Moody’s Receives Wells Notice, SEC To Commence “Cease & Decist” Proceedings Against Rating Agency
by ilene - May 8th, 2010 1:02 pm
Moody’s Receives Wells Notice, SEC To Commence "Cease & Decist" Proceedings Against Rating Agency
Courtesy of Tyler Durden
And now for today’s bombshell – lietarlly at the very end of Moody’s 10-Q filed last night, we find this stunner:
On March 18, 2010, MIS received a “Wells Notice” from the Staff of the SEC stating that the Staff is considering recommending that the Commission institute administrative and cease-and-desist proceedings against MIS in connection with MIS’s initial June 2007 application on SEC Form NRSRO to register as a nationally recognized statistical rating organization under the Credit Rating Agency Reform Act of 2006.
Well at least it took Moody’s under two months to report this massively material development, which while we are not positive on how to read the C&D action on the NRSRO registration, could mark the beginning of the end for the rating agency. If the firm is enjoined from providing additional rating research should the SEC action find fault and proceed with a lawsuit, it would mean game over for the business. Egan-Jones: it’s IPO time.
We will be shocked, shocked we tell you, to find that Mr. Buffett has sold out his entire position in MCO when BRK’s next 13-F is filed.
h/t Jing
Cramer Changes Tune On Goldman, Says Charge Is Not “Frivolous” And Firm Will Have To Settle Or Pay $2-3 Billion Fine
by ilene - April 26th, 2010 7:23 pm
Cramer Changes Tune On Goldman, Says Charge Is Not "Frivolous" And Firm Will Have To Settle Or Pay $2-3 Billion Fine
Courtesy of Tyler Durden
What a difference a day makes. First Cramer was firmly planted in the Steve Liesman camp, who in turn for the past week has been moonlighting as the semi-official Goldman PR manager, in "leaking" every piece of useless "absolving" information (a job only secondary in worthlessness to that of worst financial stock analyst ever Dick Bove who has been buying Goldman all the day down from $185), however now after actually doing some thinking, the troubled theStreet.com owner who himself is no stranger to SEC investigations, has diametrically changed his tune. In this morning’s edition of "Morning Joe" on MSNBC, Cramer said: "What makes this worse than most situations is that it’s entirely possible this young guy, who’s now holding the whole firm hostage, Fabrice Tourre – it’s entirely possible that he sold it fraudulently. If he did, then Goldman has no defense. So, what I would emphasize at this particular moment is that this guy is way too powerful. The hearings are going to go badly. Goldman knew they were going to have a Wells Notice, knew they were going to get prosecuted. They didn’t reveal it. It was totally material. Again they did that wrong.” But we thought that according to "GAMECHANGING" information which you yourself Jim broke, Goldman was ok: after all they lost "money on the deal", a conclusion so moronic it immediately led to derisive ridicule from fringe blog Zero Hedge. That said, we are pleased to bury the hatchet – after all even former Goldmanite and seasned CNBSer Jim now agrees that the vampire squid is in deep shit.
As Jeff Poor of Business and Media reports:
Cramer argued that Goldman would have better served by approaching the government hat in hand rather than taking an aggressive tack against the charges. As things are, however, he predicted serious consequences for the firm and its management.
“The main thing you have to understand is that Goldman has basically said, ‘Government, you’re just dead wrong,’ instead of saying, government, ‘We’re sorry, what do you need to do?’” Cramer explained. “In order to end this, if it’s a settlement, they will have to pay the largest fine in history and
Did Goldman And Tourre Break FINRA Regulations By Not Reporting “Fab Fabrice’s” Wells Notice Receipt?
by ilene - April 17th, 2010 12:09 pm
Did Goldman And Tourre Break FINRA Regulations By Not Reporting "Fab Fabrice’s" Wells Notice Receipt?
Courtesy of Tyler Durden at Zero Hedge
Yesterday we praised two NYT reporters for having uncovered the mess of the Goldman CDO scandal first, and we concluded, erroneously now it seems, that the SEC merely piggybacked on their disclosure to file charges against Goldman. However, as Reuters’ Matt Goldstein reports, Goldman had received a Wells Notice from the SEC as far back as "six months ago", which predates the Morgenson and Story December 24 story. And as the SEC case would likely have taken at least one year to build up, we are confident that the SEC began their investigation into Goldman and Paulson well prior, likely in 2008 if not earlier. For those unfamiliar, a Wells is basically an advance warning that the recipient will be a target of an SEC investigation. We do not anticipate that anyone aside from Tourre (who, being just 27 at the time of the alleged transactions, in no imaginable way acted alone) and Goldman’s legal counsel was aware of this development, although with allegations that Goldman was dumping various security holdings in advance of the announcement one can never be certain. One key line of questioning has emerged as a result of this disclosure: why was there no official notice anywhere in the public record of this Wells Notice receipt? The precedent is murky when it comes to corporations responsibility to report Wells Notice receipts: certainly, Goldman had no mention of this even in its March 1 10-K.
What is however without question, is that Fabrice Tourre, who as we reported yesterday, is a registered broker dealer, has a responsibilty to modify his/her U-4 within 30 days of the Wells Notice receipt, yet as of yesterday there was still "no disclosure of any event about this broker." Assuming Goldman received the Wells 31 days ago or more, it begs the question did the firm, by allowing Tourre not to report the Wells Notice, break Finra regulations, and just why it believes it has the facility to do this?
Below is Tourre’s still unupdated CRD form with Finra, which still show neither a pending civil case, nor any report of a Wells Notice receipt.
More relevantly, we are keeping a close eye on…