Wikileaks: It Could Take Down a Bank Or Two
by ilene - November 29th, 2010 8:57 pm
Courtesy of Karl Denninger, The Market Ticker
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Pic credit: William Banzai7′s Bankster Doomsday Kit
Oh oh… now we know why everyone’s calling for the government to try to arrest Assange:
So do you have very high impact corporate stuff to release then?
Yes, but maybe not as high impact…I mean, it could take down a bank or two.
…
Will we?
Yes. We have one related to a bank coming up, that’s a megaleak. It’s not as big a scale as the Iraq material, but it’s either tens or hundreds of thousands of documents depending on how you define it.
Is it a U.S. bank?
Yes, it’s a U.S. bank.
One that still exists?
Yes, a big U.S. bank.
The biggest U.S. bank?
No comment.
When will it happen?
Early next year. I won’t say more.
What do you want to be the result of this release?
[Pauses] I’m not sure.
It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume. Usually when you get leaks at this level, it’s about one particular case or one particular violation.
For this, there’s only one similar example. It’s like the Enron emails. Why were these so valuable? When Enron collapsed, through court processes, thousands and thousands of emails came out that were internal, and it provided a window into how the whole company was managed. It was all the little decisions that supported the flagrant violations.
This will be like that. Yes, there will be some flagrant violations, unethical practices that will be revealed, but it will also be all the supporting decision-making structures and the internal executive ethos that cames out, and that’s tremendously valuable. Like the Iraq War Logs, yes there were mass casualty incidents that were very newsworthy, but the great value is seeing the full spectrum of the war.
You could call it the ecosystem of corruption. But it’s also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest. The way they talk about it.
If you were wondering why there’s a sudden desire to shut these guys down, after they "leaked" all sorts of information…
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How To Fail Miserably At Being Ethical
by ilene - September 3rd, 2010 5:00 pm
How To Fail Miserably At Being Ethical
Courtesy of Jr. Deputy Accountant
Want to fail miserably at being ethical? It’s easy, all you have to do is be this guy:
I need someone to take CPA Ethics test for me
Date: 2002-01-03, 10:08PM PST
Local CPA candidate has no time to study; will PAY you to take the ethics exam for me! Serious replies, only. You must have passed test in California within last two years.
No joke, that’s a real Best Of Craigslist. Fun and somewhat related fact: JDA has a Best Of Craigslist to her credit from 2007 but let’s make it clear that mine had nothing on this douchebag.
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The Art of Spinning: How to Identify Possible White Collar Criminals or at Least Unethical and Deceitful People Who You Should Avoid
by ilene - September 2nd, 2010 7:27 pm
Sam wrote this timeless piece a few years ago but searched it out specially for us. For non-criminal types, this article is pretty depressing, but if you feel entangled in one of these criminal-non-criminal, or unethical-ethical person, relationships, it behooves you to know how the game is played. If you are an aspiring white collar criminal, this essay can be used as a how-to manual. – Ilene
The Art of Spinning: How to Identify Possible White Collar Criminals or at Least Unethical and Deceitful People Who You Should Avoid
Courtesy of Sam Antar
White collar crime is a crime of persuasion and deceit. Since the white collar criminal uses persuasion and deceit to commit their crimes, it follows that such felons are artful liars.
People often ask me what characteristics I look for in other people that alert me to possible criminal activity or at least unethical and deceitful people.
Not all questionable conduct is illegal. A person can be unethical or deceitful (however they are defined) without committing any illegal acts as defined under the law.
However, most criminals use tools like spinning (see below) in the conduct of their crimes.
The Art of Spinning:
- Sell people hope. My cousin ‘Crazy Eddie’ Antar taught me that “people live on hope” and their hopes and dreams must be fed through our spin and lies. In any situation, if possible, accentuate the positive.
- Make excuses as long as you can. Try to have your excuses based on at least one truthful fact even if the fact is unrelated to your actions and argument.
- When you cannot dispute the underlying facts, accept them as true but rationalize your actions. You are allowed to make mistakes as long as you have no wrongful intent. Being stupid is not a crime.
- Always say in words you “take responsibility” but try to indirectly shift the blame on other people and factors. You need to portray yourself as a “stand up” guy or gal.
- When you cannot defend your actions or arguments attack the messenger to detract attention from your questionable actions.
- Always show your kindness by doing people favors. You will require the gratitude of such people to come to your aid and defend you.
- Build up your stature, integrity, and credibility by publicizing the good deeds you have done in areas unrelated to the subject of scrutiny.
- Build a
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Class Action Complaint against Amedisys uses Sarbanes-Oxley Act Corporate Governance Provisions to Battle Alleged Corporate Malfeasance
by ilene - June 16th, 2010 5:35 pm
Interesting to note that these actions are not being brought because Amedisys may have gamed the Medicare System but rather on the basis that if it did in fact game it, AMED had an ethical obligation to disclose its tactics. - Ilene
Class Action Complaint against Amedisys uses Sarbanes-Oxley Act Corporate Governance Provisions to Battle Alleged Corporate Malfeasance
Courtesy of Sam Antar, White Collar Fraud
Last week, Pomerantz Haudek Grossman & Gross LLP filed a class action lawsuit against Amedisys (NASDAQ: AMED) charging the company, its CEO William F. Borne and its CFO Dale E. Redman with securities fraud. In the next few days, Bernstein Liebhard LLP and Finkelstein Thompson LLP filed similar class action lawsuits against the company. The lawsuits allege that Amedisys abused Medicare’s reimbursement system for at-home therapy care based on a compelling analysis of company revenues in an April 27 Wall Street Journal article.
