Notable accusations, admissions
and settlements in 2012:
Bank
of America:the US Justice Department is seeking$1 billionin
fines for troubled loans sold to Fannie and Freddie; MBIA’s lawsuit againstCountrywide, which was disastrously acquired
by BofA, rolls on; BofA is one of five banks participating in the$25 billionnational
mortgage settlement.
Bank of China:the families of Israeli students killed in a 2008 terrorist attack are suing the
BOC for $1 billion“intentionally
and recklessly” handling money for terrorist groups.
Bank of
New York Mellon:a subsidiary paid$210 millionto
settle claims it advised clients to invest in Bernie Madoff’s ponzi scheme; the DOJ continues to investigate possible
overcharges for currency trades that it says generated$1.5 billionin
revenue.
Citigroup:settled CDO lawsuit for$590 million; one of five banks participating in the$25 billionnational mortgage settlement; paid$158 millionto
settle charges it “defaulted the government into insuring” risky mortgages.
Credit Suisse:sued by NY state for allegedly deceiving investor in thesale of MBS.
Deutsche
Bank:settled a DOJ mortgage suit for$202 million; FHFA fraud case isongoing.
Goldman
Sachs:FHFA fraud case isongoing; after a ruling by federal appeals court,
a class action lawsuit over MBS willgo forward.
HSBC:settled money laundering charges for$1.9 billion; set aside$1 billionfor
future settlements related to mis-selling loan insurance and interest rate hedges in the UK; Libor settlement still to be
reached.
ING: settled
charges that it violated sanctions against Iran, Cuba, etc. for$619 million.
JP Morgan
Chase:being sued by NY state for MBS issued byBear Stearns;class action lawsuitandcriminal probe over failed derivatives trades in
its Chief Investment Office; one of five banks participating in the$25 billionnational
mortgage settlement.
Mitsubishi
UFJ:paid an$8.6 millionfine
for violating US sanctions on Iran, Sudan, Myanmar and Cuba.
Morgan Stanley:fined$5 millionfor
improper investment banking influence over research during Facebook’s IPO.
Royal Bank
of Scotland:$5.37 billionshareholder
lawsuit related to 2008 rights issuance; set aside$650 millionto
cover claims it mis-sold payment protection products; also fined by the FSA for mis-soldinterest rate hedges.
Société
Générale:rogue trader Jerome Kerviel loses appeal his appeal 3-year
sentence for trades that generated$6.5 billionin
losses.
Standard
Chartered:$340 millionfine
paid to NY state department of financial services for allegedly hiding the identity of customers in transactions with Iran
and drug cartels;$327 millionpaid to the Federal Reserve and US Treasury’s
anti-money laundering unit.
State Street:fined$5 millionfor
lack of CDO disclosure.
UBS:$1.5 billionLibor
fine and two traders criminally charged; rogue trader responsible for$2.3 billionloss
found guilty of false accounting.
A U.S. judge on Thursday sentenced the founder
of Peregrine Financial Group to 50 years in prison for looting hundreds of millions of dollars from the brokerage, saying
his customers would probably never recover the money they lost. Russell Wasendorf Sr., who had tried to kill himself just
before the fraud was uncovered, received the maximum sentence allowed by law and was ordered to pay $215.5 million in restitution
for his nearly 20-year scheme.
For most of the two-decade
life of Peregrine Financial Group, a leading independentfuturesbrokerage,
founder and chief executive Russell Wasendorf Sr. was taking hundreds of millions of dollars of his customers' money to cover
losses and live large.
His dual life came to light after Wasendorf, 64,
tried to commit suicide outside his headquarters in July. Authorities discovered a four-page confession letter describing
how he used a post-office box, a scanner and basic software to hide his theft for years. The Commodity Futures Trading Commission
accused him of making off with more than $200 million of customer money. Last week, he pleaded guilty to mail fraud, lying
to regulators and embezzling customer funds, crimes that could put him in jail for 50 years.
Wasendorf pleaded guilty to mail fraud, embezzlement
and lying to regulators last week. He remains in solitary confinement and under suicide watch inside an Iowa jail. Federal
prosecutors say Wasendorf stole approximately $200 million from customer accounts over the years. The 64-year-old pleaded
guilty to embezzling at least $100 million.
