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Fraud*
According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Tuesday, July 6, 2010

Goldman Walks the Fine Line

A very informative post from Zero Hedge

David Viniar Walks A Thin Line Between Truth And Perjury At Today's FCIC Hearing

Today, during the FCIC's second day of hearings, Goldman CFO David Viniar was forced to provide additional data about the firm's AIG CDS trades. Luckily the firm kept a record of all entry and exit points, and thus will be able to confirm just what the P&L of the associated trades is (and if not, we are happy to teach Goldman's risk department how to use the Bloomberg CDSD function in conjunction with RMGR run scraping to build a real time CDS portfolio tracker)... Which is ironic, because when asked by Brooksley Born why the firm has not yet provided a break down of its derivative revenue Mr. Viniar by all accounts perjured himself. As Bloomberg reported: “We don’t have a separate derivatives business,” Viniar told the panel. “It’s integrated into the rest of our business.”

Uh... what?

Every evening, a firm's back office (and that most certainly includes Goldman) takes the EOD CDS and cash marks from every single prop trader, be they equity, fixed income, mortgage, FX, etc. and using its own integrated pricing system or an outsourced one, compiles a daily P&L which is immediately sent to the head of the risk division, the head of trading, and other various listserv participants. And most certainly the traders, who have every interest of knowing just how they did in any given day as they prepare their bonus speech at the end of the fiscal year. Traders, who combine cash and CDS trading simply look at a consolidated P&L on the basis of DV01 exposure, which makes the form of product used completely irrelevant, and is a process whereby every change in 1 basis point in interest rates is equivalent to a profit or loss. Every single derivative is presented in Goldman's daily risk summary on a DV01 basis to show not only maximum possible loss, but what the daily profit or loss may have been. This makes the tracing of both revenue from derivatives and cash products seamless.

Obviously even the FCIC panel was fully aware of this:

.....

Read the rest here

5 COMMENTS:

Anonymous said...

Obama's 'Presidency in Peril' or 'Failed President?'
12 deadly signs Wall Street's 'Conspiracy of Weasels' killed Obama's reforms




12. Fortune: 'No Perp Walks? No Jail Time?' Why? Banksters own America!

Back in 2002 former SEC Chairman Arthur Levitt told Fortune: "America's investors have been ripped off as massively as a bank being held up by a guy with a gun and a mask." Sadly, Levitt now consults for Goldman.

Recently Becky Quick, anchor of CNBC's Squawk Box wrote a Fortune column: "No Perp Walks. No Jail Time. Why Prosecutors Are Going Easy on Wall Street." Answer: Because Wall Street's banksters no longer need guns and masks. Their highly effective mercenary lobbyists now own Obama's "Presidency in Peril." So they're all protected by get-out-of-jail-free cards.

Quick's summary predicts the future: "Populist anger on Main Street is boiling over, and no wonder. As long as prosecutors continue to look at such white-collar crime as too difficult or too unrewarding to tackle, you can expect the mercury to just keep rising."

And with it "moral hazard" will skyrocket as traders take ever bigger risks to justify their mega-million bonuses, convinced they're immune from prosecution and convinced that in the future taxpayers will again bailout Wall Street's too-political-to-fail banksters.

Warning: Soon the Weasel Conspiracy's out-of-control greed will trigger a historic backlash ... the coming second American Revolution ... an explosive economic class-driven civil war ... paving the way for the second Great Depression ... dead ahead.





http://tinyurl.com/3y2rdb3

Anonymous said...

In the second half of the show, Max talks to lawyer, Luc Saucier, about building a case of obscenity against the banks.

http://tinyurl.com/2bkhg6k

Anonymous said...

America is 234 Years Old Today – Is It Finished?



Goldman Sachs, JPMorgan Chase, Citigroup AND Morgan Stanley ALL had PERFECT quarters in Q1, not having a single loss in the markets in over 250 combined chances with GS alone making $9.74Bn in trading profits without having a single bad day. Let’s assume GS was the best of the best and that they hedged so well that they are normally up 7 out of 10 days using their system. What are the odds of a single firm having 63 consecutive wins, EVEN if they already have a 70% advantage? ONE IN 5.7 BILLION! And don’t forget, Q1 was a wild quarter with huge ups and huge downs – yet they were NEVER wrong. We are blessed, on this planet Earth, with a population of 6 Billion, to be in the company of 4 firms that have pulled this off AT THE SAME TIME. What will it take to wake people up to this scam?


http://tinyurl.com/2fmgxdo

JR said...

I think it is important to be following the FCIC hearings which are also on video:

For example, the Hearings & Testimony of
The Role of Derivatives in the Financial Crisis

More here:

http://www.fcic.gov/hearings/06-30-2010.php

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