Crime on Wall Street - It's a way of life

[kranker]

Prudential to Settle Rapid Trade Dispute for US $600 million, which will allow the company to avoid criminal prosecution.
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U.S. Criminal Probe Rattles $2 Trillion Municipal Bond Market

The investigation stems from an Internal Revenue Service review that found scores of municipal bond deals robbed federal taxpayers of more than $100 million.

JPMorgan Chase & Co., the third-largest bank in the U.S., American International Group Inc., the world's largest insurance company, and Financial Security Assurance Holdings Ltd., a unit of Brussels-based financial services company Dexia SA, are among the companies that received subpoenas. JPMorgan declined to comment. AIG and Financial Security spokespeople said the companies are cooperating with the probe.
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Goldman fined $2m by SEC and Nyse
The Securities and Exchange Commission and the NYSE Regulation today settled separate enforcement proceedings against a prime broker and clearing affiliate of The Goldman Sachs Group for its violations arising from in an illegal trading scheme carried out by customers through their accounts at the firm.
www.finextra.com:80/fullpr.asp?id=13891



Merrill class action settled for $40.3M
By Aaron Siegel
February 5, 2007

A federal judge approved a $40.3 million class action settlement between mutual fund customers and Merrill Lynch & Co. over alleged conflicts of interest between its brokerage and underwriting businesses, according to the Associated Press.
The decision, which was issued on Jan. 31 by U.S. District Judge John F. Keenan in New York gave final approval to the settlement, and certified the class and granted attorney's fees and expenses of about $9.37 million.
www.investmentnews.com/apps/pbcs.dll/article?AID=/20070205/REG/70205018/1022/ONLINENEWS


Bank of America slapped with $26M fine
By Riva Froymovich
March 14, 2007
Banc of America Securities LLC settled an enforcement action today with the Securities and Exchange Commission after failing to safeguard information in its research reports and issuing fraudulent research.
The New York-based investment banking arm of Charlotte, N.C.-based Bank of America Corp. agreed to a censure, a cease-and-desist order, and a $26 million fine, according to the SEC.
www.investmentnews.com/apps/pbcs.dll/article?AID=/20070314/REG/70314011/1022/ONLINENEWS



Former Wachovia manager charged in Ponzi-type scam
By Bruce Kelly
March 5, 2007

NEW YORK — A former Wachovia Securities LLC branch manager in Toledo, Ohio, has been charged with stealing between $17 million and $40 million from about 45 investors by using a Ponzi-type scheme, according to the Department of Justice.

Other Wachovia employees invested in the scheme, and the current manager of the same Toledo branch profited from the scam, alleges an attorney who has filed an arbitration claim for two former clients of Wachovia.
www.investmentnews.com/apps/pbcs.dll/article?AID=/20070305/FREE/70305009/1009/INIssueAlert01



Ex-Citigroup Trader Claimed `Widespread' Wrongdoing (Update8)
By David Glovin
March 2 (Bloomberg) -- David Becker, a former Citigroup Inc. commodities trading head who pleaded guilty to fraud, told prosecutors last year about alleged ``widespread'' wrongdoing at his and rival banks in a bid to win leniency, his lawyer said.

Becker, 40, admitted in September that he conspired to inflate trading profits by $20 million at the Citibank unit of Citigroup, the largest U.S. bank, in hopes of winning a bigger bonus. He is to be sentenced March 19 in Manhattan federal court.

``Becker related information about widespread practices at the commodities trading desks at large investment banks,'' including Morgan Stanley, Goldman Sachs Group Inc., Societe Generale, Deutsche Bank AG and UBS AG, defense lawyer Ira Sorkin wrote in court papers filed Feb. 23 seeking a reduced sentence. The banks allegedly sought ``to overstate the value of commodities transactions and portfolios,'' the lawyer wrote.
www.bloomberg.com/apps/news?pid=20601103&sid=aVLH7JTz2EaE&refer=news



SEC Charges 14 in Wall Street Insider Trading Ring
Defendants Include Hedge Funds, Lawyers and Professionals at UBS, Bear Stearns, and Morgan Stanley
FOR IMMEDIATE RELEASE
2007-28
Washington, D.C., March 1, 2007 - The U.S. Securities and Exchange Commission today charged 14 defendants in a brazen insider trading scheme that netted more than $15 million in illegal insider trading profits on thousands of trades, using information stolen from UBS Securities LLC and Morgan Stanley & Co., Inc. The SEC complaint alleges that eight Wall Street professionals, including a UBS research executive and a Morgan Stanley attorney, two broker-dealers and a day-trading firm participated in the scheme. The defendants also include three hedge funds, which were the biggest beneficiaries of the fraud.
www.sec.gov/news/press/2007/2007-28.htm




NEW YORK (Reuters) - Bank of America Corp. has begun offering credit cards to customers without Social Security numbers, typically illegal immigrants, the Wall Street Journal reported on Tuesday.

In recent years, banks across the country have been offering checking accounts and even mortgages to the nation's fast-growing ranks of undocumented immigrants, most of whom are Hispanic, the paper said, adding these immigrants generally have not been able to get major credit cards.

The new Bank of America card is open to people who lack both a Social Security number and a credit history, as long as they have held a checking account with the bank for three months without an overdraft, the Journal said.
More,
today.reuters.com/news/articlenews.aspx?type=domesticNews&storyid=2007-02-13T053517Z_01_N13447905_RTRUKOC_0_US -BOFA-CARD.xml&src=rss&rpc=22



February 10, 2007
U.S. Inquiry on Bonds at Big Bank
By VIKAS BAJAJ
Bank of America said yesterday that it was cooperating with a Justice Department investigation into bidding practices in the municipal bond business in exchange for leniency.
www.nytimes.com/2007/02/10/business/10muni.html?em&ex=1171256400&en=8e8fe1f562f7cf75&ei=5087%0A



April 4, 2006 -- WASHINGTON - The Manhattan DA is pursuing a settlement with the Bank of America in a major money-laundering probe of more than $3 billion that flowed from Latin America through one of the bank's accounts to Mideast fanatics, sources said yesterday.