Peregrine Financial Group
Inc. founder Russell Wasendorf Sr. pleaded guilty to stealing more than $100 million from the bankrupt commodities firm’s
customers...
Wasendorf’s
crimes came to light on July 9 when the founder of Peregrine, who was also the company’s chairman and chief executive
officer, tried to kill himself by piping auto exhaust into the passenger compartment of his car parked outside the firm’s
Cedar Falls, Iowa, headquarters. In
a written statement found with him then, Wasendorf said he’d been stealing from the company for almost 20 years.The
National Futures Association, an industry self- regulator, announced the same day that about $200 million in customer funds
the firm reported was on deposit at its bank were unaccounted for.
If he ever writes
a book about his stunning 20-year fraud scheme, disgraced Iowa businessman Russ Wasendorf Sr. must give the profits to the
government that he fooled for so long. Federal prosecutors on Thursday made public their full 17-page plea agreement
with the founder ofCedar Falls-based Peregrine
Financial Group, two days after a hearing in which the deal was described ingeneral terms. The agreement says Wasendorf must assign any profit to the government
that he makes "in connection with any publication or dissemination of information relating to" his crime. Wasendorf
also cannot help associates or family members profit from the story, and any proceeds generated from publicity must go toward
paying back the roughly 24,000 customers expected to lose money in the scheme. Wasendorf, 64,
has agreed to plead guilty to mail fraud, embezzling customer funds and making false statements to two regulatory agencies,
theNational Futures Associationand
the U.S. Commodity Futures Trading Commission. In the agreement, Wasendorf acknowledged that he embezzled and misspent more
than $100 million in investors' funds on himself, to keep Peregrine afloat and on other business interests, such as an upscale
restaurant he opened.
Peregrine Financial chief executive Russell Wasendorf Sr., accused
of stealing more than $200 million from his futures brokerage's customers and lying to regulators to cover his tracks,
has agreed to plead guilty to mail fraud, making false statements to regulators and embezzling customer funds...the CEO misappropriated
more than $200 million in customer funds over several years. Wasendorf, in his confession, said he spent most of the stolen
money to build a new headquarters for his company and keep his business afloat.
The U.S. is accusingWells Fargoof
massive fraud on mortgages it approved as far back as 2001.
ManhattanU.S.
Attorney Preet Bharara and the U.S. Department of Housing and Urban Development filed a civil mortgage fraud lawsuit today
against the nation’s fourth largest bank.
Wells Fargo engaged in a “longstanding and reckless trifecta of deficient training, deficient
underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance,” the US
Attorney said.
Jon Horvath, a former technology analyst at a unit of hedge-fund giant SAC Capital, sidestepped
a possible 45-year prison term and pleaded guilty yesterday to helping turn insider tips into millions of dollars in trading
profits...
Horvath, who is
originally from Sweden, pleaded before Judge Richard Sullivan to one count of conspiracy to commit securities fraud and two
counts of securities fraud...
Federal prosecutors said the tight-knit group netted a whopping $62 million just trading computer
maker Dell — possibly the largest illegal profit ever on a single stock trade. The group also stands accused of illegal
trading on shares of graphics firm Nvidia Corp.
The State of New York filed
suit against the huge bank of fraud in its promotion of mortgaged backed securities ahead of the financial crisis...The suit relates to mortgage-backed securities issued by Bear Stearns,
which was acquired by J.P. Morgan in 2008 when the firm collapsed.The attorney general's office intends
to follow up with similar actions against other sponsors and underwriters of mortgage-backed securities...it can fairly be forecast that most other large U.S. bank with units which traded and
sold mortgage backed paper will have suits filed against them as well.
Defendants Breached Their Obligations to Repurchase Defective
Loans From Securitizations While Secretly Settling Claims with Originators and Pocketing Recoveries. Although loan originators were contractually required to buy
back defective loans at an agreed-upon repurchase price, Defendants routinely permitted them to avoid this obligation by extending
cheaper or otherwise more appealing alternatives. Specifically, Defendants offered substantial concessions to originators
in order to preserve Defendants’ relationships with them and to ensure the continued flow of loans.
