It is amazing to see how the Bowl Championship series works. I think we should rename it the Bogus Championship Series.  I am old fashioned it just seems to me that we have an SEC West rematch as the national title game. Sorry, LSU won that Alabama should not be considered for the National Championship. Yes they are a solid team, one of the best in the country but it would have been far more “national championshippy” to have two teams out of the same division playing for the “national championship” if that is what it pretends to be. Even in sports that have “wild card” berths such as Major League Baseball and the NFL never can a wild card team play for the World Series or Super Bowl against a team from its own division. Same goes for the NHL and the NBA. The fact is that we should have LSU playing Oklahoma State for the Title or another team that actually won its Conference Championship.

The fact is that in most sports in fact all but the BCS there are times that an excellent team doesn’t get to play for the championship simply because someone in their conference, division or league had a better record.  If an entity wants to call its title a “national” title it should include two teams that represent different conferences.  What a sham, the real national title game will not be played just to replay the SEC West championship. When you look at the other BCS games it is clear that the BCS process has failed again. Since we are never going to get a playoff system in Division One NCAA College Football or a tournament like in NCAA Basketball we would be just as well off to go back to the old bowl system and let everyone argue about what team is number one.  We end up doing that now anyway most of the time so let’s end the BCS farce.  Actually you could probably have a real playoff system but there is far too much money in the current system for anyone, the NCAA, the Universities and the Bowl Game sponsors themselves to want to change it no matter how bad of system it is.

From real failures we go to the man that so many want to fail, Denver Broncos Quarterback Tim Tebow.  Now I am not a Tebow fan or promoter by far and certainly am not a Broncos fan unless they are playing the Cowboys or Steelers. However, despite the fact that he is not the kind of quarterback that has dominated the sport for decades.  Since the day he was drafted he has been treated with distain by most of the sports media and former players that serve as commentators.

Now I agree that Tebow doesn’t fit the template that the NFL uses now but he leads and inspires his team to win.  The way that he does it isn’t pretty and he will never be John Elway or Steve Young.  He is to use religious parlance a “heretic.” But who says that he needs to be? What if he is the kid that defies the rules wins games and inspires his team. Isn’t that what it is really about or is it about maintaining an illusion that there is only one way to lead teams and win games?  Tebow for all of his technical limitations finds ways to win and inspires his teammates.  He rapidly becoming a successful NFL heretic. I like heretics and despite it all I hope that he continues to win just to make “experts” look foolish shut his critics up.

Finally the Miami Marlins have spent more money on one player than they did for their entire payroll.  This is actually nothing new Jeff Loria buys a team, wins a world series and discards the team the next year.  However money talks and Loria has a lot to throw around. He signed closer Heath Bell for 27 million and Jose Reyes for a cool 102 million on a six year deal that includes no “no trade” clause.  It looks like they are also serious about spending big money on Albert Pujols or Prince Fielder and possibly Tiger starting pitcher Mark Buerhle. If they keep spending money like this and the Security Exchange Commission keeps investigating this could end up more like an episode of Miami Vice rather than last years CSI Miami season which ended with the Marlins dead on the slab.   Regardless the National League East will be radically different in 2012 with Ozzie Guillen at the helm and what looks like unlimited money to spend.  I can only say I wish the same would happen for the Orioles despite the fact that our uniforms are going to be way cooler than the Marlins new duds even if we lose over 90 games again.

Peace

Padre Steve+

The SEC gave Miami and Miami-Dade County until January 6 to deliver all records including minutes of meetings between local leaders and Marlins staff and the financial records of the Miami Marlins dating back to 2007, the Herald reported.

[worldnow id=6513117 width=385 height=288 type=video]

The subpoenas issued focus mainly on the Marlins role in the construction of the new stadium. Specifically, the SEC is investigating the Marlins ability to pay or contribute to the construction of the stadium.

The Marlins refused to release their financial information during the fight over the funding of the stadium.

However, the website Deadspin.com managed to obtain the numbers and found that the Marlins’ claims of poverty were not true.

It’s the second SEC probe of activities relating to the city of Miami in the past two years. The city is under a separate SEC investigation into bond dealings that cost the city $1.4 million, according to the Herald.

