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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

Friday, January 6, 2012

Goldman Sachs Guys at MF Global and CFTC

If you want to find out about Jon Corzine's peccadilloes and foibles, you can read a review of a Vanity Fair article here.

However, if you want to see how MF Global has been regulated (or not) by various agencies, then you may want to read about how the Federal authorities are making inquiries into the CME (Chicago Mercantile Exchange), which served as MF Global's primary regulator. Then you have another regulator, CFTC (Commodity Futures Trading Commission), looking into CME's conduct. How convoluted all this regulation is becoming! Mixed in with real regulation is "self-regulation." Is there such a creature as a regulator regulating "self-regulation?

MF Global Inquiry Turns to Its Primary Regulator
By Ben Protess and Azam Ahmed - DealBook

Federal authorities investigating the collapse of MF Global have expanded their inquiry to include the actions of the CME Group, the operator of the main exchange where the commodities brokerage firm conducted business, according to people briefed on the matter.

CME, which also served as MF Global’s primary regulator, has come under heavy criticism after $1.2 billion in customer money disappeared from MF Global. The Commodity Futures Trading Commission, the government agency leading the case, is scrutinizing CME’s conduct in the days before MF Global filed for bankruptcy on Oct. 31.

In particular, the commission is reviewing whether CME’s efforts to verify the safety of customer money were sufficient, the people said.

CME, for its part, has said that MF Global may have intentionally produced inaccurate documents related to customer accounts.

As the owner of the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, the CME Group is a major force in commodities and futures. It is the dominant United States exchange operator for billions of dollars in trades, affecting food prices and Wall Street profits. A censure of any kind would be a powerful, if merely symbolic, critique of the behemoth.

If the federal regulator finds that CME did not meet the standards of so-called self-regulatory organizations, it could fine or sanction the exchange. The commission could also revoke CME’s status as a self-regulator, though that is unlikely. Experts say it is rare for the government to hand down any manner of sanction against a self-regulatory body.

CME has not been accused of any wrongdoing, and the review of its actions may not produce any findings.

“Given the issues involved, we welcome and expect the C.F.T.C.’s investigation as a natural part of this process,” a spokeswoman for the CME Group said in a statement. “We are confident the C.F.T.C.’s review will determine we did everything right within our regulatory power. The system did not fail; the firm broke the law by misusing customer funds.”

The collapse of MF Global — and the ensuing hunt for the missing money — has rippled through Wall Street, Washington and the Farm Belt. Creditors are fighting for their cut in bankruptcy court, lawmakers are holding Congressional hearings, and farmers and other clients are waiting for their money to reappear.

Read the rest of the article here

2 COMMENTS:

Think like them said...

By now, it should be painfully clear the world rewards fraud,
amorality, and sloth, particularly in New York City and
London, the two cities most responsible for the GLOBAL financial catastrophe
unfolding before our eyes.  TBTF banks are bailed out and criminal politicians
re-elected, while the growing “welfare society” frowns on those supplying its
needs, but embraces the rights of the worthless.  Just like Atlas
Shrugged, but in REAL LIFE.

Black and Scholes were given Nobel Prizes for this formula, which more than
any in the global economic realm has caused misery, pain, and losses for the
unsuspecting public, at the hands of ruthless sociopaths running Goldman Sachs,
JP Morgan, and the like.  When retail traders lose their life’s savings in
rigged markets they are left penniless, while Goldman Sachs and JP Morgan are
bailed out from their mistakes with freshly printed, tax-payer funded capital,
the reward for channeling years of illicit profits into campaign
contributions.

 

In hindsight, Bill Clinton’s appointment of Robert Rubin as Treasury
Secretary in 1995 was the “shot heard round the world” in the annals of
banker/politician commingling.  

In reality, Ronald Reagan started this trend in 1981 when he hired Donald
Regan as Treasury Secretary, directly from his CEO position at Merrill Lynch. 
But Wall Street was not rich and powerful in 1980; to the contrary, it struggled
through the throes of a vicious recession and decades of stagnant stock prices. 
Conversely, in 1995 Wall Street was on the rise, and Clinton’s hiring of Goldman
Sachs’ CEO harkened a dangerous era in which powerful sociopaths, with an agenda
directly in conflict to its constituents, had taken power.
Immediately, Rubin spearheaded an effort (behind the scenes, of course) to
bolster the power of his “peeps” in New York, clearing the way for repeal of the
Glass-Steagall Act in 1999.  Glass-Steagall, one of the best laws EVER created
by Congress, emerged from the Great Depression, prohibiting the commingling of
investment and commercial banking activities.  A root cause of the 1929 crash
and 1930s Depression was bank profligacy with depositor funds, and
Glass-Steagall’s raison d’etre was the removal of such blatant
conflicts of interest.  Thus, when it was repealed in 1999, it was like issuing
Wall Street a “license to kill.”
The table below depicts the meteoric growth of “OTC derivatives” from the
time Glass-Steagall was repealed until 2008, when the market rose from virtually
nothing to more than $600 TRILLION in notional value.  Current estimates suggest
this market is somewhere between $800 TRILLION and $1 QUADRILLION, but it is
difficult to generate a truly accurate figure due to the lack of
transparency, particularly in attempting to “net” the myriad
cross-exposures of various banks.
Despite this “business” being proved to be outright, lethally
dangerous FRAUD by the all-out collapse of the world’s largest OTC derivative
guarantor, AIG, it continues to grow, estimated to have grown by 15% in just the
first half of 2011 alone (2H 2011 figures have yet to be released). 
U.S. taxpayers funded the “derivative bailout” through inflation, as
the insolvent Federal Reserve was forced to print trillions of
dollars to make whole the counterparties to failed derivative contracts with
AIG, Fannie Mae/Freddie Mac, Lehman Brothers, and others, both on and off the
radar screen, and is obviously be the “buyer of last resort” for any and all
future failures.
http://blog.milesfranklin.com/the-single-celled-option

Yash Bhuptani said...

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