Reports of fraud by corporate employees have continued
their ceaseless rise so far this year, according to the Quarterly Corporate Fraud Index. The current drivers are increasing
awareness of fraud, mandated whistle-blower protections, and changing company cultures. The index measures reported frauds
as a percentage of all compliance-related reports. Most recently, for the second quarter of 2012, that ratio climbed to 22.9%,
up from 21.7% for the same quarter in 2011.“This index essentially has been going up since the day we started tracking
it [in 2005],” says Jimmy Lin, vice president of product strategy and corporate development at The Network, a provider
of governance, risk, and compliance solutions that conducts the quarterly analysis in conjunction with BDO Consulting.
Corporate employees are simply becoming more aware of organizational issues and more willing to
report compliance errors, especially fraud, Lin says. Fraud is more often covered in the news media these days, he notes.
Also, he claims, the client companies have become more sophisticated in educating employees on what fraud looks like (which
is a service The Network provides). “We see the index going up and up as a positive. Companies are getting more interested
in a holistic approach than a check-box approach to compliance.”
Bank of America says it has agreed to pay
$2.43 billion to settle a class-action lawsuit related to its acquisition of Merrill Lynch at the height of the financial
crisis. In the lawsuit, shareholders alleged that Bank of America and some of its officers made false or misleading statements
about both companies’ financial health. The lawsuit was filed on behalf
of investors who bought or held Bank of America stock when the company announced its plans to buy Merrill Lynch in a $20 billion
deal as the banking industry and federal regulators struggled to contain fallout from the financial crisis in the fall of
2008.
Lloyds
Banking Group Plc’s (LLOY) former head of digital banking fraud and security was sentenced to two- and-a-half years
in jail for submitting false invoices totaling more than 2.4 million pounds ($3.9 million). Jessica Harper, 50, was sentenced to half of a five-year term by a judge in London
today. She gave the money to family and friends, including helping some people buy houses. The fraud at the U.K’s second-biggest state-backed lender is another blow
to London’s reputation as a financial center, which has been tarnished by separate revelations that banks rigged the
London Interbank Offered Rate and sold inappropriate derivatives to small business customers...
After
her arrest Harper...said: 'I just saw the opportunity and I thought "Well maybe considering the hours I work and everything
else I deserved it. "If I went to work at another bank I would probably be earning four times my salary." The fraud took place
during the financial crisis when Lloyds received substantial amounts of taxpayers' money.
She
stole the money over four years by creating a dummy bank account in the name of an IT firm which carried out work for Lloyds,
even throwing it off the scent when directors questioned paperwork they received...She
used a bank account set up in the name of software firm ISB Ltd butwhich was really her own, and doctored
and made up invoices and emails to pay herself large sums.
William
Steward, a former accountant in product control for UBS AG, said he began looking into trades by Kweku Adoboli in August 2011
after receiving a report of a $3.57 billion discrepancy. Steward
spent the next several weeks trying to clarify the discrepancy and received explanations from Adoboli that he had used “a
shortcut while he was under pressure for time,” rather than booking every trade.
Sophin
accused Merrill of not supervising its staff, trading without authorization and civil fraud, among other things, according
to the arbitrationaward. Merrill denied the claims and filed a counterclaim against Sophin for breach of
contract, seeking a total of $5.5 million for the deficits in the two accounts. Arbitrators,in the decision on Tuesday, found both parties liable. While
Merrill must pay Sophin $6.1 million, Sophin must pay Merrill $2.5 million. The panel admonished Merrill for "lapses in record
keeping and supervisory procedures" but said they did not indicate a widespread problem at the company.
The whistleblower who exposed alleged corruption in two Reserve Bank companies
told five top bank officials of his explosive concerns, only to be later forced out of his job and warned to keep quiet...
Among evidence gathered by the federal police are documents in which Mr Hood claims that in
2008 - after raising corruption concerns - he was told by a top bank official, Bob Rankin, that his job ''had become untenable''.
The bank's deputy governor, Ric Battellino, whom Mr Hood personally briefed on the allegedly corrupt agents, allegedly told
Mr Hood in 2008 that he should ''never'' again discuss the agent issues...
Reserve Bank of Australia subsidiary Securency allegedly paid bribes
in Asia, Latin America, and Africa to win currency printing contracts, according to a former salesman for Securency and its
sister company Note Printing Australia. Mark Ingram told Australian parliamentary investigators that RBA’s top executives
not only knew but kept quiet about bribe-giving by its subsidiaries. Early warnings about overseas graft were ignored, he
said, and the whistleblowers fired from their jobs...
