How big Financial Firm’s Bad Performance gets Rewarded
Did you hear the one about an analyst telling the truth about Citibank’s dismal risk exposure and being blamed for a $369 Billion Dollar downturn?
So much for the demise of the equity research analyst’s “Independence.”
On Wall Street you are: Damned if you do; Damned if you don’t.
The $369 Billion Analyst
Meredith Whitney’s downgrade of Citigroup yesterday didn’t just push down shares of the banking giant, it also helped send the whole market into a tailspin. And that market skid of nearly 3% shaved $369 billion from the valuation of U.S. companies.
Whitney of CIBC, who said Citigroup may need to slash its dividend to shore up its finances, indicated to Bloomberg that she was the only analyst who had the guts to say out loud what everyone already knows. “No one had the moxie to put in print what I put in print.”
In fact, not everyone agrees with her. Some analysts and investors say Citi has plenty of cash to ride out the storm and continue paying its 54-cent-per-quarter dividend. But perhaps that kind of language shouldn’t be surprising from someone who is married to a former World Wrestling Entertainment champion, John “Bradshaw” Layfield.
Notice the not so subtle slander?
And Whitney has these fighting words for Chuck Prince, the embattled CEO of Citigroup: “There’s no question he has to leave.”
With Citigroup shares plunging 7% yesterday, to $38.51, their lowest level in four years, Whitney may just have hastened that departure.
On the other hand the Commodity Futures Trading Commission wants the public to be more informed of fraud and fraudulent claims by unscrupulous foreign exchange and other Commodity Firms:
Commodity Futures Trading Commission Forex Fraud
The Commodity Futures Trading Commission (CFTC) has witnessed increasing numbers, and a growing complexity, of financial investment opportunities in recent years, including a sharp rise in foreign currency (forex) trading scams. A federal law enacted in December 2000, called the Commodity Futures Modernization Act of 2000 (CFMA), makes clear that the Commission has the jurisdiction and authority to investigate and take legal action to close down a wide assortment of unregulated firms offering or selling foreign currency futures and options contracts to the general public. In addition, the CFTC has jurisdiction to investigate and prosecute foreign currency fraud occurring in its registered firms and their affiliates.
How about Peregrine Financial Group’s acquisition of American National Trading aka the “ANTC” Group?
A cursory review of American National would reveal that their main principals and firm was alleged to be in violation by the National Futures Association of:
C.R.2-2(a) - CHEAT,FRAUD DECEIVE CUSTOMERS C.R.2-9(a) - SUPERVISION OF EMPLOYEESC.R.2-29(a)(1) - FRAUDULENT COMM. TO PUBLIC PROHIB
Gee, how inspiring.
But, nonetheless, Peregrine Financial Group, announced that: "PFG and ANTC are joining forces to better serve ANTC’s customers," said PFG Chairman and Chief Executive Officer Russell R. Wasendorf, Sr. "There are so many synergies, and we believe there will be significant benefits to ANTC customers.
Synergies? Benefits? So Many?
Really.
From a very cursory public regulatory records search—which doesn’t include any civil or criminal complaints—there appears to be over 40 customer complaints with either the National Futures Association and/or the Commodity Futures Association against Peregrine Financial Group alone.
Not very inspiring of “trust” is it?
The future of our ability to invest with confidence and trust, and to believe what our capital market Financial Firms do, is how they perform, or what they don’t perform.
Based on the recent meltdown in the large New York and Chicago Securities and Financial Firms, that appears to have been replaced with a culture not only of greed, but of our collective ennui.
We have been collectively “dumbed down” to not expect anything truthful.
It’s time that we take back the power from these charlatans? The question, is, of course, rhetorical.
Showing posts with label regulation. Show all posts
Showing posts with label regulation. Show all posts
Sunday, November 4, 2007
Friday, November 2, 2007
Our Capital Markets need More Regulation, not Less
Merrill Lynch engaged in deals with hedge funds that may have been designed to delay recognition of losses from mortgage securities. The SEC is likely to investigate. Merrill shares tumbled more than 9%.
What other skeletons are in their closet? Isn't this shameful?
We have heard so much about how our alleged dislosure law reform, made the U.S. Securities and Commodities markets "less competitive."
How Sarbanes-Oxley makes electronic startups less competitive
The legislation may have prevented accounting debacles, but it's also had a chilling and unintended consequence: reducing or eliminating the attractiveness of an IPO as a growth strategy for small electronics
Really?
Has a more transparent and accountable set of laws made the Subprime meltdown any less severe?
Has the Sarbanes-Oxley bill forced Merrill Lynch and other Financial Firms to violate regulations and to leverage themselves, and violate our trust, beyond tolerable risk levels?
Obviously, no. We need more regulation of our capital markets. Not less.
The National Futures Association alleged that Peregrine Financial Group failed to comply with their Compliance Rules.
NFA's BCC issued a Decision to Peregrine accepting Peregrine's settlement offer in which the firm neither admitted nor denied the allegations of the Complaint. The BCC ordered that Peregrine pay a $5,000 fine within thirty days of the date of the Decision. The BCC also ordered that Peregrine adopt, and submit to NFA within thirty days of the date of the Decision, procedures to ensure future compliance with NFA's Compliance Rules as they relate to the supervision of conditioned registrants. Finally, the BCC ordered that Peregrine adopt, and submit to NFA within thirty days of the Decision, procedures to ensure future compliance with all provisions of the Amended Final Order Granting Conditional Registration to Dominick Concilio.
