OK now I have officially had enough with this settlement bullsh*t. The state of New Jersey is allowed to lie about pension funding and defraud investors, and isn’t even levied a penalty? That’s not a slap on the wrist, it’s a slap in all of our faces.
Basically all it means for NJ is that they can’t sell these crap bonds anymore. Way to regulate, you lazy, toothless **cks. Now what about the idiots who invested in this crap? Throw them on the pile with the rest of New Jersey’s creditors?
The Securities and Exchange Commission accused the State of New Jersey of securities fraud on Wednesday for telling the bond markets that it was properly funding state workers’ pensions when it was not, The New York Times’s Mary Williams Walsh reports.
As a result, the S.E.C. said in a cease-and-desist order, investors bought more than $26 billion worth of New Jersey’s bonds, without understanding the severity of the state’s financial troubles. New Jersey, the S.E.C. said, has agreed to accept the order, without admitting or denying the finding. The agency did not impose a financial penalty.
Wednesday’s action was the first time the federal agency has accused a state with violating securities laws. The S.E.C.’s powers of enforcement against the states are tightly limited by states’-rights concerns and constitutional law, and it has standing to get involved only when there is a clear-cut case of fraud.
“The State of New Jersey didn’t give its municipal investors a fair shake, withholding and misrepresenting pertinent information about its financial situation,” Robert Khuzami, director of the S.E.C.’s division of enforcement, said in a statement. The cease-and-desist order named only the State of New Jersey, and not the financial institutions that helped it issue the bonds. Its largest bond underwriters during the period in question include Citigroup, JPMorgan Chase, Morgan Stanley, Bank of America, Merrill Lynch, Goldman Sachs and Barclays Capital.
Well who cares, even if they did name banks by name it’s not like they’d actually DO anything about it, right? Maybe they priced in a few million extra when they last settled with EACH of those banks for financial misdeeds.
I don’t feel sorry for the investors, actually, since this is what…
Sam Antar makes a good point here. Looking out for shareholders was not the objective of the lawsuit brought by the SEC against Goldman Sachs. Whether it would have, should have, or could have been considered is another matter, and apparently not going to be addressed. What we have here (and seemingly everywhere within our financial system) is not a real operation of law, but more of a political sideshow. - Ilene
The Securities and Exchange Commission’s settlement of a lawsuit against Goldman Sachs (NYSE: GS) over a certain subprime mortgage product sold to investors misses a key issue concerning the company’s duty to provide timely and transparent disclosures to its own shareholders about government subpoenas, investigations, and pending enforcement actions against the firm. In this particular case, Goldman did not make timely disclosures about the regulator’s investigation and pending lawsuit against the firm, right under the SEC investigator’s noses.
Goldman Sachs chooses to keep shareholders in the dark about SEC investigation and pending enforcement action
During the summer of 2008, the SEC started investigating Goldman’s marketing of a certain subprime mortgage product, known as ABACUS CDO, to investors who lost over $1 billion from that transaction.
At that time, Goldman Sachs knew that the SEC was investigating its failure to disclose material information to investors in violation of SEC Rule 10b-5 in connection with that transaction. However, Goldman Sachs did not disclose the SEC’s investigation in its financial reports.
In July 2009, the SEC sent Goldman Sachs a Wells notice informing Goldman of its intention to file a lawsuit against the company. Still, Goldman Sachs chose not to disclose the SEC’s pending enforcement action in its financial reports.
On Friday, April 16, 2010, the SEC filed a surprise lawsuit against Goldman Sachs and Executive Director Fabrice Tourre alleging securities fraud in connected with the company’s marketing of the ABACUS CDO to investors. That day, Goldman Sachs shares plummeted from $183.31 per share to $160.30 per share or about 13%, wiping out about $12 billion of shareholder wealth.
Clearly, investors deemed the surprise news of the SEC complaint against the company as material information, unlike the management team running Goldman Sachs.
Although Goldman will admit it included misleading information in Abacus materials, the investment bank will NOT admit to any major wrongdoing.
And — the figure is smaller than initial reports that were around $1 billion. So it comes off looking like it’s better for Goldman than the SEC. $550 million is still a big chunk of change though — the biggest settlement against a Wall Street firm in the history of the SEC.
This makes sense. The "intent" element of fraud is very hard to prove, but negligence or failure to disclose what should have been disclosed doesn’t require proof of fraudulent intent, it just requires a lack of disclose – a much easier case.- Ilene
The SEC accused Goldman with violating Section 10(b) of the Exchange Act and Section 17(a) of the Securities Act. Both are anti-fraud provisions. Like most anti-fraud statutes, Section 10(b) requires the government to prove a fraudulent intent. The first subsection of Section 17(a) also requires proof of fraudulent intent. But the second and third subsections of 17(a) do not require any proof of intent to defraud. This makes accusations based on the second and third subsections much easier to prove—and perhaps easier for Goldman to stomach.
In fact, subsection 17(a)(2) does not even employ any form of the word “fraud” or “deceit.” It makes the sale of a security or a derivative unlawful if a material omission renders the sale merely “misleading.”
The SEC’s claim against Goldman based on this subsection is its strongest and easiest to prove.