Another witness, Brian Hood, told policehe briefed top RBA officialsabout the bribery and they told him to never bring up the topic again. He was also later fired.
The parliamentary hearings are exposing a culture of bribery and shady dealings within RBA and its subsidiaries. The companies
allegedly bankrolled Abdul Kayum, an arms dealer based in Malaysia, giving him oversized commissions in return for help securing
contracts. Kayum was allegedly paid even after the RBA companies fired him because of corruption concerns. Despite RBA’s
denials that it knew what was happening, correspondence to and from Kayum openly referred the bribe-giving.
A senior trader at the Swiss bank UBS was a "master fraudster"
who lost his bank $2.3 billion, imperiling its very existence, through risky deals and deceit in a bid to improve his status,
bonus and job prospects, prosecutors said. Prosecution lawyer Sasha Wass told a British jury that Kweku Adoboli lied to his
employer, invented clients and breached the bank's safeguards against high-risk trading between 2008 and 2011. Adoboli
was a senior equities trader with the bank in London when he was arrested in September 2011 after UBS discovered irregularities
in trading records...The fraud wiped $4.5 billion, or 10 percent, off the share price of Switzerland's biggest bank, Wass
said. (He) "faked bookings, he created false accounts and conducted himself as a master fraudster, deliberately and systematically
deceiving and defrauding the bank which employed him."
“The department and investigative agencies
ultimately concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they
exist at this time,” the department said...A Senate subcommitteechaired by Sen. Carl Levin, D-Mich., in April 2011 found that Goldman marketed four sets of complex mortgage securities
to banks and other investors but that the firm failed to tell clients that the securities were very risky. The Senate panel
said Goldman secretly bet against the investors’ positions and deceived the investors about its own positions to shift
risk from its balance sheet to theirs.
An Iranian court
has sentenced four people to death for a billion-dollar bankfraud that tainted the government of President Mahmoud Ahmadinejad,
state media reported...Iranians, hit by sanctions and soaring inflation, were shocked by the scale of the $2.6 billion bank
loan embezzlement that was exposed last year and by allegations it was carried out by people close to the political elite
or with their assent. Of the thirty-nine people tried for the fraud - the biggest in the Islamic Republic's history - four
were sentenced to hang, the IRNA state news agency reported. "According to the sentence that was issued, four of the defendants
in this case were sentenced todeath,"
JPMorgan Chasedisclosed
on Friday that losses on its botched credit bet could climb to more than $7 billion and that the bank’s traders may
have intentionally tried to obscure the full extent of the red ink on the disastrous trades.
Mounting concerns about valuing the trades led the company to announce that its earnings for
the first quarter were no longer reliable and would be restated. Federal regulators, who were already examining the trades,
are now looking at whether employees of the nation’s biggest bank by assets intended to defraud investors, according
to people with knowledge of the matter...
The possible deceptions came to light in a regulatory filing early Friday just before the bank
reported its second-quarter earnings. While the bank posted a profit of nearly $5 billion despite the trading losses of $4.4
billion for the quarter, some analysts and regulators zeroed in on the valuation of the trades.
“If traders misrepresented a fact with the intent to defraud, they can
be subject to criminal charges,” said Alan R. Bromberg, a securities law expert atSouthern Methodist University.
A mixture of accounting moves and rosy assumptions
appear to have masked JPMorgan's London Whale.
ACCOUNTING
MANIPULATION: Here is perhaps the most amazing thing about JPMorgan Chase's (JPM) $5.8 billion trading loss: Take a look at the firm's
overall results, and it's like the London Whale's misstep, one of the largest flubs in the history of Wall Street, never happened.
Back in mid-April, about two weeks before talk of the trading losses emerged, JPMorgan was expected to earn
$1.21 a share in its second quarter. On Friday, JPMorgan reported that it had, Whale and all,earned exactly that.
How
the bank appears to have offset the huge trading loss is a prime example of how complex and malleable bank profits actually
are, and how much they should be believed. JPMorgan's quarter should give fodder for accountants to talk about for some time...