Some of the Mideast accounts are suspected of being used by terrorist groups such as al Qaeda, Hamas and Hezbollah.

www.nypost.com/news/regionalnews/66443.htm



The Bankruptcy Development That Has Wall St. Worried

February 23, 2007
Insider
The Bankruptcy Development That Has Wall St. Worried
By JENNY ANDERSON
LAST week, Burton R. Lifland, a judge in the Federal Bankruptcy Court in Manhattan, ordered Bear Stearns to pay almost $160 million to investors in a hedge fund for doing business with that fund but failing to detect that it was a fraud.
ragingbull.quote.com/mboard/boards.cgi?board=CLB01219&read=337933



MORGAN STANLEY FINED OVER TRADE REPORTING. Morgan Stanley was fined $500,000 by regulators who claimed the world's second-largest securities firm inaccurately reported short sales of stocks listed on the New York Stock Exchange. The Manhattan-based firm's Morgan Stanley DW Inc. brokerage unit inadequately supervised its trade-reporting system, according to a disciplinary order released yesterday by the NYSE's regulatory division. Last month, the same unit was fined more than $1million by New York Attorney General Eliot Spitzer for allegedly failing to supervise a broker who defrauded customers. In September, Morgan Stanley agreed to pay the NASD $2.9million for "widespread" violations.
tinyurl.com/y67erp



By NILES LATHEM

April 4, 2006 -- WASHINGTON - The Manhattan DA is pursuing a settlement with the Bank of America in a major money-laundering probe of more than $3 billion that flowed from Latin America through one of the bank's accounts to Mideast fanatics, sources said yesterday.

Sources familiar with the case - reported in yesterday's Post - revealed that DA Robert Morgenthau is close to reaching a settlement with the nation's second largest bank.
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Morgan Stanley to pay $95 million in settlement
Tue Nov 21, 2006 5:06pm ET

By Jonathan Stempel

NEW YORK, Nov 21 (Reuters) - Morgan Stanley (MS.N: Quote, Profile, Research) agreed to pay $95 million to settle fraud and other charges over its role in the 1999 collapse of General American Mutual Holding Co., averting a trial set to begin next week, the insurer's liquidator said on Tuesday.
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Bank of America Announces Mutual Funds Agreements
CHARLOTTE, N.C., March 15 /PRNewswire/ -- Bank of America today announced agreements in principle with the New York Attorney General and the Securities and Exchange Commission over matters related to improper late day trading and market timing of mutual funds. Under the agreements, Bank of America agrees to pay $250 million in total disgorgement and restitution.
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Goldman Sachs Added as Defendant in Fannie Mae Suits

"Complaints allege that Goldman, Sachs & Co. violated U.S. securities laws while allegedly arranging Fannie Mae-sponsored bond deals, the brokerage said in its quarterly report with the Securities and Exchange Commission (SEC). The deals relate to real estate mortgage investment conduits, which are bonds collateralized with mortgage-backed securities, MarketWatch reported."
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Financial Services
A Billion Dollar Retirement Rip Off
Neil Weinberg, 11.27.06, 6:00 AM ET
In a move that could have far-reaching consequences for a $140 billion industry, the Orange County, Fla., Sheriff’s Office has filed a class action charging units of Nationwide Financial Services (nyse: NFS - news - people ) with receiving illegal kickbacks from fund companies whose products it included in public employee retirement plans.
www.forbes.com/2006/11/26/retirement-annuities-scam-biz-cz_nw_1127retirement.html?partner=alerts



NEW YORK (Reuters) - The New York Stock Exchange on Wednesday said it fined Morgan Stanley (MS.N: Quote, Profile, Research) $500,000 and censured the firm for failing to report short interest positions in hundreds of securities for as long as 20 years.
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November 8, 2006
NYSE Regulation, the regulatory body of the NYSE Group Inc., hit four firms and 12 individuals with disciplinary actions today.
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"Ten of Nation's Top Investment Firms Settle Enforcement Actions Involving Conflicts of Interest Between Research and Investment Banking
Historic Settlement Requires Payments of Penalties of $487.5 Million, Disgorgement of $387.5 Million, Payments of $432.5 Million to Fund Independent Research, and Payments of $80 Million to Fund Investor Education and Mandates Sweeping Structural Reforms

The ten firms against which enforcement actions are being announced today are:

Bear, Stearns & Co. Inc. (Bear Stearns)

Credit Suisse First Boston LLC (CSFB)

Goldman, Sachs & Co. (Goldman)"

Lehman Brothers Inc. (Lehman)

J.P. Morgan Securities Inc. (J.P. Morgan)

Merrill Lynch, Pierce, Fenner & Smith, Incorporated (Merrill Lynch)

Morgan Stanley & Co. Incorporated (Morgan Stanley)

Citigroup Global Markets Inc. f/k/a Salomon Smith Barney Inc. (SSB)

UBS Warburg LLC (UBS)

U.S. Bancorp Piper Jaffray Inc. (Piper Jaffray)

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JPMorgan agrees to settle IPO 'laddering' suit
By David Enrich
Last Update: 6:35 PM ET Apr 20, 2006
NEW YORK (MarketWatch) -- JPMorgan Chase & Co. (JPM) has agreed in principle to pay $425 million to settle litigation accusing the bank of artificially inflating the price of stock after initial public offerings.