The Herald had former SEC attorneys analyze the subpoenas and they concluded that the investigation centers on if the city did enough work on the Marlins’ finances and if the team was trying to illegally influence local politicians.

It’s a stain that the Marlins can’t afford as they move into their new stadium in 2012.

• Click here for more on the story from the Herald.

http://www.economist.com/node/21538770

I find it a little ironic when I read of securities officials worrying about fraudsters when it comes to fundraising for business because I think securities regulators work mostly to make it easier for people in the industry to make lots of money at the expense of small investors.

Maybe the best way to protect investors would be to encourage them to ask lots of questions and not to part with their money until they have satisfactory answers.  Governments could also require companies to make public lots of information.

One of the features of the economists’ perfect competition model is that all the participants in a market have all the information they need to make sound decisions.

“In order for MF Global to have attained this status it must have passed through a review by:

 1)   The New York Fed

2)   The SEC

 This is not a quick nor superficial process. According to the NY Fed’s own site:

 Upon submission of a formal application, a prospective primary dealer can expect at least six months of formal consideration by the New York Fed. That consideration may include, among other things, on-site reviews of front, middle, and back office operations, review of compliance programs and discussions with compliance and credit risk management staff, discussions with senior management about business plans, financial condition, and the ability to meet FRBNY’s business needs, review of financial information, and consultation with primary supervisors and regulators.

 MF Global passed through all of these reviews to became a primary dealer in February 2011. Today, a mere nine months later, the firm is in Chapter 11 and has admitted to stealing clients’ funds to maintain liquidity.“

You read that correctly.  The SEC reviewed ALL of MF Global’s operations for 6 months.  With access to ANYTHING that is asked for.  Including the front office, the middle office and the back office!!!  Nine months later, the firm is BANKRUPT and is accused of STEALING clients money.  There was NOT new management.  There were NO major changes in ownership.  NO significant changes in anything.  And yet, 270 DAYS AFTER the firm PASSES the review by the SEC, the firm is dead!!  The review was also conducted by the Federal Reserve Bank of New York.  These are “supposed to be the smartest guys in the room”!!

Eliminate the SEC!!! 

Thanks Obama for your oversight.  I mean, YOU are the Chief Executive over the SEC.  Right??  Or were you out golfing that day??

P.S. – This is also why the Government should NOT be investing in ANY individual companies, like Solyndra!!!

MORE via S.E.C. Disciplines 8 Employees Over Madoff Failure – NYTimes.com.

Mr. Rajaratnam is a Tamil-American who obtained his master’s degree in business administration from the prestigious Wharton School in the early 1980s. While working as a research analyst at Needham & Company he started a technology hedge fund that would later become Galleon. Rajaratnam’s Diversified Fund was reported to have a net annualized return of 22.3% in 2009, skyrocketing him among the elite of US money managers.

According to prosecutors from the US Attorney’s Office for the Southern District of New York, Rajaratnam’s sentence is the longest ever imposed for insider trading. Despite the unusually long sentence he faced, Rajaratnam chose not to say anything on his own behalf. This silence was in line with Mr. Rajaratnam’s demeanor in court and in public since he was arrested two years ago.

During the trial, presiding Judge Richard Holwell once referred to insider trading as “a virus that needs to be eradicated.” On the other hand Rajaratnam’s defense team insisted their client’s crime was victimless and that no one lost money as a result. For all the news media attention insider trading gets, it remains a white-collar crime not many people fully understand.

In the United States, insider trading refers to the practice of buying or selling publicly traded securities based on material information that isn’t publicly available. The criminal release and acquisition of insider information often occurs in secrecy and violation of fiduciary trust. However, insiders need not be corporate directors or individuals to whom fiduciary confidence is entrusted. Any person who knowingly comes across material, non-public information and trades securities based upon that insider information is in violation of federal law and regulations set forth by the Securities and Exchange Commission.

