Want to see where the money is from in the HSBC laundering story? Check out Martin GrandJean’s data visualization

Superb map of where the laundered money at HSBC is coming from. Used with permission.

Graph posted on February 11. Published by Martin GrandJean. You can find it at SwissLeaks: the map of the globalized tax evasion

Swissleaks source by country

 

From the linked article: Map of the HSBC accounts amounts per country. Full size here (CC) license – freely reusable with link to this post.

Fine print in the corner you may not be able to read: …

Want to see where the money is from in the HSBC laundering story? Check out Martin GrandJean’s data visualization Read More »

Talk about pinching your pennies – HSBC had an evasion scheme for customers to avoid paying a 15% withholding tax on interest earned on hidden money.

Good grief.

Not only are we talking tax felons. We’re talking cheap tax felons.

2/10 – The Guardian – HSBC files: Swiss bank aggressively pushed way for clients to avoid new tax – Part 3. HSBC developed a specialized product they presented to lots of their clients. Lots bought it.

Problem: If you have money hidden in Switzerland, there is a tax treaty that requires the banks to withhold 15% on the interest earnings and turn the withholding over the British treasury. No reporting of individual names or amounts, just one lump sum sent to England. Apparently letting the crown have 15% of your interest is too much for some blokes.

Wrinkle: …

Talk about pinching your pennies – HSBC had an evasion scheme for customers to avoid paying a 15% withholding tax on interest earned on hidden money. Read More »

More good stuff on the banking fiascos – 2/10/15

The coverage by The Guardian and ICIJ mentioned in yesterday’s post is kicking off a lot of coverage. Twitter is lighting up with a few hundred tweets in a few minutes, but I’m learning that interest typically fades in a few days. By Friday, the twitterverse will be on to its next outrage.

Here are two more articles I found interesting. First is on UBS maybe having more trouble on aiding tax evasion. Second, when stock analysts say one of the too big to fail banks is too big to manage, it is capitalists making the criticism, not people outside the business world.

2/4 – Wall Street Journal – UBS Faces a New Tax-Evasion Probe – Authorities Investigate Whether Swiss Bank’s Clients Used ‘Bearer Securities’ to Hide Cash

More good stuff on the banking fiascos – 2/10/15 Read More »

HSBC: One of the ATMs available to tax evaders

Major breaking news this weekend is the extent of shady dealings at HSBC’s subsidiary in Switzerland. Lots of dirty money accepted for deposit at the bank and lots of assistance provided to money launderers and tax evaders.

HSBC says they have cleaned up their act since 2008.

2/8 – The Guardian – HSBC files show how Swiss bank helped clients dodge taxes and hide millions – Part 1. Large volume of leaked files show a HSBC subsidiary in Switzerland actively helped clients evade taxes.

HSBC: One of the ATMs available to tax evaders Read More »

To get $1.5 billion settlement, S&P doesn’t have to admit wrongdoing and Justice Department doesn’t have to admit retaliation. Split the dollar positions and it’s a done deal.

Oh, and bring in some jelly donuts when the deal is getting close and you can bridge that last third of a billion difference.

S&P reached a settlement with the Department of Justice and a bunch of states over the ratings S&P gave to mortgage securities before the financial crisis. Top line settlement amount is $1.5B. See Wall Street Journal article, S&P to Pay $1.5 Billion to Resolve Crisis-Era Litigation.

Be advised the ridicule and abuse in this post will soon flow thick…

Settlement negotiations

Starting point from the DoJ side was $5B and acknowledgement of wrongdoing.  S&P wanted under a billion and acknowledgment of the whole deal being in retaliation for S&P downgrading the federal credit rating.

My version of the back and forth haggling that got them to common ground:

$5B.

Drop admission of guilt.

DoJ: Okay, $3.2B. S&P: We’ll break the billion mark.

DoJ drop to $1.5B and S&P up to $1.2B.

Bring in those yummy donuts. You know, the ones with the jelly filling and sprinkles. Then drop the retaliation claim and agree on $1.3B.

Done? Yup.

Everyone’s happy. Nobody has to admit they did anything wrong. Both claim complete, total vindication.

That’s my loose paraphrase. For the unabridged version, see the WSJ article How the Justice Department, S&P Came to Terms.

A different look at the sequencing

To get $1.5 billion settlement, S&P doesn’t have to admit wrongdoing and Justice Department doesn’t have to admit retaliation. Split the dollar positions and it’s a done deal. Read More »

Price cut on print books

I’ve dropped the prices for the print copies of my books available at Amazon, Barnes & Noble, and iTunes store.

Here is what you can find on-line:

tragedy-cover

 Tragedy of Fraud – Insider Trading Edition

Story of Scott London’s fall from regional audit partner at KPMG to prison inmate because of his insider trading.

