Search Results for: libor

Explaining complex financial details to jurors is an obstacle to putting senior executives in jail


Image courtesy of
Image courtesy of

For all of you who think there should be hundreds of bankers in jail, keep in mind one of several hurdles to clear is getting a jury to go along with you. Major lesson in the result from the Dewey & LeBoeuf trial is that complicated financial stuff is really, really difficult to explain to a jury.

10/21 – Wall Street Journal – Jury in Dewey Law-Firm Case Felt Inundated by Details

There were 150 counts against the three senior executives of the law firm. If I get the case correctly, the core issue is manipulating the financial statements through the means of inappropriate journal entries. Alleged goal was to cook the books in order to keep the lenders happy and thus keep the law firm alive.

The jury acquitted on a couple of dozen charges and was deadlocked on all the others. They did not return a guilty verdict on any charge.

Another massive bank fiasco involving the full cast of TBTF banks, this time for Credit Default Swaps. Where is the boundary of fiascos?

Image courtesy of
Image courtesy of

I’m a bit slow on the uptake sometime. There is an entirely new, huge banking mess that I hadn’t heard about before the billion dollar settlement was announced. Another small fiasco is rumored.

Another day, another couple billion out of the stockholders’ pocket.

First the nearly $2B private settlement.

Twelve banks agreed to settle a private antitrust lawsuit. The now-admitted scheme was to manipulate credit default swap rates. Those are deals to cover the loss if a bond defaults.

Updates on banking fiascos – 8/31

Image courtesy of
Image courtesy of

Here are a few updates I’ve noticed about the banking fiascos:

8/17 – CFO Journal at Wall Street Journal – Biggest Banks’ Crisis-Era Settlements Petering Out: Report – Study by SNL Financial says payouts related to the financial crisis by the six largest US bank accumulate to $132B. More settlements are expected, but the number and dollar amount of settlements is slowing down.

Reserves for additional settlements are $5.9B at Goldman Sachs and $1.4B at Wells. The other four didn’t respond to the reporter about the dollars they have in reserves.


8/30 – Wall Street Journal – Meet the Private Watchdogs Who Police Financial Institutions – Article gives background on private sector monitors put in place to check on changes made to comply with deferred prosecution agreements.

Minor updates on the banking fiascos: Forex settlements and a new fiasco

Settlements of private lawsuits are continuing. Also, settlements with CFTC underway for another rate manipulation scheme.

6/18 – Wall Street Journal – Banks’ Civil Forex Settlements Near $2 Billion/ Barclays, BNP Paribas, Goldman Sachs and HSBC recently signed agreements to settle case  – The settlements for private litigation over manipulation of foreign exchange rates are moving forward. Article says HSBC has settled up for $285M, Barclays for $375M, Goldman Sachs is in for $129.5M, and an unknown amount for BNP.

By my calculation that brings the total for seven banks to …

Speculation on upcoming bank settlements

Not much news on the bank fiasco front in the last week or so. Here are two articles pondering what settlements are on the horizon.

5/26 – Alison Frankel at Reuters – Forex class action deals may hint banks braced to lose Libor appeal – Citigroup settled up for $394M with private parties over manipulation of forex.

Article points to one settlement I missed:

1/5 – Reuters – JPMorgan settles currency manipulation lawsuit in U.S. – Morgan will settle up with about $100M.

Follow up articles on the $5.8B settlement from TBTF banks

A few articles of note on the humongous settlements from five banks for manipulating foreign exchange rates. Oh, and a trivial $0.1B settlement from Barclays for manipulating yet another swap rate.

5/20 – Wall Street Journal – Barclays Fined $115 Million by CFTC for Alleged Manipulation of ISDAfix – Barclays tried to manipulate another index which is used to calculate pension payouts. This is an interest rate swap index. Game playing ran from 2007 until 2012.

$5.6B for 5 banks to settle up on manipulating forex for customer’s accounts

Big settlement announced today to resolve the Forex manipulation cases. Big surprise for me is the NYDFS only came in at $485M, with all of that going against Barclays. I was guessing a higher amount with DFS wanting a settlement from all the banks.