Oh yeah, and have you head about the "Bubble Alert" that we are being warned about? Who is responsible for this mess?
So, yeah, this inflation thing is nothing to worry about. Which is why investors continue to plunk money down in hard assets and buy up dollar-denominated products like oil and gold, both of which surged again to finish another day with those “highest price since Columbus” headlines.
Both gold and oil have gained around 60% in the last two years.
A few years ago, $100-a-barrel crude oil and $1,000 gold would have seemed completely ridiculous. But the markets are on the cusp of grasping the former, and at this rate, the latter isn’t too far off. (Many will say, “c’mon, $1,000 gold is ridiculous,” but admit it - you hesitated before saying that this time.)
As the dollar continues to decline these assets get cheaper for foreigners to buy, but they’re not the only ones, considering the steady demand coming from the U.S. as well. With world economies still in reasonably solid shape, the commodity demand remains strong. “The dollar is falling and is making dollar-denominated assets cheaper so you get gold and crude going up and that’s probably going to keep going for a while,” says Patrick Kerr, president of Oilgasfutures.com, a commodity brokerage.
What he’s been hearing lately — and this might be a “bubble” alert — is that there are many fund managers discussing the idea that people are underallocated in these assets, with too much in equities and bonds. Buying in at $100 oil seems a bit foolhardy, but then again, people said that at $70 and $80 as well (which was a day or two ago, if we remember).
So, let's put this into some kind of perspective--the Financial Firms are complaining that we are not "competitive" because they are over-regulated; while at the same time they have over-leveraged themselves, violate the requisite regulatory guidelines, and expose us, average Americans, to an unprecendeted level of exposure to financial ruin, to no fault of our own.
Isn't it time to regulate the Merrill Lynch's, the Peregrine Financial Group's, the Citibank's, and the rest of the Financial Firms, with more scrutiny and regulations?
What other skeletons are in their closet? Isn't this shameful?
We have heard so much about how our alleged dislosure law reform, made the U.S. Securities and Commodities markets "less competitive."
How Sarbanes-Oxley makes electronic startups less competitive
The legislation may have prevented accounting debacles, but it's also had a chilling and unintended consequence: reducing or eliminating the attractiveness of an IPO as a growth strategy for small electronics
Really?
Has a more transparent and accountable set of laws made the Subprime meltdown any less severe?
Has the Sarbanes-Oxley bill forced Merrill Lynch and other Financial Firms to violate regulations and to leverage themselves, and violate our trust, beyond tolerable risk levels?
Obviously, no. We need more regulation of our capital markets. Not less.
The National Futures Association alleged that Peregrine Financial Group failed to comply with their Compliance Rules.
NFA's BCC issued a Decision to Peregrine accepting Peregrine's settlement offer in which the firm neither admitted nor denied the allegations of the Complaint. The BCC ordered that Peregrine pay a $5,000 fine within thirty days of the date of the Decision. The BCC also ordered that Peregrine adopt, and submit to NFA within thirty days of the date of the Decision, procedures to ensure future compliance with NFA's Compliance Rules as they relate to the supervision of conditioned registrants. Finally, the BCC ordered that Peregrine adopt, and submit to NFA within thirty days of the Decision, procedures to ensure future compliance with all provisions of the Amended Final Order Granting Conditional Registration to Dominick Concilio.
Oh yeah, and have you head about the "Bubble Alert" that we are being warned about? Who is responsible for this mess?
So, yeah, this inflation thing is nothing to worry about. Which is why investors continue to plunk money down in hard assets and buy up dollar-denominated products like oil and gold, both of which surged again to finish another day with those “highest price since Columbus” headlines.
Both gold and oil have gained around 60% in the last two years.
A few years ago, $100-a-barrel crude oil and $1,000 gold would have seemed completely ridiculous. But the markets are on the cusp of grasping the former, and at this rate, the latter isn’t too far off. (Many will say, “c’mon, $1,000 gold is ridiculous,” but admit it - you hesitated before saying that this time.)
As the dollar continues to decline these assets get cheaper for foreigners to buy, but they’re not the only ones, considering the steady demand coming from the U.S. as well. With world economies still in reasonably solid shape, the commodity demand remains strong. “The dollar is falling and is making dollar-denominated assets cheaper so you get gold and crude going up and that’s probably going to keep going for a while,” says Patrick Kerr, president of Oilgasfutures.com, a commodity brokerage.
What he’s been hearing lately — and this might be a “bubble” alert — is that there are many fund managers discussing the idea that people are underallocated in these assets, with too much in equities and bonds. Buying in at $100 oil seems a bit foolhardy, but then again, people said that at $70 and $80 as well (which was a day or two ago, if we remember).
So, let's put this into some kind of perspective--the Financial Firms are complaining that we are not "competitive" because they are over-regulated; while at the same time they have over-leveraged themselves, violate the requisite regulatory guidelines, and expose us, average Americans, to an unprecendeted level of exposure to financial ruin, to no fault of our own.
Isn't it time to regulate the Merrill Lynch's, the Peregrine Financial Group's, the Citibank's, and the rest of the Financial Firms, with more scrutiny and regulations?
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