In addition, the lawsuits innovatively utilize a provision under Section 406 of the Sarbanes-Oxley Act 2002 which provides a back-door way for investors to force ethical corporate governance and sue public companies for malfeasance. That provision requires Senior Financial Officers, such as the CEO and CFO of public companies, to abide by a strict code of ethics which broadly defines corporate malfeasance and effectively makes it easier for defrauded investors to prove misconduct by certain senior executives. Suing public companies for code of ethic violations can be a potent tool to insure good corporate governance and conduct.
Allegations that Amedisys intentionally increased patient visits to trigger higher Medicare reimbursements
According to the Pomerantz press release:
Specifically, the Complaint alleges that defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company’s reported sales and earnings growth were materially impacted by a scheme whereby the Company intentionally increased the number of in-home therapy visits to patients for the purpose of triggering higher reimbursement rates under the Medicare home health prospective payment system, as those excess visits were not always medically necessary; (2) that the Company’s reported sales and earnings were inflated by said scheme and subject to recoupment by Medicare; (3) that the Company was in material violation of its Code of Ethical Business Conduct and compliance due to the scheme to inflate Medicare revenues; and (4) based on the foregoing, defendants lacked a basis for their positive
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The Age of The Trader
by ilene - May 2nd, 2010 4:24 pm
The Age of The Trader
Courtesy of Edward Harrison at Credit Writedowns
I have written a number of posts which point to a shift in the center of power on Wall Street from the client-facing advisory business to the market-making trading business. I think understanding this shift is vital to understanding what caused the financial crisis and to understanding the defense that Goldman Sachs has proffered for its actions in the Abacus AC1 deal.
What has happened is that major international investment banking groups have taken on a sales & trading ethos of caveat emptor where once the client was king. In my view, this is a direct result of the rise of securitization, structured products and derivatives as a profit center in financial services and is the major contributor to Wall Street’s new unfortunate public image as a casino.
I took on different aspects of this shift in these posts:
- Jul 2009: Goldman crushes earnings estimates
- Jul 2009: More on why big capital markets players are unmanageable
- Feb 2010: Inside the mind of an investment banker: Greece, Goldman and derivatives
- Apr 2010: Chris Whalen on "The Age of the Trader"
- Apr 2010: Is Goldman fulfilling its public purpose?
- Apr 2010: Goldman’s public purpose and where I have problems with the Abacus deal
I suggest you read them to get more colour on various aspects of Wall Street culture which have eroded the ethics of bankers and led to self-preservation over client-focus.
Here’s the statement in all of those posts I want to dwell on. It came in my post on Goldman’s earnings announcement from July of last year. I wrote:
The Goldman press release is here. What I find notable is the order in which the press release presents the earnings, with a statement on the advisory business first, followed by equities and then fixed income even though fixed income was where the most revenue and profit came. That is revealing – and shows Goldman execs still consider the advisory business of relatively more importance from a reputational perspective. (emphasis added)
Reputation is one thing, reality is another. Former banker turned journalist Bill Cohan gets at the heart of this in his recent blog post "Goldman: Still Greedy, No Longer Patient." He writes:
Once upon a time, Goldman Sachs’ raison d’etre was to serve the ongoing needs of
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Rant of the Day: No Ethics, No Fiduciary Responsibility, No Separation of Duty; Complete Ethics Overhaul Needed
by ilene - April 16th, 2010 7:58 pm
I’ve posted a lot on the Goldman Sachs fraud charges and hope it marks the beginning of change. Many of my favorite bloggers believe this is a mere distraction, and GS, the corporation, will get a slap on the wrist and a fine – which means essentially nothing happens to the people responsible for an ongoing parade of front-running, misrepresentations and frauds, even if the SEC is only permitted to file civil charges. That said, here’s Mish on the subject. (My highlights) – Ilene
Rant of the Day: No Ethics, No Fiduciary Responsibility, No Separation of Duty; Complete Ethics Overhaul Needed
Courtesy of Mish
Goldman Sachs Shares Drop After Goldman Sachs Accused of Fraud in Mortgage Deals
Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.
The move marks the first time that regulators have taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market. Goldman itself profited by betting against the very mortgage investments that it sold to its customers.
The suit also named Fabrice Tourre, a vice president at Goldman who helped create and sell the investment.
The instrument in the S.E.C. case, called Abacus 2007-AC1, was one of 25 deals that Goldman created so the bank and select clients could bet against the housing market. As the Abacus deals plunged in value, Goldman and certain hedge funds made money on their negative bets, while the Goldman clients who bought the $10.9 billion in investments lost billions of dollars.
“The product was new and complex, but the deception and conflicts are old and simple,” Robert Khuzami, the director of the S.E.C.’s division of enforcement, said in a statement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
In recent months, Goldman has repeatedly defended its actions in the mortgage market, including its own bets against it. “We certainly did not know the future of the residential housing market in the first half of 2007 anymore than we can
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site