More on Bear Stearns Indictment
Submitted by
CalculatedRisk on Fri, 06/20/2008 - 9:16am (67 comments)
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Good Afternoo
Wake me when they dismantle the SEC for it's apathy, nay, encouragement of balance sheet fraud.
Six people from a downtown San Diego real estate firm are among more than 400 real estate insiders who have been swept up in a massive, nationwide crackdown on mortgage fraud.
Called Operation Malicious Mortgage, the probe announced yesterday has netted more than 400 indictments since March, including dozens over the past two days. It has been led by the Justice Department and the FBI, which put the losses to lenders and other victims in the schemes at more than $1 billion across the country.
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You bring the tar. I'll bring the feathers.
"Operation Malicious Mortgage"
Who thinks up this shit?
Christopher Cox is the failed chairman of the SEC. I think we can all be thankful he isn't a cop because he wouldn't find crime if it hit him in the head.
Shnaps writes:
"Operation Malicious Mortgage"
Seems more like securities fraud to me than mortgage fraud.
Operation Delicious Dorkage was already take
One of the problems in this case, and it's become endemic in Hedge Fundistan, is having managers in direct contact with investors.
The investors should have been communicating through a salesperson, who really can say just about anything. A broker isn't held to the same fiduciary standards as an asset manager. And managers especially should have shut their traps about issues like redemptions.
It's a sign of Wall Street's hubris that they let these hotshot managers spout off to investors without any legal vetting. Everybody just got so careless. You can bet memos are going out to managers all over the country today, telling them to keep their eyeballs on the spreadsheets and keep their mouths shut.
Don't use e-mails to send messages to co-managers. Use paper airplanes and burn them.
400's a good number, but 4000 would be better. How about opening up the operation to bounty hunters with good forensic information?
Never happen, but man: would there be action!
"...shading the truth..."
If that is now illegal, who will be left standing?
Props to Exit -bhwah
one thing i'd like to know, hwy is kerkorian always involved in the auto's. fishy fishy fishy
As Ann Woolner says, write your e-mails as if they're going to appear in an indictment. That way they won't be.
Another Fed sponsored bank takeover of Wachovia by Jp morgan? Wachovia is with problems...
All they had to do was pay attention to Peter Schiff. From the WSJ:
Peter Schiff, president of securities-brokerage firm Euro Pacific Capital in Darien, Conn., has been downbeat on the economy for months but never thought he was the kind of customer that AmEx would worry about. That changed a few months ago when one of his employees tried to book a block of hotel rooms for a seminar on the firm's corporate AmEx card. The card was declined, and Mr. Schiff subsequently discovered that AmEx had cut his $40,000 credit line to $4,500.
Mr. Schiff says an AmEx customer-service representative told him that his business had been identified as "high risk" and that American Express was trying to reduce its exposure to the financial-services industry.
"Operation Malicious Mortgage"
Who thinks up this shit?
Let me think, no, meditate on the eternal mysteries,..."OMMmmmmm"
If this sticks, then Lehman and most of the banks that raised capital in the last 6 months are in deep doo-doo as well.
Furthermore, what if the $29billion in guarantees the FED gave to JPM goes wrong. Could BennieB be going to jail too for misleading the public and stating that these assets they're guaranteeing are strong.
"Big Ariz. mortgage-fraud bust
36 in state among 406 indicted as part of U.S. crackdown"
Link to story - Big Ariz. mortgage-fraud bust
We have our health and families,'' Cioffi told fellow portfolio manager Matthew Tannin and two other co-workers the next day.We are not a 19-year-old Marine in Iraq.''
over/under on Cioffi's lifespan?
i'll start--- 35days
Interesting Times:
Ok, I concede, Dow shouldn't hold above 12K.
Darn manipuspectors.
"Wake me when they dismantle the SEC for it's apathy, nay, encouragement of balance sheet fraud."
OK. And how will dismantling regulatory authorities help things?
And do you have any substantiation for your charge that regulators "encouraged" balance sheet fraud?
The real world does not operate like the internet. In the real world, you need hard evidence, unlike the internet, where rumor, angry rants, and an all-around misanthropic bent would be considered enough evidence to convict Mother Theresa of genocide. But setting aside Christopher Hitchens, in this case it is clear that the authorities have chosen a high-profile, clear-cut case in order to make a strong first step, in what is likely to be a chain of charges (some more deserved than others.)
