In what is becoming a troubling pattern, financial regulators have yet again delayed a vote on a crucial provision of the Dodd-Frank Act. The Commodity Futures Trading Commission again put off voting on a rule that would more strictly regulate the massive swaps market, which is used by firms to fix or lock in their energy costs, more clearly defining which banks and energy companies would be subject to costly regulations. Major commodity companies, such as BP, Shell and Cargill have vigorously argued that they should be exempt from the new regulations because their use of swaps is necessary to insulate themselves from major changes in prices and currency values. More in the Huffington Post here.
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Securities and Exchange Commission Chairman Mary Schapiro defended the Obama administration for not prosecuting Wall Street CEOs whose companies fed into the 2008 market collapse, saying the government can’t press charges against bankers when “we don’t think the law and the facts are on our side.” Schapiro said the strategy has been to settle potential cases with cash penalties, since a prosecution could drag on for years and exhaust her agency’s resources. More in Politico [...] The chairwoman of the Securities and Exchange Commission defended the agency’s record of settling fraud cases with Wall Street companies, saying on Wednesday that she believed the agency’s practices “clearly have deterrent value,” even though firms were often charged repeatedly for violating the same securities laws. Mary L. Schapiro, the S.E.C. chairwoman, added that repeat offenders remained a problem because “people have short memories” on Wall Street. That forces the commission to bring many of the same types of cases “so that people don’t forget that they have these obligations and that somebody is watching and somebody is willing to hold them accountable.” More in the New York Times [...] The owners of the New York Mets are set to ask a judge today to end a $386 million lawsuit by the Bernard Madoff brokerage trustee without a trial, saying he hasn’t proved they ignored the fraud because it benefited their business. U.S. District Judge Jed Rakoff threw out most of Madoff trustee Irving Picard’s $1 billion lawsuit against the baseball team’s owners last year, saying he could pursue only $386 million at a trial set to start March 19 in Manhattan federal court. To get most of the money, Rakoff said Picard must prove the defendants, including Fred Wilpon and Saul Katz, were willfully blind to Madoff’s crimes, which Picard has said cost investors about $20 billion in principal. More on Bloomberg Businessweek [...] Over the last six months, U.S. Senior District Judge Jed Rakoff has made Irving Picard of Baker & Hostetler look more like Don Quixote than a white knight riding to the rescue of investors who lost billions in Bernard Madoff’s Ponzi scheme. Rakoff has already squelched the Madoff trustee’s fraud claims against the banks that allegedly aided and abetted Madoff’s scheme, as well as cutting off Picard clawback claims that date back more than two years. On Tuesday, in Rakoff’s biggest-dollar ruling in the Madoff case, the judge said Picard does not have standing to pursue a $60 billion racketeering suit against UniCredit and two other foreign banks that allegedly participated in a scheme to funnel $9.1 billion to Madoff in exchange for kickbacks to a woman named Sonja Kohn. (Picard had claimed $20 billion in damages, which can be tripled under the Racketeer Influenced and Corrupt Organizations Act.) More on Reuters [...] MF Global was a Broker-Dealer/ FCM that speculated in highly leveraged sovereign debt with their proprietary funds. At some point they used their customer segregated accounts to support their proprietary positions. The result was a bankruptcy filing on Oct. 31 that has caused massive hardship to their customers and wreaked havoc on the futures industry. I’ve spent a great deal of time talking to and listening to people about what went wrong at MF Global and even more time talking to and listening to people about what is wrong with the futures industry. There is a lot of anger and finger-pointing. I recognize that much of the criticism is emanating from those who have lost money. While I sympathize with all those who haven’t yet recovered their funds, I feel it is important to set the record straight and point out some of the realities. Read more in Futures Magazine [...] The report of the SIPC Modernization Task Force outlining legislative recommendations and other changes related to the Securities Investor Protection Corporation (SIPC) is now in the hands of the SIPC Board of Directors. The SIPC Modernization Task Force was created in June 2010 to review the operations of SIPC and to recommend needed changes. The Task Force held a total of 14 meetings and created a Web site (http://www.SIPCModernization.org) to collect suggestions directly from the public. The Task Force also gathered extensive public input during two public forums, one held online in September 2010 and the other in person in New York City in June 1, 2011. In addition, the Task Force received in-person presentations and written contributions from, investor education experts, representatives of the mutual fund industry, and other expert parties. Read more in the Sacramento Bee [...] U.S. government regulators haven’t done enough to limit the more than $100 million in legal fees that Fannie Mae and Freddie Mac are paying on behalf of executives who departed in accounting scandals, a federal watchdog said. The two mortgage-finance companies have been spending tens of millions of dollars fighting securities lawsuits and other litigation on behalf of former executives, bills that have piled up even after the companies were seized by federal regulators in September 2008. Lawmakers have been critical of the companies’ regulator, the Federal Housing Finance Agency, for allowing those payments. Read Wall Street Journal report [...] The Mets really, really liked Madoff’s money, according to the newest revelations from the much-disliked court-appointed Madoff trustee, Irving Picard, with whom they’re engaged in a protracted legal battle. The accusations aren’t really surprising but will probably make you slap your forehead and shake your head a bit sadly. Saul Katz, reports the Times, referred to it as the “vig,” which is a gambling term for the money the house makes on every transaction, no matter the outcome. Which it was, kind of, only Madoff was the house, not the Mets. More in New York magazine [...] Saying his legal arguments were “too clever by half,” U.S. District Judge Jed Rakoff dismissed civil racketeering claims by Madoff trustee Irving Picard against a handful of European banks that allegedly helped keep the Ponzi scheme alive. In an 18-page order released to lawyers today, Rakoff dismissed Unicredit S.p.A, Pioneer Global Asset Management, Unicredit Bank Austria and former Unicredit chief executive Allesandro Profumo from Picard’s lawsuit seeking to recover $20 billion stolen from Madoff investors. More in Forbes [...] |
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