The case brought against Rajaratnam by the Securities Exchange Commission and the US Attorney was supported by strong evidence: the FBI wiretapped the hedge fund manager’s cell phone for most of 2008. The investigation was expansive in its magnitude, stretching from Galleon’s oak-paneled headquarters in New York City to the corporate parks of Silicon Valley in California. More than 20 people have been arrested as a result. Most have pled guilty and received sentences far lighter than Rajaratnam’s 11-year prison term.

Prosecutors estimated Rajaratnam pocketed up to $75 million in profits from insider trading of stock in ATI Technologies, Clearwire Corporation, Google, Intel, and others. One of Rajaratnam’s most notorious trades involved a former Goldman Sachs director. In 2008, Rajat Gupta passed significant information to Rajaratnam concerning a $5 billion investment from Warren Buffett in Goldman Sachs. That investment by Berkshire Hathaway was instrumental in helping Goldman Sachs avoid the fate of Lehman Brothers during the collapse of the credit markets in 2008.

Mr. Rajaratnam has been given 45 days to get his affairs in order prior to reporting to prison. His defense team plans to appeal the sentence. Though he was expected to receive more than 20 years imprisonment, Judge Holwell took into consideration Mr. Rajaratnam’s delicate state of health: he suffers from advanced diabetes and faces possible kidney failure.

In addition to jail time, Judge Holwell imposed a $10 million fine and a forfeiture of $53.8 million. Even after the Galleon fund folded in 2009, the 54-year-old former fund manager kept investors in the black. Galleon investors were returned their funds and profits in an orderly manner upon Rajaratnam’s arrest.

Guest author ELAINE HIRSCH is a jack-of-all-interests, from education and history to medicine and videogames. This makes it difficult to choose just one life path, so she is currently working as a writer for various education-related sites and writing about all these things instead.

Their marriage began in 1998 in Washington State where Mr. Zilkha worked for Microsoft. By 2001 the family had moved to Connecticut and a new job for Mr. Zhilka as a trader with hedge fund Pequot Capital Management. By 2003 their marriage was over and the divorce wars began. Eventually the financial aspects of their divorce were completed with Ms. Zilkha receiving $750,000.00 in assets including the family home.

The conflict started up again in 2008 when child support was to be reviewed. Mr. Zilkha filed updated financial information which included disclosure of a sum of $2.1 million. His ex-wife and her lawyer were mystified about the emergence of this asset, but then Ms. Zilkha remembered that before the collapse of the marriage, her husband had told her that he was negotiating a payment from Pequot.

Ms. Zilkha’s attorney knew that her client had kept the family computer and wondered if there was information about this money in old emails. What she found turned the case from a high conflict divorce case to a Securities Exchange Commission investigation of insider trading.

Emails retrieved from the computer hard drive provided proof that Mr. Zilkha had obtained confidential information from a former colleague at Microsoft that led to Pequot selling Microsoft shares with a payout to Pequot of $14 million.

Investigators at the SEC had long suspected that Mr. Zilkha had been involved in insider trading but with no “smoking gun” the investigation had languished.

CEO of Pequot, Arthur Samberg and Pequot paid fines and penalties to settle the case amounting to $28 million. Mr. Samberg, once the world’s largest hedge fund manager, sold the assets of Pequot and shut it down. Mr. Zilkha faces administrative charges with respect to his role as “tipper”.

Did Ms. Zilkha eventually get her child support? Don’t know, but under new legislation she received a reward of $1 million from the SEC for providing the evidence that was needed to convict.

Lawdiva aka Georgialee Lang

Among the problems with Bank of America’s procedures: Poor training for personnel dealing with customers, Limiting the time personnel could spend with customers, Requiring repeated and unnecessary resubmission of various kinds of documentation.  The practice which appears the most egregious is that of telling a customer that the mortgage modification process was underway, collecting the payments — and then foreclosing anyway.

