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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Apache Corporation (NYSE, Nasdaq: APA) and its subsidiaries today announced an agreement to sell producing oil and gas assets in the Deep Basin area of western Alberta and British Columbia, Canada, for $374 million.
Incremental to Apache's earlier $2 billion share re-purchase announcement, the company plans to use the proceeds of this transaction to buy back Apache common shares under the 30-million-share repurchase program that was authorized by Apache's Board of Directors in 2013.
Apache is selling primarily dry gas-producing properties comprising 622,600 gross acres (328,400 net acres) in the Ojay, Noel and Wapiti areas in Alberta and British Columbia. In the Wapiti area, Apache will retain 100 percent of its working interest in horizons below the Cre...
As I suspected it might, the stock market bounced strongly last week. Weakness the prior week was due in part to traders exiting positions for vacation during the holiday-shortened week, protecting big capital gains, cashing out to pay taxes on capital gains, and “delta hedging” on put options. However, I’m not convinced that the pullback was sufficient to create the great buying opportunity -- but it was sure a tradable bounce.
Among the ten U.S. business sectors, the big winner last week was Energy, which was up about +4.5%. Also, Financial and Industrial were each up about +3%. Defensive sector Utilities still stands alone as the year-to-date leader, up about +11%, while Energy’s strong performance last week has it in second place, up about +5% YTD. Healthcare has been the big loser as i...
On Monday, Greenwald and other journalists at The Guardian and The Washington Post were awarded the Pulitzer for their reporting on the National Security Agency. The big question as the awards approached was whether the Pulitzer Prize committee would recognize their work, and they did just that.
On Sunday's "Reliable Sources," Greenwald told Stelter...
“However, both indexes are at or near MAJOR support levels. That means that we are ‘in the zone’ for a bounce of some sort in the next couple of days.” And a bounce is exactly what we got: But as you can see even with last week’s bounce, we are still locked in a downtrend. As we look ahead to next week, should we break out of the downtrend to the upside, we’ll want to take advantage of buying stocks doing the same. And should we remain in a downtrend, we want to short stocks that are also locked in downtrends. As we’ve said before: Success in the market comes from trading stocks in tandem with the indexes. Should the markets break higher, then FF is an excellent long side candidate: Here we have a leading stock that like the Nasdaq is in a min...
Brave souls who write about stocks always subject themselves to potential embarrassment if they take a stand on the future movement of their selected company. Including both a price target and a time horizon makes you accountable if things don’t go as predicted.
For that reason many media pundits much prefer to explain what’s already happened rather than sticking their necks out. They would rather justify the (supposed) reason...
In the days before the Geneva "de-escalation" conference (and coincidentally, days after the secret visit of CIA director Brennan to Kiev), the top story across western media was the "undisputed" proof that east-Ukraine, populated by "terrorist separatists", is preparing to unleash a neo-nazi wave against local jews, when a leaflet was unveiled, beckoning the Jewish population to register and declare their assets.
Shares in Chipotle Mexican Grill Inc. (Ticker: CMG) opened higher on Thursday morning, rising more than 6.0% to $589.00, after the restaurant operator reported better than expected first-quarter sales ahead of the opening bell. But, the stock began to falter just before lunchtime on concerns the burrito-maker will increase menu prices for the first time in three years. The price of Chipotle’s shares have since fallen into negative territory and currently trade down 3.5% on the session at $532.89 as of 1:50 p.m. ET.
[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process.
The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...
I just wanted to be sure you saw this. There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.
If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.
Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.
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Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.
And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference. Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014? The Biotech ETF beat the S&P by better than 3 points.
As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...
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