So how do you make a nearly $6 billion loss go away? First stop taxes. The bank said
that the London Whale's blunder cost the bank $4.4 billion in the second quarter alone. But that's before taxes. After it
pays taxes, though, JPMorgan says the loss will shrink to just over $2.7 billion, which means the bank plans to take a $1.7
billion write off from Uncle Sam. Like any loss, banks are allowed to use trading blunders to offset taxable profits elsewhere
in the bank. The question is the rate. At $1.7 billion, JPMorgan is writing off roughly 38% of the loss...
JPMorgan
appears to have gotten a $2.9 billion boost from changes it made to its loss provisions...Just before the bank released its earnings, it announced that
it was restating its first quarter earnings. JPMorgan now claims more of the London Whale's trading losses happened in the
first quarter, $459 million to be exact - or just slightly more than what Dimon needed to fill the gap - than it earlier thought.
"I think they did as much manipulation as they could have to hide the loss,"
says Christopher Whalen, who follows bank stocks for Tangent Capital Partners.
VIDEO
Staggering
Losses at JPMorgan; Banking Scandal in Britain
JPMorgan Chase's latest report put losses from
a failed trading strategy at $5.8 billion, nearly three times the original estimate.At the same time, the bank also reported a profit of $5 billion for the second
quarter.
Meanwhile, new questions arose about the Federal Reserve and a banking scandal in
Britain. Barclays has acknowledged it under-reported borrowing costs
in 2007 and 2008 to manipulate the so-called LIBOR, an international benchmark lending rate that affects everything from mortgages
to student loans to credit cards.
Failed
mortgage company Countrywide Financialused a VIP program — including
loans to lawmakers, key congressional staffers and executive-branch officials — to help the company wield influence
and block legislation that would have cut into its profit margin, according to a House investigation. Countrywide also gave
VIP loans to top officials at Fannie Mae, the government-sponsored mortgage
giant, according to a new report by the House Oversight and Government Reform Committee...
Countrywide
and Fannie Mae formed a strategic partnership in 1999. Former Fannie Mae CEO James Johnson, a well-known figure in Democratic
Party circles who helped forge the close relationship with Countrywide, received more than $10 million in VIP loans. Fannie
Mae’s collapse and subsequent bailout has cost U.S. taxpayers $93 billion-plus.
Officials
at Freddie Mac, another mortgage-related Government-Sponsored Enterprise, received Countrywide VIP loans as well. Freddie
Mac’s bailout has cost an additional $53 billion...
“Documentsand
testimony show that Angelo Mozilo and Countrywide’s lobbyists may have skirted the federal bribery statute by keeping
conversations about discounts and other forms of preferential treatment internal. Rather than making quid pro quo arrangements
with lawmakers and staff, Countrywide used the VIP loan program to cast a wide net of influence.”
A former UBS trader goes on trial in London this week in
a case involving losses of $2.3 billion that will subject the Swiss bank to an "uncomfortable" examination of its culture
and practices...UBS has improved internal monitoring and controls to avoid any repeat of the events of September 2011. The
bank has scaled down some of its investment banking activities and retreated to its traditional core business of wealth management.
With $1.554 trillion in assets, UBS is the world's second-largest wealth manager after Bank of America, according to wealth
consultancy Scorpio Partnership.
In a short statement, the bank confirmed an earlier report by
Bloomberg News that said the SFO, which investigates and prosecutes white-collar crime and corruption, was about to look into
payments made in 2008 to Qatar’s sovereign wealth fund as the firm sought to raise money.
Central banks are special creatures, and investigating them
turns out to be the hardest thing in the world...
Note
Printing Australia (NPA), a wholly owned subsidiary of the RBA, manufactures polymer banknotes. In May 2009, Age newspaper
broke the scandal: eight former executives of Securency and NPA had paid millions of dollars in bribes and kickbacks to officials
in Vietnam,Malaysia, and Indonesia between 1999 and 2004 through middlemen, including a Malaysian arms dealer,
in order to win contracts for manufacturing bank notes... But the RBA is not alone. Similarly sordid allegations have entangled Ewald Nowotny, Governor
of the Austrian National Bank and member of the ECB’s Governing Council [read...Austrian Central Bank: Bribery, Kickbacks, Money Laundering]. At the Swiss National Bank, an insider trading scandal
caused its chairman, Philipp Hildebrand, to resign. And in the US, an audit of the Federal Reserve System by the Government
Accountability Office shed some light the dizzying conflicts of interests and cronyism at the New York Fed when it decided
who got which billions during its multi-trillion-dollar bailout mania [read....The GAO Audit of the Fed Doesn’t Call It ‘Corruption’
but it Should].