Goldman might accept a settlement if the civil charges requiring fraudulent intent or claiming a scheme that operated as fraud were dropped, a source said. That would leave open the charge of merely negligently “misleading” the investors in the Abacus deal. A source close to the matter indicated that this would be far more palatable to the company since it does not explicitly implicate Goldman in fraud.
But if it’s outright fraud Goldman won’t try to weasel out with a settlement? Suuuure, I buy that. Wouldn’t want to taint their pristine, almost divine reputation now would we?
The two sides are still far apart. Goldman Sachs is unwilling to enter into the typical Wall Street settlement—paying a fine and agreeing not to commit further violations, while neither admitting nor denying the accusations—because it insists on denying that it intentionally committed fraud, sources familiar with the matter say. The SEC has accused Goldman of fraud under both the Securities Act of 1933 and Exchange Act of 1934 and is unwilling
NEW YORK (Reuters) – A federal judge ordered Bank of America to explain why it agreed to pay $33 million to settle a U.S. Securities and Exchange Commission lawsuit if it believed it properly disclosed bonuses it authorized for Merrill Lynch & Co employees.
A day after receiving arguments from both sides about the proposed settlement, U.S. District Judge Jed Rakoff questioned the bank’s willingness to settle, saying that if it was "to curry favor with the SEC or to avoid retaliation by the SEC, the court needs to know the specifics."
The judge, however, also questioned the SEC effort to end its civil case, suggesting it might be unreasonable to let off company executives and their lawyers without penalty.
"… Where shareholders have been victimized by the violative conduct, or by the resulting negative on the entity following its discovery, the Commission is expected to seek penalties from culpable INDIVIDUAL OFFENDERS acting for the corporation."
BINGO. Yet as this fine was "agreed" to be paid by the very people injured, in that it is coming from the company coffers rather than officers directly, it is exactly identical to fining the victim of a robbery when assessing the penalty, and what’s worse, they didn’t get a vote on being fined!
"In its August 24th submission, the SEC repeatedly reconfirms its central assertion that "Bank of America’s [proxy] statement was materially false and misleading…"…… Yet the same submission asserts that the SEC, despite its 2006 policy quoted above, decided not to bring individual charges against culpable individual offenders because the company’s witnesses "stated that they relied entirely on counsel to decide what was or was not disclosed in the proxy statement"…..
This is puzzling. If the responsible officers of the Bank of America, in sworn testimony to the SEC, all stated that "they relied entirely on counsel,", this would seem to be either a flat waiver of privilege or, if privilege is maintained, then entitled to no weight whatever, since the statement cannot be
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On the heels of the Chinese stock market plunging 5.5%, continued turmoil in the Middle East and the price of gold hitting 5 year lows, former U.S. Treasury official, Dr. Paul Craig Roberts told Eric King of King World News that Putin and the Russians are now dominating in Syria and the Middle East as the West destroys itself.
Dr. Paul Craig Roberts:“It could well be that this is going to work out so much in Russia’s favor that Putin will send a letter of thanks to the Turkish President and say, &lsquo...
As evidenced by the Greek, Chinese, and now Argentine 'jumps', the world remains increasingly aware of the inevitable worth of fiat currencies and fears the desperate acts of governments as the react to that reality (and is looking for alternatives).
This infographic explains the wide ranges of the Bitcoin universe, accompanied with quotes from some of its best-known business leaders.
We are entering one of the most bullish times of the year historically. As we mentioned last week, the final 30 trading days of the year have been higher each of the last 12 years.
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Getting to today, it is Black Friday – the official start to the holiday spending season. We’ve seen many stats that show this day isn’t quite as important as it once was. From many sales now starting on Thanksgiving, to Cyber Monday this coming Monday – there are other times people are looking for the best deals. None the less,...
Nope it is not interest rates, nope it is not Donald Trump, it is!
It is the CRUDE OIL crash, simple!
Jim Willie has good comments in the first 40 min of this pod cast.
Energy company ... - Debt is blowing up (See energy element of HYG). - Hedging at oil $100 is coming to an end. - Iran coming back to the market, more supply. - Saudi still providing massive supply. - Oil tankers holding oil parked in the ocean are coming in to harbor to unload - US dollar strength supports lower oil prices - World wide DEMAND slump for energy or deflation. - More oil being sold outside the US Dollar - The Oil futures can not be manipulated easily as folks actually ...
Some weeks when I write this article there is little new to talk about from the prior week. It’s always the Fed, global QE, China growth, election chatter, oil prices, etc. And then there are times like this in which there is so much happening that I don’t know where to start. Of course, the biggest market-moving news came the weekend before last when Paris was put face-to-face with the depths of human depravity and savagery. And yet the stock market responded with its best week of the year. As a result, the key issues dominating the front page and election chatter have moved from the economy and jobs to national security and a real war (rather than police ...
1) The shares of one of my largest short positions (~3%), Exact Sciences, crashed by more than 46% yesterday. Below is the article I published this morning on SeekingAlpha, explaining why I think it’s still a great short and thus shorted more yesterday. Here’s a summary:
The U.S. Preventative Services Task Force’s Colorectal Cancer Screening Draft Recommendation issued yesterday is devastating for Exact Sciences’ only product, Cologuard.
I think this is the beginning of the end for the company.
My price target for the stock a year from now is $3, so I shorted more yes...
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Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).
Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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