Posts Tagged ‘Ernst & Young’

Investigation Begins Into E&Y's Role In Connection With Lehman's Repo 105 Scam

Investigation Begins Into E&Y’s Role In Connection With Lehman’s Repo 105 Scam

Courtesy of Tyler Durden

Fox Business reports that the investigation around Lehman is intensifying. Surely the SEC, now generically equated with objects that float around in sewers in formal conversation, has realized it has to do something, anything, to find at least one scapegoat for the financial collapse. Which is why we read with little surprise Gasparino’s report that "thee SEC has ramped up its inquiry into Lehman’s fall, particularly after court-appointed bankruptcy examiner Anton Valukas issued a lengthy report stating that Lehman’s top executives were “grossly negligent” in possibly hiding the risky nature of the firm’s finances during its final day." What we find much more interesting is that "yet another investigative agency, the Public Accounting Oversight Board — created under the 1992 Sarbanes-Oxley law to investigate and discipline public accounting firms — has launched an inquiry into the role of Lehman’s auditor, Ernst & Young, following the examiner’s report, which accused the big accounting firm of “professional malpractice,” for its work in approving accounting techniques Lehman used during its dying days in the summer of 2008." In the absence of any Wall Street villains, which it is now all too clear have endless diplomatic immunity from prosecution by the corrupt regulators, will the auditor, together with Dick Fuld, be made into the sacrificial lambs? Or will we continue the farce that anything even remotely related to capital markets integrity and reporting is real and valid? Judging by the nearly 60 days of no S&P downticks, the market has answered that question for us.

More from Gasparino:

It was the use of one of those accounting techniques, known as Repo 105, which appears to be at the top of the list of investigators, people with knowledge of the inquiry say. The use of the accounting technique, which is designed to temporarily lower the amount of “leverage,” or borrowing a firm uses to stay afloat thus lowering its risk levels, isn’t necessarily illegal. In fact, Lehman sought and received a favorable opinion from Ernst & Young to use the technique in 2008.

But what might fall afoul of the securities laws, according to people close to the inquiry, is if Lehman turned to the gimmick in a concerted effort to hide its risk level. One person with knowledge of the inquiry say investigators


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Time for Truth: Three Card Monte is for Suckers

Time for Truth: Three Card Monte is for Suckers

By Eliot Spitzer and William Black, courtesy of New Deal 2.0 

three-card-monte-150Eliot Spitzer and William Black call for an immediate Congressional investigation of Lehman’s accounting deception and the release of relevant emails and internal documents.

In December, we argued the urgent need to make public A.I.G.’s emails and “key internal accounting documents and financial models.” A.I.G.’s schemes were at the center of the economic meltdown. Three months later, a year-long report by court-appointed bank examiner Anton Valukas makes it abundantly clear why such investigations are critical to the recovery of our financial system. Every time someone takes a serious look, a new scandal emerges.

The damning 2,200-page report, released last Friday, examines the reasons behind Lehman’s failure in September 2008. It reveals on and off balance-sheet accounting practices the firm’s managers used to deceive the public about Lehman’s true financial condition. Our investigations have shown for years that accounting is the “weapon of choice” for financial deception. Valukas’s findings reveal how Lehman used $50 billion in “repo” loans to fool investors into thinking that it was on sound financial footing. As our December co-author Frank Partnoy recently explained as part of a major report of the Roosevelt Institute, “Make Markets Be Markets“, such abusive off-balance accounting was and is endemic. It was a major cause of the financial crisis, and it will lead to future crises.

According to emails described in the report, CEO Richard Fuld and other senior Lehman executives were aware of the games being played and yet signed off on quarterly and annual reports. Lehman’s auditor Ernst & Young knew and kept quiet.

The Valukas report also exposes the dysfunctional relationship between the country’s main regulatory bodies and the systemically dangerous institutions (SDIs) they are supposed to be policing. The NY Fed, the regulatory agency led by then FRBNY President Geithner, has a clear statutory mission to promote the safety and soundness of the banking system and compliance with the law. Yet it stood by while Lehman deceived the public through a scheme that FRBNY officials likened to a “three card monte routine” (p. 1470). The report states:

“The FRBNY discounted the value of Lehman’s pool to account for these collateral transfers. However, the FRBNY did not request that Lehman exclude this collateral from its reported liquidity pool. In the…
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Politics

TRUMP CONCEDES (SORT OF)

 

TRUMP CONCEDES (SORT OF)

Courtesy of Teri Kanefield

The Trump Legal team filed more documents today in the appellate court. I tweeted a bit about how silly they were (let me know if you all want me to march through them). Then this happened:

Trump giving the go-ahead for the transition to get underway was (I believe) the closest he will get to conceding the election. Two amusing things happened. First, Trump tweeted this about 10 minutes after Emily Murphy submitted a letter saying she would move forward, and that she has made her decisions solely on her own and not at anyone’s direction. Looks like Trump wanted people to think that she was, in fact, acting at his direction.