SECURITIES: SEC censures Bear Stearns Cos.
11/23/2006

The U.S. Securities and Exchange Commission has censured Bear Stearns Cos., without issuing a fine, for sending unapproved sales pitches to investors before initial public offerings and mutual fund sales.

Five salespeople at different Bear Stearns' offices sent e-mails and faxes to clients in 2002 and 2003 during so-called quiet periods before offerings, the SEC said Wednesday.

U.S. securities law limits the type of information companies and their advisers can give investors before an IPO.
www.stltoday.com/stltoday/business/stories.nsf/0/391C916458085CA88625722F000BF3B9?OpenDocument


Morgan Stanley fined $2.9 million for "extensive violations" dealing with reporting obligations, short sales and a slew of other NASD, Securities and Exchange Commission and other rules.
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"A lawsuit filed in Suffolk Superior Court in 2004 alleged that a hedge fund operated by the Boston firm had been executing naked short sales through an account at Goldman Sachs, targeting American Business Financial Services stock."
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"And even then, let’s say that they continue to sell naked, helping out their hedge fund clients – you know, a big house like UBS or Lehman or Bear or Goldman just sells and sells, day after day."
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"Early last year, Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) agreed to pay $40 million each to settle Securities and Exchange Commission allegations about laddering. JPMorgan previously had paid $25 million to settle an SEC case arising out of the same investigation, although the agency didn't accuse JPMorgan of laddering or other market manipulation. "
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WASHINGTON, Nov. 2 /PRNewswire/ -- NASD has imposed a $200,000 fine against EKN Financial Services Inc. of Woodbury, NY -- along with CEO Anthony Ottimo, President Thomas Giugliano, Head Trader William Baker and Financial and Operations Principal Michael Benvenuto -- for engaging in improper short selling in connection with three unregistered securities offerings, commonly referred to as PIPE (Private Investment in Public Equity) deals, and other violations.
biz.yahoo.com/prnews/061102/dcth029.html?.v=75&printer=1



"a scheme that implicates hedge funds, Smith Barney, Goldman Sachs and a aptly named company called “Flip Firm”, who helped to cover the trail of the naked short sellers"
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"Morgan Stanley, Bear Stearns and Goldman Sachs Group Inc. have a hammerlock on providing hedge fund services after spending more than $200 million a year on trading systems, offering more stock for short sales and courting former employees who left to start their own hedge funds, according to a survey by Tremont Capital Management Inc., an industry consulting firm in Rye, New York."
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"Someone explain to me how Goldman and whomever else signed off on the DD for REFCO when it IPOed last August missed the CEO's hidden $500 million in debt and now this. Something is broken here folks, and broken bad.."
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"Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and 10 other banks had outlined in a Dec. 16 letter to the Fed that they would halve the number of unconfirmed transactions by May, compared with the amount outstanding in September."
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"The Post states that regulators will be looking for the trading and customer ledgers of Bear Stearns, Morgan Stanley and Goldman Sachs."
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"All 20 members of DTCC’s board, including Jill M. Considine, Chair and CEO, and Donald F. Donahue, COO, DTCC; Jonathan E. Beyman, CEO, Lehman Brothers (NYSE: LEH); Randolph L. Cowen, Global Head of Technology and Operations, Goldman Sachs Group (NYSE: GS); Dianne Schueneman, Senior VP, Merrill Lynch & Co. (NYSE: MER), New York; Douglas Shulman, President, NASD, Inc., Washington, DC; and Timothy J. Theriault, President, The Northern Trust Co. (NASDAQ: NTRS); and Catherine R. Kinney, President and Co-Chief Operating Officer, New York Stock Exchange, had been asked by Shichtman to “reign in” Thompson and other high executives of DTCC following two documented instances of media tampering involving FinancialWire."
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"Utah and Connecticut regulators' first line of attack will be to get Wall Street firms' trading records via the Depository Trust & Clearing Corporation, which tracks and settles all stock trades. Regulators will be looking for the trading and customer ledgers of Bear Stearns, Morgan Stanley and Goldman Sachs, which all have large and highly lucrative clearance operations"
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"Goldman said on Dec. 16 that it paid Chief Executive Officer Henry Paulson about $37 million in shares and stock options."
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"This year’s bonus total for Wall Street was over $21 Billion with Goldman Sachs handing out an average of $500,000 to their employees. Abelow worked for Goldman Sachs."
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"The original Stockholders of the Federal Reserve Banks in 1913 were the Rockefeller's, JP Morgan, Rothschild's, Lazard Freres, Schoellkopf, Kuhn-Loeb, Warburgs, Lehman Brothers and Goldman Sachs."
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More from www.sanitycheck.com

December 3, 2002

Goldman Sachs (NYSE: GS ), Morgan Stanley (NYSE: MWD), the Salomon Smith Barney unit of Citigroup, the Deutsche Bank Securities unit of Deutsche Bank and the U.S. Bancorp Piper Jaffray unit of U.S. Bancorp (NYSE: USB ) each agreed to pay $1.65 million in fines for allegedly violating e-mail record-keeping requirements. The fines were assessed to each company by the SEC, the New York Stock Exchange and the NASD. In accepting the penalties, the broker-dealers neither admit nor deny the allegations.


December 20, 2002

Late last night regulators and investment banks agreed to a series of fines and sanctions in response to Wall Street's mistreatment of individual investors through bastardized, conflicted research.