This summer has seen one bank after another slapped with fines
or rocked by reports of wrongdoing...Libor, or credit card overcharges, money-laundering...hard to keep track. ProPublica
has laid out the details on some of the most notable cases, including fines, resignations, and which investigations aren’t
over yet.
Four
years after the collapse of Lehman Brothers and the near-total paralysis of capitalism's central nervous system -- the moment
fear completely overwhelmed greed onWall Street--
we are starting to see a few glimmers of hope. The good news: Several big banks have finally started taking steps to reform
Wall Street's out-of-control compensation system, which rewards bankers and traders with big bonuses for taking insane risks
with other people's money. The bad news: These banks are in Europe, and most of their U.S. cousins still just don't get it.
Over the last few decades, white-collar law has transformed from a boutique business into a
major focus for the biggest law firms. As firms expand globally and the federal government makes corporate prosecutions a
higher priority, the practice has become a profit center. Companies do not like to scrimp with civil and criminal cases. The
stakes are too high.
For Madoff victims, many of whom claim they are owed much more
money, the SIPC checks may not be enough. SIPC has come under fire in recent years for its handling of the Madoff and Stanford
swindles. The corporation, which is not a watchdog agency actively working to prevent thievery, comes in after major losses
and typically appoints independent trustees like Irving Pickard to try to track down, recover and repay investors.
SIPC stated
that “approximately $17.3 billion in principal is estimated to have been lost in the Ponzi scheme by direct BLMIS customers
who filed claims. When combined with the funds already returned to BLMIS customers, the second interim distribution
satisfies more than 50 percent of the total Madoff accounts with allowed claims. Nearly 1,100 accounts were covered by the
second distribution.
The Trustee’s recovery of more than $9.147 billion has been
made possible through advances provided by SIPC, which is funded by the securities industry. To date, SIPC has advanced
over $800 million to pay customer claims and an additional $621 million to fund the liquidation proceeding. No monies
recovered by the Trustee have been used to pay any administrative expenses. All recoveries made by the Trustee benefit
customers.”
Under federal securities law, the statute of limitations in fraud
cases typically is five years. Given that many of the mortgage-related securities that precipitated the crisis were created
in the boom years of 2006 and 2007, regulators have a rapidly closing window of opportunity to bring new charges. As of July
18, the Securities and Exchange Commissionhad charged110
entities or individuals in crisis-related cases, and won $1.39 billion in penalties.
Evidence
gathered by the Financial Crisis Inquiry Commission clearly demonstrated that the financial crisis was
avoidable and due, in no small part, to recklessness and ethical breaches on Wall Street. Yet, it's clear that the unrepentant
and the unreformed are still all too present within our banking system. A June survey of 500 senior financial services
executives in the United States and Britain turned up stunning results. Some 24 percent said that they believed that financial
services professionals may need to engage in illegal or unethical conduct to succeed, 26 percent said that they had observed
or had firsthand knowledge of wrongdoing in the workplace, and 16 percent said they would engage in insider trading if they
could get away with it.
In the past five months,
the financial sector has had eight high-profile scandals...From worldwide manipulation of interest rates to an admission of
fraud written in a suicide note, many of the alleged actions took place years ago but are only now coming to light...Take
a look at eight financial scandals that came to light in the past five months.
While most of the world was focused on a festival of sporting
excellence,Barclays,HSBCand Standard Chartered have been apologizing for their involvement in interest rate-rigging,
money-laundering and sanctions-busting.Lloyds Banking Groupand Royal Bank of Scotland have also both been caught up in the Libor scandal and
fined for violating US sanctions against Iran...
True, it is unfair to single out U.K. banks. Sixteen institutions are under investigation for
rigging the London interbank offered rate, including major US and European banks; two Dutch banks and one Swiss have been
fined for sanctions violations. There has been an industry-wide cultural failures: bank boards were very focused on market
risk and credit risk but they fatally ignored legal and reputational risk...