This isn’t the only litigation facing Bank of America and its assumption of Countrywide Financial’s highly questionable loans.   It seems Countrywide routinely held on to documentation for its mortgages including the original notes.  If true, then litigation in New Jersey could reveal that while BofA thought the mortgages had been securitized — approximately 96% were supposed to be — BofA may be on the hook for these. BofA’s other problem is that if the securities were supposed to be “mortgage backed” and aren’t, then investors can force BofA to buy them back.   [DailyFinance]

Problems such as the November 2010 New Jersey litigation have multiplied.  The decision by former BofA CEO Kenneth Lewis to purchase Countrywide for $4.2 billion is still creating problems.  BofA posted a second straight quarterly loss in January 2011 resulting from its writedowns of mortgage losses.  [Reuters]  The problems were supposed to have been mitigated in 2009, but that may not necessarily be the case.

The “common wisdom” was that after the Housing Bubble burst and the Credit Crunch began banks were much tighter with their lending, their underwriting standards were better, and their mortgage products were improved.  Not. So. Fast.  There is evidence to the contrary.

“Bank of America was the second largest mortgage lender in 2009, behind Wells Fargo. Its volume was up 116% over the previous year. Meanwhile, Citigroup and JP Morgan were pulling back, allowing the size of their mortgage business to shrink. “  [CNBC]  There was about $2 trillion in mortgages written in 2009, and obviously that isn’t all that far below the 2007 Bubble Level of $2.4 trillion.   CNBC’s Jon Carney summed up the situation: “Bank of America is probably still screwed.”

By June 2011 Bank of America was looking at $27 billion in mortgage losses by 2013, and this figure didn’t include the $46 billion the Bank had already absorbed.  Worse still, federal investigators were noticing that Bank of America was “purposely dragging its feet” when it came to disclosing its foreclosure practices and policies.  HUD officials found that the Bank of America was refusing to allow its employees to discuss the foreclosure processes, and the Attorneys General in New York and California were launching their own investigations.   [Forbes]

As of August 30, 2011 Bancorp was suing Bank of America:

“The lawsuit, which was filed in New York on Monday, claims Countrywide sold U.S. Bancorp a pool of over 4,000 loans originally valued at $1.75 billion. U.S. Bancorp claims Countrywide ignored its own mortgage underwriting guidelines when issuing those loans.

According to the complaint, Countrywide agreed to repurchase loans within 90 days if any of the statements made in the loan contract wound up being untrue. Those statements included an assertion that the loans complied with the bank’s underwriting guidelines.”

US Bancorp is asking that Countrywide/BofA repurchase the mortgages in this “pool.”

Thus Bank of America is in a double bind.  On one hand, it can try to mitigate its losses by foreclosing on the toxic mortgages (and get itself in trouble with federal and state entities for failing to properly assist homeowners in the process) and on the other, it must find a way to satisfy those who bought the Countrywide mortgage “pools,” investors who thought they were purchasing securitized assets based on authentic mortgage underwriting guidelines.

That Big Deal on January 11, 2008 in which Bank of America paid $4 billion for Countrywide [CNN] now gives every appearance of being a Big Bust.   But, CEO Lewis was confident at the time:

“Bank of America Chairman and CEO Kenneth Lewis suggested he was aware of the troubles that his firm was taking on, but said acquiring Countrywide was a “rare opportunity” for his company.  “Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation’s premier lender to consumers,” Lewis said in a statement.”

The bloom was off the rose by September 2009 when Lewis announced he was retiring as CEO of Bank of America.  [HuffPo]  Lewis had been earning a $1.5 million annual salary from BofA until October 2009 when he announced he would not accept a salary for his remaining tenure.  However, the “zero” didn’t include the $53 million in pension benefits and the $69 million in stock options which were also part of his final compensation package.  [CNN]

Bank of America was allocated $45 billion in initial “bailout funding,” [BBC] and the bank was allowed to sell some $73 billion in toxic mortgages to Fannie/Freddie for $500 million.  [TheStreet]  As for Angelo Mozilo, the individual who “cooked” up the mortgages for Countrywide — he was allowed to cut a deal with the SEC and prosecution was dropped.  [DailyFinance]  Yves Smith at Naked Capitalism provides more background on this aspect of the Countrywide debacle.  How was Mozilo’s fraud not prosecutable?   Among the answers, “secondary liability:”

“Legislators also need to restore secondary liability. Attentive readers may recall that a Supreme Court decision in 1994 disallowed suits against advisors like accountants and lawyers for aiding and abetting frauds. In other words, a plaintiff could only file a claim against the party that had fleeced him; he could not seek recourse against those who had made the fraud possible, say, accounting firms that prepared misleading financial statements. That 1994 decision flew in the face of sixty years of court decisions, practices in criminal law (the guy who drives the car for a bank robber is an accessory), and common sense. Reinstituting secondary liability would make it more difficult to engage in shoddy practices.”  [NC]

So, Lewis took home his compensation package and Mozilo escaped prosecution,  keeping the $132 million he “earned” in 2007.

