Posts Tagged ‘misrepresentation’

The Mainstream Media Doesn’t Know Sh*t About Securities Law or the Goldman Case- with Barry Ritholtz of The Big Picture

The Mainstream Media Doesn’t Know Sh*t About Securities Law or the Goldman Case- with Barry Ritholtz of The Big Picture

Lady justice with scales

Courtesy of Damien Hoffman at Wall St. Cheat Sheet

Last week Barry Ritholtz had an excellent post 10 Things You Don’t Know (or were misinformed) About the GS Case in which Barry noted that 99% of the mainstream media commentary regarding the strength of the SEC’s case is, of course, completely uninformed conjecture.

I sat down with Barry, who is a lawyer with experience in securities law, to get an insightful take on the SEC’s case against Goldman Sachs (GS):

Damien Hoffman: Barry, what annoys you most regarding the media’s commentary on the Goldman case?

Barry: The rule on securities fraud and misrepresentation is straight forward. You cannot make material misrepresentations when selling a security. You can’t say black when it’s white. You can’t say up when it’s down. John Paulson can’t say he’s long 200 million when he’s short 200 million. You just can’t and yet that’s what was done.

It doesn’t matter if Goldman lost money. So what? You can lose money. If I rear-ended a guy with my car and banged up my fender, I lose money. It has nothing to do with fault or guilt. State of mind on all that other stuff is irrelevant. The question is whether Goldman is guilty of committing some form of violation of these rules. It’s either yes or no. It’s amazing people get it so very wrong.

Damien: Which people or publications got it very wrong?

Barry: There are a lot. But, for example, the New York Times got it wrong when they talked about the loss. Market Watch got it wrong when they talked about “Mens Rea” which is mental state. There are just a few who got it wrong and misinformed the public.

You don’t have to be a specialist in this area. You just have to understand that there’s certain specifics of securities rules and litigation. If you are not familiar with that area, then, as I mentioned, pour yourself a big glass of shut-the-fuck-up and sit quietly in the corner.

At first, Jim Cramer, who’s usually smarter than this, lost his objectivity and said, “Goldman lost $90 million, how can there be a crime.” Are these people trying to put forth the legal standard that anyone…
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Calpers Sues The Rating Agencies For Bad Investment Advice

Tom Lindmark discusses the lawsuits resulting from losses due in part to rating agencies’ seemingly negligent advice. I don’t fully agree with his conclusion, though do in part – there’s plenty of responsibility to spread around, and a "day in court" is one way to divide it up. – Ilene

Courtesy of Tom Lindmark, BUT THEN WHAT?

Calpers Sues The Rating Agencies For Bad Investment Advice

rating agencies, lawsuits, bad advice

Just the first of many lawsuits of this type that will be coming down the pike but this one has some rich irony to it.

Calpers, the California retirement system manager, has filed suit against Moody’s, Standard & Poors and Fitch claiming that they are responsible for over $1 billion of losses it incurred in investments in structured investment vehicles which owned exotic financial assets.

From the NYT:

The suit from the California Public Employees Retirement System, or Calpers, a public fund known for its shareholder activism, is the latest sign of renewed scrutiny over the role that credit ratings agencies played in providing positive reports about risky securities issued during the subprime boom that have lost nearly all of their value.

The lawsuit, filed late last week in California Superior Court in San Francisco, is focused on a form of debt called structured investment vehicles, highly complex packages of securities made up of a variety of assets, including subprime mortgages. Calpers bought $1.3 billion of them in 2006; they collapsed in 2007 and 2008.

Calpers maintains that in giving these packages of securities the agencies’ highest credit rating, the three top ratings agencies — Moody’s Investors Service, Standard & Poor’s and Fitch — “made negligent misrepresentation” to the pension fund, which provides retirement benefits to 1.6 million public employees in California.

The AAA ratings given by the agencies “proved to be wildly inaccurate and unreasonably high,” according to the suit, which also said that the methods used by the rating agencies to assess these packages of securities “were seriously flawed in conception and incompetently applied.”

OK, that’s standard stuff and we will see a lot more of it. Who prevails is an open question, however, I think that if the tide does turn against the rating agencies then the legal actions are most likely money down a dry hole. There’s no way that the agencies have the funds to cover a wave of negative judgements. But here’s the most intriguing…
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Zero Hedge

FX Volatility Nears All Time Low In "Perfect Storm Of Vol, Skew And Carry"

Courtesy of ZeroHedge View original post here.

