SEC as merely incompetent while simultaneously defining FINRA (Financial Industry Regulatory Authority) as ‘in bed with the industry’ that is Wall Street. Well, it does not take an advanced degree to connect Harry’s grenade toss into FINRA’s backyard a year ago with his volley this morning. (more…)
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Posted in Bernie Madoff, FINRA, General, Harry Markopolos, Madoff, Mary Schapiro, SEC, regulation | 16 Comments »