The total tab in fines is $1 billion. Citigroup (NYSE: C), parent of Salomon Smith Barney, took the largest hit, at $325 million, but a baker's dozen of other Wall Street firms got fines, including Credit Suisse First Boston (NYSE: CSR) at $150 million, and Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MWD) at $50 million apiece. On top of these fines the companies will be required to fund a trust as seed capital for an independent stock-analysis entity.



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[kranker]

April 4, 2003

Spear, Leeds & Kellogg, a unit of Goldman Sachs, and four employees agreed to be censured and fined $435,000 for alleged trading misconduct on the floor of the exchange between 1999 and 2002. Although Spear's Amex floor operations were sold off in late 2002, it remains the largest NYSE specialist outfit.


April 28, 2003

Goldman Sachs was found to have “issued research reports that were not based on principles of fair dealing and good faith .. contained exaggerated or unwarranted claims.. and/or contained opinions for which there were no reasonable bases.” The firm was fined $110 million dollars, for a total of $119.3
million dollars in fines in six months.


September 4, 2003

In a settlement with the SEC, Goldman Sachs & Co., a unit of Goldman Sachs Group (NYSE: GS ), agreed to pay $4.3 million in restitution and a $5 million penalty related to improper trading in U.S. Treasury securities and futures. Without admitting or denying the findings, Goldman consented to the SEC's order. The restitution and penalty relate to improper trading in 30-year bonds on Oct. 31, 2001, that the SEC alleges was caused by embargoed information received by then senior economist John Youngdahl. The SEC has filed a civil complaint against Youngdahl and Peter Davis, a Washington, D.C.-based consultant, who allegedly supplied Youngdahl with a tip that the U.S. Treasury was about to announce the suspension of the 30-year bond. Youngdahl has also been charged with seven counts of criminal activity by the U.S. attorney for the Southern District of New York. Davis, also charged by the U.S. attorney, has already pleaded guilty. A lawyer for Youngdahl says that his client intends to fight the charges. (See "Goldman Scuffs Its Shoes.")


March 15, 2004

Goldman Sachs& Cowas (“Goldman”)censured and fined $15,000 for the following conduct. On 21 occasions during the fourth quarter 2002, and on 23 occasions during the first and second quarter of 2003, Goldman failed to expose customer orders it represented as agent for 30 seconds prior to entering offsetting and interacting firm proprietary orders. (ISE Rule 717(d)) Goldman failed to maintain satisfactory written procedures to assure compliance with proper facilitation of customer orders. (ISE Rule 401) The fine was composed of $10,000 for violations of 717(d) and $5,000 for the written supervisory procedures violation.


July 1, 2004

Goldman Sachs Group agreed to pay $2 million to settle an administrative proceeding with the SEC. According to the SEC, sales traders at Goldman violated the waiting period for marketing an IPO before a registration became effective. Additionally, the SEC alleged that a Goldman executive spoke to the media about an IPO by PetroChina (NYSE: PTR) before an initial registration was filed. In the settlement, Goldman neither admitted nor denied the findings.


February 17, 2005

Following several months of negotiations, the parent companies of the five largest specialists at the New York Stock Exchange revealed nearly $240 million in total fines and restitution related to alleged NYSE rule violations. In the agreements in principle, still being finalized by the SEC and NYSE, the companies claim they will neither admit nor deny findings that allege the specialists failed to maintain a fair or orderly market. The Spear, Leeds & Kellogg unit of Goldman Sachs (NYSE: GS ) will pay a total of $45.5 million.


January 26, 2005

Goldman Sachs and Morgan Stanley have agreed to pay a combined $80m (£43m) to settle allegations that they manipulated markets to ensure big first day gains in flotations during the stock market boom.
The Wall Street banks were accused of guaranteeing clients bigger allocations in initial public offerings if they agreed to buy more of the shares when they started trading. The scheme is known on Wall Street as "laddering".


March 22, 2005

The NASD fined a Goldman Sachs Group Inc. unit $1 million for hiding initial public offering allocations after being pressured by clients demanding anonymity. The regulator said Spear, Leeds & Kellogg LP, which in January was renamed Goldman Sachs Execution & Clearing LP, used its system to circumvent the Depository Trust Corp.'s IPO Tracking System, which lets underwriters monitor the quick trading, or "flipping," of new issues. DTC provides clearance and settlement services to the securities industry. The NASD fined a Goldman Sachs Group Inc. unit $1 million for hiding initial public offering allocations after being pressured by clients demanding anonymity. The regulator said Spear, Leeds & Kellogg LP, which in January was renamed Goldman Sachs Execution & Clearing LP, used its system to circumvent the Depository Trust Corp.'s IPO Tracking System, which lets underwriters monitor the quick trading, or "flipping," of new issues. DTC provides clearance and settlement services to the securities industry.


April 1, 2005

In Indonesia, Goldman has had an ongoing problem largely ignored by the U.S. media. According to the Hong Kong Standard, on 3-4: “Goldman Sachs Group colluded with Indonesia's state oil company, Pertamina, to ensure Frontline buys two supertankers for as much as US$56 million (HK$436.8 million) below the market price in July 2004, the country's anti-monopoly agency said.” Goldman was fined $15.76 million by Indonesia, a levy that came in close proximity to another fine, in which Goldman was fined $1 million by the NASD in a case that involved withholding IPO information from the market.