While the VIX still has a fair ways to go before it plumbs the all-time single-digits lows that defined the spectacularly serene equity markets in 2017, FX vol is already there: the JPMorgan Global FX volatility index has dropped to 6 year low levels, and is just shy of all time lows.

Of course, most of this stability in the FX realm is due to central banks depressing cross-asset vol; yet the more vol is pushed lower, the higher it will spring back once c...



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Phil's Favorites

American influence could take the hit as Putin, Zelenskiy try to make peace in Donbass

 

American influence could take the hit as Putin, Zelenskiy try to make peace in Donbass

Zelenskiy is facing a tough meeting with Russia’s Putin on Dec. 9. Ukrainian Presidential Press Office via AP

Courtesy of Erik C. Nisbet, The Ohio State University and Olga Kamenchuk, The Ohio State University

President Vladimir Putin of Russia and his Ukrainian counterpart, Volodymyr Zelenskiy, are set ...



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Kimble Charting Solutions

Gold Miners Indicator Attempting Multi-Year Breakout, Says Joe Friday

Courtesy of Chris Kimble

Are Gold Mining stocks about to be sent a bullish signal they haven’t received in years? Possible says Joe Friday.

This chart looks at the Senior Miner/Junior miner (GDXJ/GDX) ratio over the past few years. Historically when the ratio is heading up, miners tend to do very well.

The ratio has created a series of lower highs just below the falling line (1), since the summer of 2016. The ratio is currently testing the strong falling resistance line and the June 2019 highs at (2).

Joe Friday Just The Facts Ma’am; If the ratio succeeds in a double breakout at (2), it sends miners a long-awaited bullish message.

...

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Insider Scoop

Scott Galloway Calls For Twitter's Board To Replace 'Part-Time CEO' Jack Dorsey Amid Africa Move Plans

Courtesy of Benzinga

A shareholder in Twitter Inc. (NASDAQ: TWTR) and New York University business professor wrote an open letter Friday to the company's board calling for the replacement of CEO Jack Dorsey.

What To Know

Scott Galloway, who owns more than 330,000 shares of Twitter stock a...



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Lee's Free Thinking

Chart Shows the Fed Ramping Up Not QE - Funding Almost All Treasury Issuance

 

Chart Shows the Fed Ramping Up Not QE – Funding Almost All Treasury Issuance

Courtesy of Lee Adler, Wall Street Examiner 

The Fed is ramping up “Not QE” .

The Fed bought $2.2 billion in notes today in its POMO, “not QE,” operations. Actually $2.15 billion because they sold back a whole $50 million. Must have been a little glitch in the force.

This brings the Fed’s total outright purchases of Treasuries to $170 billion since it started Not QE, on September 17.

It also did $107 billion in gross new repo loans to Primary Dealers to buy Tre...



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Chart School

Silver stock taking the sector higher

Courtesy of Read the Ticker

As the US economy begins to show late cycle characteristics like: GDP slowing, higher inflation, higher wage costs, CEO confidence slump. 

Previous Post: Gold Stocks Review

The big players in the market are looking for the next swing off good value lows. This means more money is finding it way into the gold and silver sector, and it is said gold and silver stocks actually lead the metal prices.

The cycle below shows prices are ready to move in the months ahead (older chart re posted).


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Digital Currencies

Chinese Crypto Exchange IDAX Locks Cold Wallet As CEO "Goes Missing"

Courtesy of ZeroHedge

By William Suberg via CoinTelegraph.com

Chinese cryptocurrency exchange IDAX has suspended deposits and withdrawals after its CEO allegedly disappeared.

In a blog post on Nov. 29, IDAX, which earlier this week warned it was seeing a run on withdrawals, said the whereabouts of Lei Guorong were currently unkno...



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Members' Corner

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

 

Sacha Baron Cohen Uses ADL Speech to Tear Apart Mark Zuckerberg and Facebook

By Matt Wilstein

Excerpt:

Sacha Baron Cohen accepted the International Leadership Award at the Anti-Defamation League’s Never is Now summit on anti-Semitism and hate Thursday. And the comedian and actor used his keynote speech to single out the one Jewish-American who he believes is doing the most to facilitate “hate and violence” in America: Facebook founder and CEO Mark Zuckerberg.

He began with a joke at the Trump administration’s expense. “Thank you, ADL, for this recognition and your work in fighting racism, hate and bigotry,” Baron Cohen said, according to his prepared...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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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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