The other amusing part was that Tr...



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Phil's Favorites

TRUMP CONCEDES (SORT OF)

 

TRUMP CONCEDES (SORT OF)

Courtesy of Teri Kanefield

The Trump Legal team filed more documents today in the appellate court. I tweeted a bit about how silly they were (let me know if you all want me to march through them). Then this happened:

Trump giving the go-ahead for the transition to get underway was (I believe) the closest he will get to conceding the election. Two amusing things happened. First, Trump tweeted this about 10 minutes after Emily Murphy submitted a letter saying she would move forward, and that she has made her decisions solely on her own and not at anyone’s direction. Looks like Trump wanted people to think that she was, in fact, acting at his direction.

The other amusing part was t...



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ValueWalk

Proposed Klamath River Dams Removal: The Height Of Obtuse Thinking?

By William E. Simpson II. Originally published at ValueWalk.

Considering the recent revelations as published in several California newspapers regarding the Klamath River dams removal proposal, many important questions arise to those who are using logic to examine the fishy-reasoning for considering the removal of several perfectly good dams.

Q3 2020 hedge fund letters, conferences and more

Photo: William E. Simpson II: CAL-FIRE tanker trucks and helicopters dr...

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Zero Hedge

As Oil Soars, Former NHL Player Turned Hedge Fund Manager Says "Inevitable" It Will Go Higher

Courtesy of ZeroHedge View original post here.

Update (1100ET): WTI jyust broke above $45 as today's move goes vertical. This is the highest price for oil since March, which is interesting given that Cushing storage is near capacity...

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If you're bullish on oil, we've got good news and bad news. The good news is that one hedge fund manager is finally taking an outsized bet on oil and is making headlines...



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Biotech/COVID-19

Why the Oxford AstraZeneca vaccine is now a global game changer

 

Why the Oxford AstraZeneca vaccine is now a global game changer

Courtesy of Michael Head, University of Southampton

In the long dark tunnel that has been 2020, November stands out as the month that light appeared. Some might see it as a bright light, others as a faint light – but it is unmistakably a light.

On November 9, Pfizer announced the interim results of its candidate vaccine, showing it to be “more than 90% effective” in preventing symptomatic COVID-19 in late-stage human trials. The news was greeted with joy.

A ...



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Chart School

Bitcoin Chart Review

Courtesy of Read the Ticker

Bitcoin is testing its old all time high. Bitcoin is not alone as it is at the same party of all risk on trends. Abundant end of year liquidity, add the relief of finishing US elections will see the end of the buyers strike and gains should continue (just like 2016).

Bitcoin is on fourth types of charts held within readtheticker.com, each chart answers different questions.

Charts ...

Cycle charts shows off price and time cycles, with forecasts.


Click for popup. Clear your browser cache if image is not showing.




Long term channels, with time and price targets.


Click f...



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Kimble Charting Solutions

Transports Sending Strong Bullish Message To Other Dow Indices?

Courtesy of Chris Kimble

Are Transportation stocks about to send a quality bullish message to other Dow indices this month? Sure could be!

This 3-pack looks at the Dow Jones Industrials, Transports, and Utilities indices on a monthly basis.

One week from the end of a month, the DJ Transports are attempting an important bullish breakout at (1). Unless a sharp reversal takes place in the next week, Transports could close out the month at new monthly closing highs!

The Dow is attempting to close at all-time highs this month, while the Dow Utilities Index remains a few percent below 2020 highs....



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Digital Currencies

Dalio Admits "I Might Be Missing Something" As Bitcoin Surges Above $18,000

Courtesy of ZeroHedge

Since the US election, Bitcoin prices (in USD) have surged a stunning 40%, also lurching higher after each vaccine headline hit.

Source: Bloomberg

Getting ever closer to its all-time record high...

Source: Bloomberg

As crypto prices soared overnight, Bridgewater Associates founder Ray Dalio stepped back into the fray, saying in a Twitter thread that “I might be missing something about Bitco...



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Mapping The Market

COVID-19 Forces More Than Half of Asset Management Firms to Accelerate Adoption of Digital Marketing Technology

By Jacob Wolinsky. Originally published at ValueWalk.

There is no doubt that the use of technology to support client engagement initiatives brings both opportunities and threats but this has been brought into sharp focus this year with the COVID-19 pandemic.

The crisis has brought to the fore the need for firms to enable flexibility in client engagement – the expectation that providers will communicate to clients on their terms, at their speed and frequency and on their preferred channels, is now a given. This is even more critical when clients are experiencing unparalleled anxiety from both market conditions and their own personal circumstances.

...

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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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