Or we could just dismantle the regulatory authorities and let all the fraudsters retire to Bermuda. The authorities do nothing and people complain, the authorities do something and people complain, it's a wonder anyone would willingly volunteer to run this country.
Pretty nasty stuff that commodities are up today despite the rout in stocks.
It kind of ties the hands of the central bankers.
Bernanke's Nightmare
one thing i'd like to know, hwy is kerkorian always involved in the auto's.
I think Kerkorian's trying to do what Mittal did with the US steel industry. GM has market cap of $7.6B; if he can shed most of the pension liabilities through bankruptcy or restructuring, then he's made quite a profit.
Mr. Schiff says an AmEx customer-service representative told him that his business had been identified as "high risk" and that American Express was trying to reduce its exposure to the financial-services industry.
That is a hilarious story. The financial industry doesn't trust even the financial industry anymore.
GillianX writes:
If this sticks, then Lehman and most of the banks that raised capital in the last 6 months are in deep doo-doo as well.
That's not so clear to me. As long as you stay in the realm of opinion--like "we feel we have sufficient liquidity to withstand any foreseeable contingencies"--you can always go back and offer some retroactive justification for it. But when you start saying things like "we only have a couple of million in redemptions coming in June" or "I still have $8 million of my personal assets in the fund," that's when you get into trouble.
Shading the truth is one thing; making incorrect statements of fact is another. These guys crossed the line as if they didn't even know it was there.
Market close call anyone? 1309 just a guess. Strong support is much lower.
That is a hilarious story. The financial industry doesn't trust even the financial industry anymore.
It's like an alcoholic refusing to let another alcoholic borrow his car.
TED spread up 5.81%.
BOOYAH!
"over/under on Cioffi's lifespan?
"i'll start--- 35days"
I think you missed the memo--suicide might have been the thing to do during the last financial market collapse, this time around it's faking suicide.
<a href="http://www.freedomworks.org/newsroom/press_template.php?press_id=2571> Senate Housing Bill Requires eBay, Amazon, Google, and all Credit Card companies to Report Transactions to the Government
"Hidden deep in Senator Christopher Dodd's 630-page Senate housing legislation is a sweeping provision that affects the privacy and operation of nearly all of Americas small businesses. The provision, which was added by the bill's managers without debate this week, would require the nation's payment systems to track, aggregate, and report information on nearly every electronic transaction to the federal government."
[Note: Christopher Dodd is the Democratic Senator from Connecticut]
For more, see here.
BOOYAH!
thr four horsemen of collapse.
wide media coverage
Politician pandering
Gov't bailout
Multitude of bottom callers
There's a big difference, legally speaking, about being overly enthusiastic to the point of absurdity, and lying about securities conditions. One is regularly practiced and more or less accepted in industries (Mr. Yun, I'm talking at you), the other is against the law. It sounds like this is pretty clearly in the latter camp.
It will be interesting to see what kind of defense they can come up with. I'm personally hoping for something along the lines of "look how intentionally misleading the government's own statistics on the housing market and the economy in general are; how can we be guilty unless they are too?"
I would think that JPM will also be hit with multiple class action lawsuits from investors. Does fed cover those expeses too (as part of BSC bailout) ?
El Cliffo:
First step to taxing internet sales.
What do you think Kirk Kerkorian will run out of first money or patience?
BigR - exaaaaaaaaaaaaaaaaactly.
These guys realised what was going on, and becouse of that they will go to prison. F.D. Raines (ex Fannie CEO) didn`t, so he walked away with ~$400 mill. Now you see why "ignorance is bliss".
What do you think Kirk Kerkorian will run out of first money or patience?
He's been hounding Detroit for it seems decades. No fricking way he runs out of patience. Now, running out of life is another thing. You got to wonder what kind of chip a 91-year old dude must have to be still in the game.
"There's a big difference, legally speaking..."
Maybe, Nick, but morally speaking there is no difference. Alan Greenspan caused more losses than these two guys did. This stuff should be measured by the damages, not by the 'gotchas'.
TED spread up 6.951%.
BOOYAH! BOOYAH!
mp,
Also watching that - was going to hold out for cracking 1.0 as the booyah point!
any recent growth to bear fangs?
Energyecon, Conjure is drooling today.
heh, makes me glad all my canines are female!