June 9, 2005

NASD today announced that it has ordered three firms - Morgan Stanley & Co, J.P. Morgan Securities, Inc., and Goldman, Sachs & Co. - to pay more than $2.9 million following sales of restricted securities in violation of lock-up agreements as required by Each of the firms, or entities or individuals affiliated with the firms, acquired the securities from issuers in private placements prior to each issuer's IPO. Each of the firms subsequently served as an underwriter of the issuer's IPO. Under NASD rules, certain of the private placement securities were deemed underwriting compensation and were restricted from sale for a period of one year from the date of the IPO. In addition, NASD rules provided that if a member firm agreed to restrict the sale of securities for an additional period of time - one or two years - additional discounts would be provided to the value assigned to the shares for purposes of determining underwriting compensation.NASD rules.


August, 2005

The NASD censured and fined 20 firms a total of $1.65 million for late and inaccurate reporting of municipal bond trades. Goldman Sachs was fined $140,000.


February 20, 2006

Securities regulators are moving to crack down on an online brokerage for allegedly permitting a controversial Wall Street trading practice called "naked shorting.''
Online brokerage TradeStation (TRAD:Nasdaq) recently disclosed that regulators at the NASD have notified the firm that some of its customers may have engaged in improper short sales. The Florida-based brokerage said in a filing that regulators could fine the firm for nearly 200 infractions that took place in 2004. TradeStation says regulators have found 172 improper short trades made during a two-month period in 2004. The trades allegedly were improper because they were made without an "affirmative determination" that TradeStation could either "receive delivery of the security on behalf of the customer'' or "borrow the security on behalf of the customer.''
TradeStation says the short sales being examined by regulators were "authorized and arranged'' by Bear Stearns (BSC), the big Wall Street firm that processes and executes trades for the smaller brokerage. A Bear Stearns spokesman declined to comment.


Apr 12, 2006

NEW YORK (MarketWatch) -- NYSE Regulation Inc. on Wednesday said it fined Spear Leeds Kellogg Specialists LLC $200,000 for improperly contacting companies considering listing on the New York Stock Exchange. The alleged contact was made between June 2003 and March 2004, regulators said. The NYSE also faulted Spear Leeds, a unit of Goldman Sachs Group Inc., for failing to have proper systems in place to meet its disclosure obligations.


Copyright ©2006 Bob O'Brien

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Hartford Fincl Units To Pay $55M In SEC
« Thread Started on Nov 8, 2006, 1:47pm »
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July 23, 2002, 4:00PM

Senate investigators charge banks abetted Enron
Associated Press

WASHINGTON - Major investment banks gave Enron Corp. multimillion-dollar loans that helped the now-bankrupt company disguise its true financial condition and, in some cases, they knew that Enron was using deceptive accounting for the loans, a Senate investigator testified today.

The bipartisan investigative subcommittee of the Senate Governmental Affairs Committee reviewed a million pages of documents, most of them subpoenaed, and interviewed dozens of witnesses from Enron and its Wall Street investment banks. It found some banks actively aided Enron in its dodgy accounting in return for big fees and favors in other deals, investigator Robert Roach told a hearing before the panel.

"The evidence indicates that Enron would not have been able to engage in the extent of the accounting deceptions it did, involving billions of dollars, were it not for the active participation of major financial institutions willing to go along with and even expand upon Enron's activities," Roach said at the hearing.

There also is evidence that some of the banks allowed investors to rely on Enron financial statements they knew were misleading, Roach said.

The banks used complex financial transactions to boost Enron's anemic cash flow to match its profit growth on paper, according to lawmakers. The energy-trading company recorded the money from the bank loans -- said to total $8 billion -- as prepaid trades of natural gas and other commodities with an entity based in the Channel Islands off Britain.

He said that Citigroup Inc., the nation's largest financial institution, and J.P. Morgan Chase & Co., also pitched the deals to other companies.

Citigroup "shopped" the Enron-style deals to 14 companies, successfully selling it to at least three, Roach testified.

Houston-based Enron, which filed for bankruptcy in December, taking the investments of millions of people with it, used a web of thousands of off-balance-sheet partnerships to hide some $1 billion in debt from investors and federal regulators.

If not for the deals with the banks, Enron's debt would have been $14 billion in 2000 rather than the $10 billion the company reported, and its cash flow would have been half of the $3.2 billion it reported, according to subcommittee investigators. If the true picture had been known, it would have put downward pressure on Enron's stock price and credit ratings from agencies such as Moody's Investors Service and Standard & Poor's.

Officials of those agencies, testifying at today's hearing, said they were unaware of the transactions with the banks and that Enron misled them and withheld information.

"Why didn't the watchdogs bark?" Sen. Joseph Lieberman, D-Conn., asked of the credit-rating officials.

In a 1998 e-mail, a J.P. Morgan Chase executive in Houston wrote that "Enron loves these deals."

Enron officials "are able to hide ... debt" from Wall Street analysts, he wrote.

Jeffrey Dellapina, a managing director of J.P. Morgan Chase at its New York headquarters, testified at Tuesday's hearing that the e-mail was "inaccurate."

Officials of the two financial companies denied any wrongdoing, saying lenders shouldn't be held responsible for how borrowers such as Enron recorded their loans.

Bank officials stressed at the hearing that Enron's former auditor Arthur Andersen had reviewed the company's accounting for the transactions and approved it.

Before senators heard the testimony, they decried the wave of accounting scandals rocking investors' confidence and the markets. Telecom giant WorldCom Inc. filed the biggest bankruptcy in U.S. history on Sunday, less than a month after it disclosed that it hid nearly $4 billion in expenses through deceptive accounting.

"It's clear that Enron was not alone in shady financial dealings," said Sen. Jim Bunning, R-Ky. "Americans across this country are watching their savings and their pensions dwindle."

Citigroup has called the transactions with Enron "entirely appropriate at the time based on what we knew and what we were told by Enron."