Clearing
up the "cesspit" is essential. New regulations will make banks safer. But you can't legislate for culture. That change has
to be driven by boards. Fortunately, there are signs the UK banks understand this. Few doubt HSBC chief executive Stuart Gulliver
is serious when he talks about cultural change: in two years, he has sold 36 businesses, exited a number of countries and
reorganized the group along global business lines, stripping power from national chiefs...
"...the order alleges that Standard Chartered’s deception was aided by Deloitte &
Touche, an auditor, which had been hired by the bank in 2004 as a result of a prior settlement with regulators to provide
an independent report on its compliance failures. Instead, the DFS alleges that Deloitte provided Standard Chartered with
confidential reports on other banks that gave it insights into how regulators were investigating Iranian transfers; and then,
at the bank’s request, drafted a “watered-down” version of a report that deleted references to sensitive
payments."
An informal survey of 314 global finance professionals by the London-based
Chartered Institute for Securities & Investment on Tuesday found that two-thirds have little or no trust in the British
banking industry. Only 2 percent rated the banks totally trustworthy.
What were Morgan Stanley’s efforts that saw both the DOJ
and SEC decline to charge them? It starts with the questions likely to drive the general lines of inquiry for investigations by these agencies:
...even if regulators get more serious about imposing jail time
on miscreant bankers, it may not solve the problem. It’s very difficult to prove a case beyond a reasonable doubt...“The
standard of proof in a criminal proceeding is very high, and most juries simply can’t understand the complexity of many
financial crimes.”
That fact that no bank executives have gone to jail following the
global financial crisis supports this view. And the most notable exceptions do not inspire confidence. Before finally being
convicted, Bernie Madoff managed to “elude prosecution for decades even when it was evident to sophisticated observers
that he was running a Ponzi game,” ...And Martha Stewart, also convicted, had nothing to do with the “the financial
crisis that has impoverished many Americans. This was most assuredly not a victimless crime, but the authorities appear to
lack the will or the appropriate tools to prosecute the perpetrators. Until this situation is improved, we should not be surprised
to witness more of the same.”
Allegations of insider trading at Nomura, money laundering
at HSBC, interest rate manipulation at Barclays – it’s one scandal after another! Some say mega-banks are too
complex to manage and control, others blame bad management, still others say the culture is rotten. Corruption abounds.
Greed, secrecy, arrogance, lack of a moral compass,
and opportunity all combine in too many financial institutions. This prompts very highly paid executives to abuse their offices
for their personal benefit at the expense of their own institutions, colleagues, shareholders, bank customers and, more broadly,
the financial system itself.
There have been so many big banking scandals of late
that you have to wonder whether the regulators and supervisors of our financial system have been on permanent holiday.
Financial frauds
are shocking when they come to light and one of the first questions usually raised is “why couldn’t investors/regulators
have seen this?”...The
latest potential example is Peregrine Financial Group Inc...Based on
the contents of the confessional statement and the criminal complaint...behavior had several points in common with other schemers
who escaped close scrutiny for years:Home-made forgeries, Financial respectability, Small-time
accountants, and Pillar of the community...
One of the world’s biggest banks (Barclays) is on the hook for attempting to manipulate interbank borrowing
rates. Another (HSBC) is accused of money laundering violations in Mexico alongside sanctions breaches and private-banking
tax offences. A third (JPMorgan) lost more than $5bn on a misguided trading strategy.
Quite apart from the damage done to the banks’ reputations,
and the financial fallout for shareholders, one thing is clear: the ethics of banking are broken.
This website is dedicated to providing a reference
source on the scourge that is whirling across planet Earth destroying governments, businesses, cities, families and imperiling civilized
culture by agregating and making available on one site sources of news, analysis and opinion about corruption.
Criteria for inclusion on this site of "BIG
Corruption" cases:
Very High level corporate and/or government official(s) involved;
Very Large amount of money lost;
International financing/aid agency program;
Global impact on numerous countries/businesses/investors; and/or
Classic example that can be used in training/seminarsmajor cases of global fraud and corruption.
As a news agregator website this site primarily serves to gather for research and educational
purposes in one single place news and information specifically pertinent to major global corruption in business and government.
The news items, views, editorials and opinions summarized or reported on this website are taken from the general media and
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