Meanwhile back in the neighborhoods,  Bank of America is still trying to foreclose on the toxic (Countrywide) mortgages by any means available and homeowners in Nevada and elsewhere are being asked to submit and resubmit documentation as the foreclosure procedure drags on.

PS: Please don’t try to convince me that Mozilo and Lewis are “job creators.”

In a closer analyzation of how the economy works the most simplest of explanations is that the rise and fall of it is based on “speculation” or investor confidence. So I am foolishly thinking that the problem may be solved by having more positive and optimistic minded stockbrokers working on wall street. At this point it seems that none of them seem to have a positive outlook on anything at this point. If there any many money at this point and state of the economy, the SEC ( Securities Exchange Commission) may seriously want to do some investigating because surely there has to be some insider trading going on. Speaking of “INSIDER” Washington, DC evidently must have a fascination with that word; Why? Because most of those charged with regulating the financial industry have a “stake” in the matter.

Take for instance Larry Summers once the Sec. of Treasury is a current Obama economic adviser and has ties with some of the Investment banks that the American taxpayers recently bailed out. If you look around the President’s financial advisors you will see several individuals who have worked for such companies as; Bear Sterns, Lehman Brothers, and AIG just to name a few. Even Timothy Geithner was once the head of the regulatory arm of the Federal Reserve in New York at the time of the financial collapse. It makes me wonder if he dropped the ball then when the banks were looting the pockets of the American taxpayers, why would we put him in charge of the Federal Reserve.

Surely one can not expect those who got us into this financial debacle to now be able to regulate themselves, or there friends and associates back the aforementioned banking institutions. There must wasn’t much thought that went into the vetting process when these individuals were being chosen in their current roles. I’ve seen those applying for minimum wage jobs receive more scrutiny than these “clowns”.

Now the President has announced that he has a “Jobs Plan” which I along with the rest of america can’t wait to see. I definitely hope that it will be useful enough to bring the “Unemployment Rate” below the 9% percent where it currently sits. These guys in Washington don’t seem to get the clue that all of the speeches in the world isn’t going to get the country back to work. Most of those in Congress I imagine probably don’t care because none of them or none of the people they know are probably feeling the effects of the economy. Oh how nice it must be to stand on their “soap boxes” and tell the press what the American people do and do not want.

Then we have Presidential candidates like Gov. Rick Perry of Texas that will criticize the current President and his efforts to fix the “jobless” rate in america when Texas has one of the largest jobless rates out of the other forty-nine (49) states in the country. I feel like we were promised “hope” and all I feel is “hopelessness” of a uncertain and failing economy.

The American people have been robbed, and we continue to get robbed by those policy makers in Congress. All I want know is, “Who has the gun?” The United States Constitution promises us a government for the people, and by the people. However it is not what we have or bargained for out so far. NOTE TO WASHINGTON: Campaign promises or only words until you make good on them. So get back to work and start fixing the problems of this country and its people.

Image via Wikipedia

WSJ reports that the SEC is bearing down on Fracking. The Securities and Exchange Commission which is tasked with regulating capital markets and is constantly under-staffed and under-resourced thereby allowing pirates to loot pillage and rape on Wall Street is asking oil and gas companies for detailed information about the use of “Fracking” The information is to include details about chemicals used and efforts to minimize environmental impact.

Does the SEC have a body of competent employees who can assess detailed fracking information. I think not. Why would the SEC do the work of environmental regulators? bureaucracy running rampant.