Enron's Washington attorney, Robert Bennett, has said the company would continue to cooperate with investigations by Congress, the Justice Department and the Securities and Exchange Commission, and that people should not "rush to judgment."

In April, Enron shareholders who had sued the company for allegedly defrauding them added nine investment banks, including Citigroup and J.P. Morgan Chase, that financed the deals to their lawsuit in federal court in Houston. The shareholders said the banks' knowledge of Enron's questionable partnerships and other transactions gave them an inside view of the company's financial condition as they sold Enron securities to investors.

The other banks named in the lawsuit were Credit Suisse First Boston USA Inc., Canadian Imperial Bank of Commerce, Bank of America Corp., Merrill Lynch & Co., Lehman Brothers Holding Inc., Britain's Barclays Bank PLC and Germany's Deutsche Bank AG.


www.chron.com/disp/story.mpl/special/enron/1504392.html

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July 26, 2002, 2:04PM

Citigroup, Chase asked about offshore Enron deals
Associated Press

WASHINGTON -- A senator leading an investigation into big investment banks' ties with now-bankrupt Enron Corp. has asked the heads of Citigroup Inc. and J.P. Morgan Chase & Co. to answer questions on their use of offshore companies in deals with Enron.

Sen. Carl Levin, D-Mich., sent letters Thursday to Citigroup chairman and chief executive officer Sanford Weill and J.P. Morgan Chase president and CEO William Harrison, setting a Monday deadline for them to personally provide the information. ADVERTISEMENT


Levin heads the investigative panel of the Senate Governmental Affairs Committee. At a hearing of the panel Tuesday, a committee investigator testified that the Wall Street investment banks, including Citigroup and J.P. Morgan Chase, gave Enron multimillion-dollar loans that helped the company disguise its true financial condition. In some cases, the investigator said, the banks knew Enron was using deceptive accounting for the loans.

Officials of Citigroup and J.P. Morgan Chase denied any wrongdoing in testimony at the hearing.

The letters to the bank executives from Levin, also signed by Sen. Susan Collins of Maine, the subcommittee's senior Republican, cited "troubling factual issues" that emerged at the hearing.

Spokesmen for the two financial companies couldn't be reached for comment Thursday night.

In a memo sent to Citigroup employees, Weill said Citigroup's transactions with Enron were legal, met accounting standards and reflected industry practices.

"And our people, relying on the advice of independent legal and accounting experts, believe they were doing the right thing," Weill said.

Harrison delivered a similar message to the investment community Wednesday, saying that the J.P. Morgan Chase acted "properly and with integrity" in all of its dealings with Enron, while also assuring investors that the bank itself was financially sound.

The bipartisan investigative subcommittee also found that some banks actively aided Enron in its deceptive accounting in return for big fees and favors in other deals.

Enron made a secret oral agreement in 1999 with Citigroup, the nation's largest financial institution, that disguised the company's improper accounting for a $125 million loan known as Roosevelt, according to committee investigators.

The banks used complex financial transactions to boost Enron's anemic cash flow to match its profit growth on paper, according to the investigators. Enron, an energy-trading company, recorded the money from the bank loans -- said to total $8 billion -- as prepaid trades of natural gas and other commodities with an entity based in the Channel Islands off Britain.



--------------------------------------------------------------------------------


HoustonChronicle.com -- www.HoustonChronicle.com | Section: Enron
This article is: www.chron.com/disp/story.mpl/special/enron/1509877.html

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Does Crime Pay?
cmkxunitedforum.proboards70.com/index.cgi?action=display&board=referencematerials&thread=1163264359

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U.S. Criminal Probe Rattles $2 Trillion Municipal Bond Market

The investigation stems from an Internal Revenue Service review that found scores of municipal bond deals robbed federal taxpayers of more than $100 million.

JPMorgan Chase & Co., the third-largest bank in the U.S., American International Group Inc., the world's largest insurance company, and Financial Security Assurance Holdings Ltd., a unit of Brussels-based financial services company Dexia SA, are among the companies that received subpoenas. JPMorgan declined to comment. AIG and Financial Security spokespeople said the companies are cooperating with the probe.

cmkxunitedforum.proboards70.com/index.cgi?action=display&board=general&thread=1165611080&page=1#1165611080

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Fund firms must give back $43.8 million
By Aaron Siegel
December 13, 2006

NASD today hit four firms with fines totaling $850,000 and ordered them to pay $43.8 million in remediation for failing to pass along discounts to investors who bought mutual fund shares.

Edward D. Jones & Co. of St. Louis, RBC Dain Rauscher Inc. of Minneapolis and Royal Alliance Associates Inc. of New York were each fined $250,000 apiece.

Morgan Stanley DW Inc. of New York was tagged with a $100,000 fine.

The firms were also ordered to provide remediation to of eligible clients who qualified for, but did not receive, the benefit of available so-called NAV-transfer programs, according to a statement from NASD.

Based on estimates provided by each firm, Edward Jones, RBC Dain Rauscher, Royal Alliance and Morgan Stanley will pay $25 million, $6.8 million, $1.6 million and $10.4 million, respectively, to their clients, plus interest.

Each firm will also be required to retain a third party examiner to oversee the remediation process.

"The failures [of the firms] to adequately supervise the identification and implementation of NAV transfer programs deprived their customers of substantial discounts on mutual fund purchases," said James S. Shorris, NASD executive vice president and head of enforcement, in a statement.

