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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

Saturday, November 26, 2011

Okay, Goldman Sachs, You Got Away With It This Time!

Below is a video and some of Yves' commentary regarding an interview she participated in for PBS. Here you see all the reasons why there are no prosecutions for the criminal financial activity that took place and helped bring down the financial system. We hear that there are no prosecutions because of the difficult, complex and diffused responsibility of financial activity. There are a lack of resources and willingness especially with the SEC case against Goldman's Abacus case where the SEC had four attorneys and the defense had dozens.

Then the revolving door between the SEC and law firms' defense lawyers are cited as a reason for lack of action. Banks that finance politicians' campaigns are another reason. It is noted that the DoJ is absent from criminal prosecutions. Regulators have conflicts of interest. Fannie and Freddie had lawyers paid for by the taxpayers. There is even the excuse that the Goldman Sachs civil fraud suit looked good but was not an adequate settlement where GS had billions and were fined a mere millions. There were apparently not enough facts to bring a criminal case (even though there was no investigation into finding those same missing facts!)

Was the civil case a way to play to the crowd? Or did it send a message? (One might think the wrong message was sent: you can keep taking risks because you will be bailed out.) It seemed that some of those interviewed thought that prosecutions wouldn't stop the fraudulent actions but regulations would. Then, of course , there is the statute of limitations to bringing fraud cases.

The conclusion is that the financial system has systemic problems that market discipline can't take care of and that Dodd-Frank will not prevent.

Only Yves Smith presented a means to prosecute the financial criminals. It seems that everyone else has decided that there is no need to focus on criminal behavior in this present financial crisis. One wonders how the United States will able to undo all the damage that has been done worldwide because of the accounting frauds in their top banks.

We Speak on PBS Newshour About Why No Bank Executives Have Gone to Jail
By Yves Smith - naked capitalism

The cynic in me has to note that PBS Newshour decided to cover the issue of why no banksters have gone to jail on what has to be one of their lowest traffic days of the year. And I have a sneaking suspicion I got the call to go on the show because it was not exactly easy to find people willing to be taped late in the afternoon on the day before Thanksgiving (they did have to go to the trouble not only of arranging for a studio in Alabama, but also finding a makeup person, since I’m not in the habit of taking my TV warpaint with me when I travel).

I hope you like this segment. PBS prefers a format which keeps the guests from interacting directly. On the one hand, they do allow each speaker to make fairly long, uninterrupted comments, which is refreshing (at least on American TV). But on the other hand, the lack of back and forth can allow speakers to talk past each other and also tends to reduce the vigor and incisiveness of the remarks.

The comments are worth reading also
You can see the comments and video here


Angels said...

I didn't understand all reasons of these people, and I think that it is strange decision to cover the issue...  What problems have financial system?

Makes you wonder said...

MF’s Missing Money Makes You Wonder About Goldman: Jonathan Weil

Six months ago the accounting firm PricewaterhouseCoopers LLP said MF Global Holdings Ltd. and its units “maintained, in all material respects, effective internal control over financial reporting as of March 31, 2011.” A lot of people who relied on that opinion lost a ton of money.

When an auditor certifies that a client’s internal controls are effective, that’s supposed to mean the company can do basic functions like maintain accurate financial records, detect unauthorized transactions and keep track of its receipts and expenditures. We know MF couldn’t do these things during the final days before its bankruptcy filing, when former New Jersey Governor Jon Corzine was still its chief executive officer.

The newspaper also quoted Thomas Peterffy, CEO of Interactive Brokers Group Inc., saying: “I always knew the records were in shambles, but I didn’t know to what extent.”

Although we shouldn’t rule out anything, this scenario seems implausible. One lesson from the 1980s savings-and-loan crisis is that whenever a financial institution fails, it’s almost always true that its internal controls were poor -- and had been that way for a long time. Otherwise it wouldn’t have failed.

There’s more at stake here than the missing $1.2 billion. Besides MF, other companies that use Pricewaterhouse’s New York office as their auditor include Goldman Sachs Group Inc. and JPMorgan Chase & Co. Both banks presumably are too big to fail, meaning taxpayers would be on the hook if they ever blew up. A Pricewaterhouse spokesman, Caroline Nolan, declined to comment on the firm’s work for MF.

Interesting said...

There is no *Statute of Limitations* on treason. The penalty for
treason, stipulated in our Constitution according to the wisdom and
foresight of our Founders, is “to be hanged by the neck until dead.”
This penalty for treason is one of their prime legacies to *We the
People* today, along with freedom of speech and of the press.

Hush money said...

Sunday, November 27, 2011
The Stench From MF Global Gets Worse - Should James Giddens (Bankruptcy Trustee) Recuse Himself?

But it runs even deeper.  I find it very interesting that no one has mentioned Refco or Goldman Sachs in this whole ordeal.  After all, MF Global purchased the assets of Refco after it tanked in colossal fashion.  However, there were many questions which were conveniently swept under the rug and buried.  For instance, Refco filed for bankruptcy literally two months after Goldman Sachs took it public.  Typically, when a large company like Refco is taken public, the underwriter and audit firm involved, Grant Thornton, perform very detailed and thorough legal and accounting due diligence.  The fact that Refco filed bankruptcy literally 60 days after it went public raises all kinds of questions, all of which were neatly and conveniently dismissed.  If memory serves me correctly, Goldman threw out about $300 million in "nuisance" settlement money, thereby somehow avoiding billions in liability actions.  It also made a lot more money off of Refco and it's IPO than the$300 million in "hush" money that it coughed up.  Goldman Sachs' audit firm:   Price Waterhouse, the client of the MF Global bankruptcy trustee James Gidden.

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