Here are two articles with the details, then I’ll list the individual settlements:  …

Commerzbank joins the billion-dollar-fine club

The newest member of the elite club of banks that write billion dollar checks to settle up with the regulators is Commerzbank AG, the second largest bank in Germany.

After reading several reports on the billion and a half settlement, it seems to me that their corporate culture, at the core personality level, is to be not overly concerned about complying with US law.

The two primary issues are aiding and abetting the billion-dollar Olympus fraud and processing a quarter billion dollars of wire transfers for Iranian and Syrian customers banned from the US banking system.

Suppressed documentary on the brutal, I mean *really* brutal, competition between branches at Morgan Stanley. Sort of reminds me of a movie I saw.

Investment News has discovered a documentary produced by Morgan Stanley chronicling the harsh competition between branches that is encouraged by their home office. Some news reports suggest this is a parody, but I don’t think so.

Click to see the ten minute video:

Margin Games:

Manager on Fire

Some of my favorite scenes:

Digital currencies are radical change on the horizon for banking and credit cards. (Radical change #2)

There is radical change all around us and more on the way. I know that. My blind spot is figuring out how that will affect my audit firm.

(Cross-posted from my other blog, Outrun Change.)

Here’s one part of radical change I can see on the horizon:

1-24 – Wall Street Journal – Bitcoin and the Digital-Currency Revolution / For all bitcoin’s growing pains, it represents the future of money and global finance.For a brain stretcher on digital currency, check out the article. Focus is on Bitcoin, which is merely the starting point in a revolution of disintermediation.

Just like money funds disintermediated (that means cut out of the picture) bank deposits in the distant ‘80s, bitcoin and other yet-to-be-invented digital currencies will disintermediate a huge portion of the financial system.

Picture the long series of transactions when you buy a cup of coffee at the corner shop with your credit card (this is a long quote cited under fair use, oh, also to promote the book it is extracted from): …

What is behind the record $56 billion in bank fines in 2014?

Here are a few possibilities for the record level of settlements for bank in ’14: Wrapping up the legacy issues from the financial crisis. Regulators are getting serious about pushing big banks to improve their operations. Or maybe regulators just want more money. Or maybe banks are getting worse at obeying the law.

Some articles for you to ponder:

12/30 – Wall Street Journal – For Banks, 2014 Was a Year of Big Penalties – Here’s my interpolation of the fines and legal costs for the largest banks, as presented in the article’s graph:

  • $  3B – 2009
  • $  3B – 2010
  • $23B – 2011
  • $44B – 2012
  • $46B – 2013
  • $65B – 2014

Settlements for Forex manipulation announced. We will need to wait for all settlements to learn if this is only a cost of doing business

Three major regulators announced settlements with six banks for their now admitted manipulation of foreign exchange rates. At least two regulators (Department of Justice and NY Department of Financial Services) still have investigations open. One bank, Barclays, withdrew from the settlement.

The scheme ran for six years, starting after the fall 2007 meltdown and running until a year after the Libor settlements were underway.

Here is my recap of the fines by bank with calculation of the annualized cost, all amounts in U.S. dollars: …

Update on Forex manipulation. Also, another thought why the banking fiascos won’t be ending anytime soon

Previously mentioned the big banks are under investigation for allegedly manipulating forex: Next banking fiasco? Manipulating foreign exchange rates? Those are the rates used to trade currencies. In addition to admitting manipulation of Libor, many banks now stand accused of manipulating forex.

Just two updates..

10/30 – Wall Street Journal – Big Banks Brace for Penalties in Probes – Tons of leaks feed the story of the typical cast of big banks being in negotiations to settle allegations of their manipulating foreign exchange rates, or forex. Big news to me is the banks are all trying to settle at the same time with all of the regulators.

(If one company reaching a simultaneous agreement with every regulator is called a global settlement, then if every company in the industry reaches an agreement with all regulators on the same day, would that be called a global global settlement? Universal global settlement?)