Each firm agreed to pay fines without admitting nor denying the charges.

www.investmentnews.com/news.cms?newsId=3186

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Lucy Komisar | New York, United States [Munched]
[
02 January 2007 10:03

This month, Siemens, the Germany-based global engineering and electronics company, informed the United States Securities and Exchange Commission that prosecutors investigating the company for corruption have seized bank accounts in Switzerland and Liechtenstein, two leading "offshore" banking centres.

Investigators in Switzerland, Germany and Italy have been looking into evidence that some of the more than half a billion dollars that Siemens -- Europe's largest engineering company by sales -- paid to "consultants" since 1999 were in fact bribes.

And an investigative judge in France is looking into charges that French oil and gas giant Total paid bribes to win a $2-billion gas contract in Iran in the late 1990s. Christophe de Margerie, the official who negotiated the contract, has also been accused of corruption in the Iraq oil-for-food programme. He is scheduled to become Total's CEO in February.

Evidence was provided by Swiss investigators who froze $82-million in two Swiss bank accounts they believe was a bribe Total paid to an Iranian intermediary to get the Iranian contract.

Just a few years after the mega-corporations Enron and Parmalat focused the attention of the press, the public and politicians on the nefarious use of offshore banks and shell companies set up by Citibank and Chase Bank (now JP Morgan Chase) to cook the books and cheat investors, after the Bank of New York was shown to have moved and laundered billions of dollars for Russian criminals and tax evaders, after the revelations that ex-Chilean dictator Augusto Pinochet had used secret bank accounts to hide arms sales kickbacks, the offshore secrecy system is alive and thriving.

What has happened in the French case suggests why. The French investigating magistrate in both Total cases, Philippe Courroye, has a reputation for independence and skill in probing corruption. However, he is being stymied by his own government. At the request of a Swiss magistrate, the French fraud squad seized documents in Total's headquarters last March, but declined to release them for reasons of "national interest".

French governments under both the socialists and the conservatives have refused to provide records to another investigating magistrate, Renaud van Ruymbeke, that allegedly show the details of more than $1-billion in bribes and kickbacks paid by the French arms company Thomson (now Thalès) to Taiwan and French officials for a frigate warships contract.

Money deposited by the alleged "bagman" has been frozen in Swiss accounts. The French excuse: "Defence security". However, many believe it is more likely that the high French officials who got the kickbacks are thinking of their own security.

"National interest" is the same the reason given by Prime Minister Tony Blair when this month he forced the United Kingdom Serious Fraud Office to drop its investigation of bribes the British arms company BAE may have paid Saudi officials beginning in the 1980s to win multibillion-dollar contracts. Swiss bank records show that BAE ran an offshore bribery system using Swiss bank accounts and British Virgin Islands shell companies.

The US has also ignored big-time offshore illicit dealing. A still secret report, seen by IPS, based on records seized in the 2002 Operation Spiderweb dragnet coordinated by Italian authorities and involving France, Monaco, Switzerland, Germany, Canada and the US showed that billions of dollars a year was channeled offshore for Russian crime groups through the Bank of New York (BoNY) and other banks, and then to Europe to be invested in legitimate businesses, or returned to mafia-controlled enterprises in Russia.

A US Congressional investigation found that the Bank of New York had moved $7-billion from Russia through shell company accounts in the late 1990s. The BoNY network was clearly a major Russian crime operation, yet under President George Bush, the US Justice Department's scrutiny was dropped. BoNY got a verbal slap on the wrist and had to promise to improve examination of clients' identities and suspicious transfers.

New York District Attorney Robert Morgenthau -- famous for exposing and prosecuting the BCCI offshore scandal in the early 1990s when George Bush senior's Justice Department sat on its hands -- believed that the department didn't dig deeply enough. However, US authorities told him not to pursue this case and cut him off from information.

Global Witness, the London-based group that investigates corruption in African extractive industries, has detailed how Angolan heads of state have stolen billions of dollars in revenues that Western oil companies such as ChevronTexaco and TotalFinaElf conveniently deposit in offshore accounts run by banks such as Lloyds. Watchdog groups note that Blair's highly touted "Campaign for Africa" becomes a cruel joke when he refuses to shut down the system that loots those countries' revenues and prevents them from being self-sustaining.

There are now more than 70 offshore centres that sell bank and/or corporate secrecy, collectively holding deposits worth trillions of dollars. They allow criminals of all stripes, including big-time tax evaders, to set up companies and accounts under fake or borrowed names. Offshore "tax havens" are banking profit centres.

"There is no reason for any country in the world to be permitted to use the common plumbing, the common financial infrastructure that we all use to move money around the world, without guaranteeing that funds can be traced from beginning to end when something goes wrong, whether it goes wrong from sanctions busting, a terrorist, a drug money launderer, a spouse hiding money from a husband, or a wife hiding money from their ex-spouse," Jonathan Winer, a former deputy assistant US secretary of state for International Law Enforcement, told a Congressional panel in March.

"It does not matter. The transactions need to be traceable, and the information needs to be shared, and the US foreign policy should be focused on that goal because there are a lot of goals that can be accomplished not just for the United States but for a lot of other countries that cannot tolerate what we can tolerate because they are not as wealthy," he noted.

Experts believe that as much as half the world's capital flows through offshore centres. Tax havens like the Cayman Islands have 1,2% of the world's population but hold 26% of the world's wealth, including 31% of the net profits of US multinationals.

Another few hundred billion come from fraud, corruption and drug trafficking. According to the International Monetary Fund, between $600-billion and $1,5-trillion of illicit money is laundered annually, equal to 2% to 5% of global economic output -- most of it in offshore banking centres.