But remember this could be all part of the great Marcellus Shale conspiracy theory. By getting the wrong regulator involved in the fracking investigation you will only screw up the reports and eventually throw them away as useless.

But if you are a securities lawyer with some knowledge of fracking your market value is up big time.

Disclosure: George Gutowski writes from a caveat emptor perspective. I personally have no involvment in fracking but I do heat with natural gas. I have no positions in stocks or commodities mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Related articles

• Did Fracking Cause the Virginia Earthquake? (thetruthiswhere.wordpress.com)
• SEC Edgar suspension unacceptable Document Destruction smoke screen #SEC #edgar #irchat #corpgov (financialskeptic.wordpress.com)
• Marcellus Shale Conspiracy Theory Obama is brilliant maybe? #natgas #marcellusshale #fracking (financialskeptic.wordpress.com)
• Did Fracking Cause the Virginia Earthquake? (wilderside.wordpress.com)
• Gov. Christie to decide on whether N.J. will become first state with ‘fracking’ ban (nj.com)
• Drillers decline to attend Ball’s frack hearing (timesunion.com)
• Will California regulate fracking? (sfgate.com)
• Marcellus Shale drilling to blame for Virginia earthquake? No fracking way, industry officials say (pennlive.com)
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• After Lifting Fracking Moratorium, Will NY Gov. Cuomo Explain Girlfriend’s Ties to Petroleum Industry? (treehugger.com)

Release Date:
17 August 2011

IMPORTANT: This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice. Release Date: 17 August 2011

Welcome to the August edition of Mishcon Fraud Watch. Its aim is to provide businesses and their advisors with a snapshot of what has been happening in the world of fraud in the last month.

We make no judgement whatsoever as to the morality, legality or appropriateness of the conduct which forms the subject matter of this bulletin. We simply aim to bring these matters to the attention of those involved in the prevention, detection and investigation of fraud.
UNITED KINGDOM
Reports

According to a new study by professional services firm BDO, the amount lost by UK companies to fraud fell in the first part of the year – to around £920m between December 2010 and May 2011, compared with £1.06bn in the equivalent period between December 2009 to May 2010.
Financial Times, 18 July 2011
Government

Private sector fraud specialists such as forensic accountants are to play an increased role in tracking and seizing criminal finances, according to a new Home Office strategy for combating organised crime, which costs the UK up to £40bn each year.
Helen Warrell
Financial Times, 28 July 2011
NORTH AMERICA
Securities and Exchange Commission (SEC)

The SEC has charged Diageo plc over allegations of widespread violations of the Foreign Corrupt Practices Act stemming from more than six years of improper payments to government officials in India, Thailand, and South Korea.
SEC press release 2011-158, 27 July 2011

The SEC has charged First Capital Savings & Loan Ltd. Chief Executive Jeffery A. Lowrance over allegations that he scammed hundreds of investors with false promises of high, fixed-rate returns while secretly using their money, approximately $21 million, to fund his start-up alternative newspaper.
SEC press release 2011-147, 15 July 2011

J.P. Morgan Securities LLC has agreed to pay approximately $51.2 to settle charges of fraudulently rigging at least 93 municipal bond reinvestment transactions in 31 states.
SEC press release 2011-143, 7 July 2011
Legal Services

Theodore Freedman, a former restructuring lawyer at US law firm Kirkland & Ellis, has been indicted on tax fraud charges for allegedly cheating the US government out of $1m in taxes.
Kara Scannell
Financial Times, 15 July 2011
EUROPE
Art

Billionaire art dealer, Guy Wildenstein, has been formally accused of fraud after thirty valuable paintings and sculptures that had been missing for decades were discovered in the strong room of his family’s institute in Paris. He denies any wrongdoing.
John Lichfield
The Independent, 8 July 2011

A whistleblower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation’s worst financial criminals.

Click here to read…

Is Soros: the Hedge Fund Investor, Made $850 Million on Bet, US lose AAA credit rating?

Rotten cheese smells in Denmark.  S.E.C. should check  this out, like pronto.

See this:

Securities Exchange Act of 1934 – The SEC

Concerned about this? You have a right to know-  Write the SEC:

Questions and Complaints