It seems like that Dr. Kevorkian always shows up at the bedside, whenever someone is doomed and slowly dying on life support, in pain and suffering.
Now, I don't know how you people feel about assisted suicide, but I think that while assisting the auto industry in its death throes might be merciful, it can't be good for the economy at large. And then there's the whole pension issue ...
What's that? ... KERKORIAN?
Never mind.
If the prosecutors can prove the managers knew certain material facts on a certain date, and then prove the managers told investors materially different facts on a subsequent date - IMO that is powerful evidence of securities fraud.
Well, that is securities fraud. Esp. when you add the documented trades for their own accounts.
Somewhere out there John Grisham is using the copy/paste function.
let the witch hunt begin
what a joke
there are clearly people in the financial industry who are far more guilty than these two clowns - but these guys did it on a big public stage
lets blame the entire subprime debacle on them while we're at it
time to move on the the next issue - we found the culprits behind subprime
oil anyone?
If the prosecutors can prove the managers knew certain material facts on a certain date, and then prove the managers told investors materially different facts on a subsequent date - IMO that is powerful evidence of securities fraud.
So all those people who bought into Lehman's rights issue were defrauded? If shitcanning the CFO & COO isn't material, I don't know what is.
can i reclaim 11697..
oy vey..
ac said:
That is a hilarious story. The financial industry doesn't trust even the financial industry anymore. It's like an alcoholic refusing to let another alcoholic borrow his car.
That's a funny metaphor, but this is even worse because there's no evidence the borrower is unreliable!
TradingStats writes:
can i reclaim 11697..
haha. let's see.
Margin Call of Cthulhu
ROFL! Handle of the year!
rich writes: Don't use e-mails to send messages to co-managers.
Big bonuses this year to the IT directors that followed to the letter the often-ignored written internal policies the instruct them to discard all email backups after 6 months... and no VP better dare send a message now to "remind" them...
"the instruct" --> "that instruct"
Margin Call of Cthulhu
ROFL! Handle of the year!
paul_in_sb
I guess his margin call is last.
Yes, but I thought email and other computer stuff never really went totally away, unless you pulled out the hard drive and stomped on it many many times, and even then the incriminating email could appear from somewhere else.
PPT, where are yoooouuuuu?????
ac said:
That is a hilarious story. The financial industry doesn't trust even the financial industry anymore. It's like an alcoholic refusing to let another alcoholic borrow his car.
Margin call said:
That's a funny metaphor, but this is even worse because there's no evidence the borrower is unreliable!
When I turned 25 my car insurance went down because I exited a group defined by just my age and sex. It is the same type of thing for AMEX. Yes, there are
While I have no doubt these guys are guilty as hell, I'm not so sure it will be proven beyond a reasonable doubt. They tried 3 times, I think, with Quattrone and couldn't get him. But these guys were arrogant ijits for sure.
All the Valtrex in the world won't keep an incriminating email from turning up in the right place at the worst possible time.
And the rules governing data shredding are downright Byzantine...one man's data disposal can be another man's SarOx violation (oh yes, SarOx is still on the books, kiddies).
So no, you can't just delete everything after 6 months, honey. You need to be a little sharper than that if you want to avoid prosecution.
"But these guys were arrogant ijits for sure."
Not sure what an ijit is, but being arrogant isn't against the law last I heard.
DCRogers writes: Big bonuses this year to the IT directors that followed to the letter the often-ignored written internal policies the instruct them to discard all email backups after 6 months... and no VP better dare send a message now to "remind" them...
Too bad Wall Street firms are so quick to fire their IT staff.
EngineerJim
arrogant ain't agin the law, but it sure as the sun rises in the east not a good attitude for a crook..
rich writes:Don't use e-mails to send messages to co-managers. Use paper airplanes and burn them.
So, what your saying is that it's all good as long as you don't get caught?
Classic.
ijit = idiot
Arrogant isn't illegal, but it greatly increases the odds of being nailed for something that is.
Nevertheless, these guys might still walk.
I guess I am still confused as to the standard being applied here. Clearly duplicitous and wrong on the redemption requests, as CR points out. But if questioning the health/lifespan of the subprime market while investing is worthy of a perp walk and a 20 year sentence wtf does a CDO manager get? Head of a Wall St mortgage desk? Head of Carlyle listed equity vehicle?
When the company abbreviation is BS maybe that ought to give a clue...