But Western governments, who may think their banks and corporations are simply ripping off other countries, should take a closer look. They are losing billions of dollars in taxes through offshore tax evasion. A hearing in the US Senate in August detailed how Sam Wyly, famous in the US for financing the "Swift Boat Veterans for Truth" attack on presidential candidate John Kerry, may be guilty of one of the largest personal tax frauds in US history.

With the help of Bank of America and an offshore network of fake companies in the Isle of Man, he and other members of the family allegedly cheated the country of taxes on nearly a billion dollars.

While the cheating on taxes has an often deadly impact -- killing people from poverty-related causes when their governments lack revenues for development -- other purposes for which the offshore sector's opacity can be used have a speedier lethal effect.

In June, police in Spain and France arrested 12 people they said had for 20 years funded the Basque terrorist group ETA through extortion, blowing up businesses of those who refused to pay. They laundered the money through tax havens around the world.

Spanish Prime Minister José Luis Rodríguez Zapatero, who has rejected status quo policies in other respects, may see good reason to reject the do-nothing attitude of his colleagues in the US, Britain, Germany and France and press for action to dismantle the worldwide offshore secrecy network. - IPS

www.mg.co.za/articlePage.aspx?articleid=294779&area=/insight/insight__international/

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By NILES LATHEM

April 4, 2006 -- WASHINGTON - The Manhattan DA is pursuing a settlement with the Bank of America in a major money-laundering probe of more than $3 billion that flowed from Latin America through one of the bank's accounts to Mideast fanatics, sources said yesterday.

Sources familiar with the case - reported in yesterday's Post - revealed that DA Robert Morgenthau is close to reaching a settlement with the nation's second largest bank.


The bank is not being accused of complicity with money-launderers or terrorists, but is facing possible penalties for dealing with an unlicensed money transmitter from Uruguay, sources said.


A bank spokeswoman had no comment.


Morgenthau forced the shutdown of a New York account at the bank that investigators said was used to funnel $3 billion from a shadowy money transmitter called Lespan in Montevideo to several suspicious accounts in the Middle East, sources said.

Some of the Mideast accounts are suspected of being used by terrorist groups such as al Qaeda, Hamas and Hezbollah.


www.nypost.com/news/regionalnews/66443.htm

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Bank of America arm fined $3 million
By Aaron Siegel
January 29, 2007

NASD has fined Banc of America Investment Services Inc. $3 million for its failure to obtain customer information for certain high-risk accounts.

Charlotte, North Carolina-based Banc of America Investment Services was also fined for its failure to have adequate communication with its parent bank to ensure that independent suspicious activity report filing obligations were met.

The self regulatory organization found that Banc of America Investment Services failed to obtain required additional customer information for 34 accounts that involved trust and private investment corporations domiciled in the Isle of Man, and apparently affiliated with one family.

NASD said that the accounts held between $79 million and $93 million in assets, and engaged in multimillion dollar wire transfers across international boundaries.

Between August 2003 and October 2004, the unit did not require the names of the beneficial owners and never restricted activities in the accounts, , NASD said.

At the time the accounts were opened, Banc of America Investment Services had established anti-money laundering procedures designed to address certain customer account risks by requiring additional information from the accountholders, specifically, the names of the beneficial owners, before conducting substantial transactions in the accounts.

Banc of America Investment Services agreed to settle the charges without admitting nor denying any wrongdoing.

www.investmentnews.com/apps/pbcs.dll/article?AID=/20070129/FREE/70129032

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cmkxunitedforum.proboards70.com/index.cgi?action=display&board=general&thread=1170116427&page=1#1170223448

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More securities fraud,

www.northcountrygazette.org/articles/121206InsightOne.html


query.nytimes.com/gst/fullpage.html?res=9804E4DC1138F930A25752C0A962948260


query.nytimes.com/gst/fullpage.html?res=9800E1D8143AF93BA15750C0A961958260


www.boston.com/business/articles/2004/10/01/raymond_james_sued_by_sec/


www.usatoday.com/money/industries/brokerage/2004-10-29-lehman-enron-lawsuit_x.htm


www.nysscpa.org/home/2006/506/2week/article7.htm

www.marketwatch.com/News/Story/Story.aspx?guid={CB7B1331-27FD-44B9-A257-E2032661B7A9}&siteid=google&dist=


www.injuryboard.com/view.cfm/Article=1258


www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/12/21/BUG01AESBG1.DTL&type=business


www.nysscpa.org/home/2006/406/3week/article61.htm

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The life and times of Goldman Sachs,

cmkxunitedforum.proboards70.com/index.cgi?action=display&board=referencematerials&thread=1172412608&page=1

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Bank of America Cooperation in Municipal Bond Investigation Recognized by Justice Department Amnesty; Settles Certain Matters with IRS
Friday February 9, 12:17 pm ET

cmkxunitedforum.proboards70.com/index.cgi?board=general&action=display&thread=1171244506

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Ex-Merrill executives face retrial
By Aaron Siegel
April 5, 2007

Three former Merrill Lynch & Co. Inc. executives will be retried for fraud and conspiracy regarding their involvement with a phony deal made in conjunction with Houston-based Enron Corp., according to the Associated Press.

In 2004, James A. Brown, Daniel Bayly and Robert S. Furst were convicted of conspiracy and wire fraud for helping push through Enron's sham sale of three power barges off the coast of Nigeria to the brokerage in 1999.

Many of the charges against those men were overturned last year (InvestmentNews, August 2) .

Jurors also convicted William Fuhs, a fourth Merrill Lynch executive and Dan Boyle, a former Enron finance executive.

Mr. Fuhs had his convictions thrown out due to a lack of.........(more)

www.investmentnews.com/apps/pbcs.dll/article?AID=/20070405/REG/70405011/1022/ONLINENEWS