Price cut on print books Read More »

The change from Apps is just getting started. (Radical change #3)

Another part of my effort to explain that while I see radical change on the horizon in other areas, I have a blind spot how those things will affect auditing.

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

1/19 – Mark Mills at Forbes – The Mobile Revolution Has Only Just Begun – Look again at the radical change in the last century:

Not only have radios become cheap but they’ve collapsed in size while rising in capability. A trailer-pulled radio that weighed one ton in WWI is now a chipset weighing a fraction of an ounce buried inside a smartphone that can handle one million-fold more traffic than those first Marconis.

Combine that with a computer the size of a phone and you have a smart phone.

The change from Apps is just getting started. (Radical change #3) Read More »

More good stuff for auditors – 1/30

Here are a few more articles of interest to auditors. Fragility of the Big 4, big/little GAAP, brain stretcher on revenue recognition when oil prices have collapsed.

1/28 – Clifton Larson Allen – CLA Talk Video: FASB to Simplify Nonprofit Financial Statements – Discussion of some downsides to the expected revisions to NPO accounting.

More good stuff for auditors – 1/30 Read More »

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): …

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

Rationalization in action is frightening to see

It is scary to see the power of rationalization. We humans can exert great effort to persuade ourself that wrong is right. With enough effort, we can persuasively argue that wrong is a positive good, the noble alternative.

It is unsettling to me when I see a client deeply believe that tax or accounting fraud is perfectly legitimate and I am the one who is in the wrong to suggest otherwise.  Worrisome is a watching a friend who believes that hurtful or destructive or nasty or evil behavior is Godly. Even more upsetting is when I catch my brain in full rationalization mode.

No, I’m not about to give any examples from clients, friends, or my life.

Unfortunately, we have a sad public example of rationalization racing at full power (sad pun intended).

Some background on Lance Armstrong’s massive doping schemes

Many public sources report that Lance Armstrong has been found to use performance enhancing drugs for a very long time. He won seven consecutive Tour de France races.

According to Wikipedia, in 2012 he received a life-time world ban on all competitive events in all sports. His seven wins were revoked. He was found to have engaged in sophisticated doping schemes for many years.

In 2013, he admitted massive doping in an interview with Oprah Winfrey. He admitted using a long and specific list of banned substances and did so in each of the 7 Tour de France races.

Rationalization on display

Having set the background, let’s look at an article in The Guardian:  Lance Armstrong: I would probably cheat again in similar circumstances. Thanks to Professor Mike Shaub (twitter @mikeshaub) for pointing out the article.

Rationalization in action is frightening to see Read More »

I get the concept of radical changes in our near future. I am blind to see how it will affect my firm. (Radical change #1)

We are in the midst of radical change. I’m writing this blog (Outrun Change) to sort out the change around us. (cross-posted from Outrun Change, obviously.)

I get it in terms of tech change obliterating newspaper want ads, count of first class mail pieces for the Post Office, and devastation to bookstores (remember Borders?).

I totally get the concept that you can be your own book publisher with a cost of under $200 per title if you have the skill to use Adobe Acrobat along with Microsoft Excel and Word. Major publishers are dinosaurs.

Run your own digital publishing company? Been there. Done that. Three times. And publishing the Nook version is literally one extra click, one click, in the on-line production cycle.

I get the concept of radical changes in our near future. I am blind to see how it will affect my firm. (Radical change #1) Read More »

More good stuff on banking fiascos

No massive publicity on the banking front, but there are ongoing issues in getting money laundering under control and the ongoing investigations of manipulating foreign exchange rates.

1/14 – Wall Street Journal – Forex Probe Finds New Signs of Potential Wrongdoing – Scope of the Forex fiasco and related U.S. Federal investigation is growing. Investigators have found new issues and that the manipulation of exchange rates may go beyond trading desks.

There is also a wider investigation running that I’ve seen mentioned: …

More good stuff on banking fiascos Read More »

My first baby steps to understand dark pools and high frequency trading

I’m blogging to learn. Writing means you need to understand, which means you need to read and think, which means you learn and then you can write.

One item on a really long list of things I don’t get is dark pools and high-speed trading. I understand the basic concept, but know there is a lot I’m missing. If you don’t get it either, join me for a few steps in the journey to get a clue.

Here’s an article that tells me there is a problem: …

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Yet another embarrassing tech error – sending a text message to the wrong person

Double check who is getting your texts.

We’ve all heard the stories of hitting ‘reply all’ instead of ‘reply’ when discussing something in an e-mail that shouldn’t go to ‘all’.

Here’s a new oopsie I learned about personally but at low cost. (Cross posted from Nonprofit Update.)

Yet another embarrassing tech error – sending a text message to the wrong person Read More »