Archive for the ‘JPMorgan Chase’ Category
CHICAGO, Aug 6 (Reuters) – JPMorgan Chase & Co on Monday sought to limit the power the bankruptcy trustee for Peregrine Financial Group has to subpoena information from financial institutions that did business with the failed brokerage.
JPMorgan said in a court filing that Trustee Ira Bodenstein’s request for authorization from a bankruptcy court to serve subpoenas on financial information may be overly burdensome by encompassing Peregrine’s affiliates and wholly owned subsidiaries, in addition to the brokerage itself.
In other words “there might be something here we don’t want you to see, especially if you look real closely.”
Here’s the thing — subpoenas are not “zero cost” deals on either side. Not only does the Trustee have to spend time (money) going through returned materialthe third-party target is entitled to a statutory amount of money in compensation for compliance.
Now it’s a different matter if the subpoena is issued for improper or vexatious purpose (e.g. with an intent to disrupt someone’s business with a third party.) But in this case there apparently are real issues of fact that are intended to be discovered and it’s difficult to imagine how serving subpoenas related to PFG Best could possibly disrupt JP Morgan’s business with other customers or vendors.
JPMorgan also objected to Bodenstein’s request that the bankruptcy court prohibit subpoenaed financial institutions from recouping any costs incurred with providing documents.
Ok, that’s reasonable. But there’s a differnce between “any costs” and statutory costs. Is JP Morgan trying to charge some sort of “research fee”? The per-page cost for production (or its electronic equivalent) is a standard thing that has been allowed forever, and (IMHO) is entirely proper.
What’s not, and what Bodenstein may have been trying to evade, is JP Morgan attempting to claim that it had a need to charge hundreds (or thousands!) of dollars an hour for “research expenses” to locate and produce the documents, rather than the actual production costs themselves.
It’s reasonable to be compensated for the actual cost of paper and toner, etc. It’s not to be “compensated” for alleged “research expenses” when the documents requested are ordinary business records that you either (1) already do have or (2) damn well should have.
Despite widespread crime of various types across all classes of society, most Americans polled were comfortable trusting their own “moral compass.” Let’s see how we did with that in July.
Bob Diamond, the American CEO of Barclays Bank in Britain, resigned – or, if you prefer, as one Member of Parliament was happy to emphasize in Diamond’sJuly 4 hearing, he was “sacked” — after it was revealed that a cabal of banks manipulated LIBOR, the London Interbank Offered Rate set by a poll of leading banks to determine the benchmark global interest rate. LIBOR is the reference rate used by many home mortgage loans, commercial loans, floating rate notes, collateralized debt obligations and many other financial instruments.
LIBOR fixing is a global issue and U.S. banks have also been implicated in manipulating LIBOR to their ultimate advantage at the expense of global investors.
Bob Diamond didn’t volunteer to give back any of his deferred compensation at the hearing:
Mr. Andrew Love: On the deferred bonus scheme for senior executives in Barclays bank, anyone who does harm to Barclays’ reputation may be asked to forgo some of those deferred bonuses. Do you think that that is appropriate in your circumstances in that you agree that Barclays’ reputation has been harmed?Bob Diamond: That’s certainly a question for the board.
While Bob Diamond testified in front of Britain’s Members of Parliament, American urban flash mobs engaged in Independence Day mayhem.
The board of Barclays Bank answered Bob Diamond’s question. Diamond “voluntarily decided” to forgo up to $31 million (20 million British pounds) in deferred bonus, but he gets a year’s salary, pension and benefits and tens of millions collected in prior years.
Peregrine Financial Group’s (PFG Best) CEO Russell Wasendorf Sr. was arrested after the United States District Court for the Northern District of Iowa filed a criminal fraud complaint against him. Wasendorf had apparently attempted suicide earlier in the week, although skeptics say it may have been staged to throw investigators off the scent of where he may have stashed ill-gotten gains.
His suicide note stated:
I have committed fraud. For this this I feel constant and intense guilt. I am very remorseful that my greatest transgressions have been to my fellow man. Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts.
The alleged fraud went on over a period of 20 years, but Wasendorf’s remorse was only revealed after an NFA audit revealed false statements and it was clear that he would be charged.
Jamie Dimon, CEO of JPMorgan Chase, the largest bank by assets in the United States, admitted the bank had “material weakness” in the chief investment office (CIO), a unit that reported directly to Dimon.
In the previous four years the unit had reported $2 billion in profits, but in the first half of 2012 alone, it lost $5.8 billion on trades that Dimon at first claimed were hedges and then later admitted: “It morphed into something that I can’t justify. It was just too risky for our company.” Moreover, these trading losses didn’t morph on their own; the trades required human intervention, and losses continue to mount.
In contrast to Bob Diamond’s hearing before parliament, Dimon’s June 13, 2012 Senate hearingsounded like a cordial celebrity roast. Dimon has not been held accountable for potential Sarbanes-Oxley violations related to his signing corporate documents asserting controls at JPMorgan were adequate when — by any reasonable professional standard — they were not.
The news for Jamie Dimon got even worse after Michael J. Moore and Dawn Kopecki at Bloombergquestioned the veracity of Dimon’s April 13, 2012 disclosures in response to an analyst’s question about media reports that JPMorgan Chase had engaged in enormous derivatives trades and that huge trading losses were imminent.
While JPMorgan booked a $718 million loss on the positions held by its chief investment office in the first quarter, it didn’t publicly specify the loss when releasing the results April 13. When an analyst asked Dimon that day about media coverage of the trades, he dismissed them as a ["tempest in a teapot."].
(“Dimon Saw $1 Billion Potential Loss When He Made ‘Teapot’ Remark,” July 13, 2012.)
On July 13, 2012, JPMorgan Chase revealed that there are questions that the books may have been mismarked by the traders. In other words, it has raised a question of fraud. As for Jamie Dimon, it raised the question of an utter failure of corporate governance and telling the truth too slowly. The bank also materially restated its first quarter 2012 earnings.
Also on July 13, Ocala Florida’s 71 year-old Samuel Williams fought back and saved customers from thugs in Internet cafe. Williams has a concealed weapons permit. After two thugs, one armed with a gun and the other armed with a bat, entered an Internet café to rob and terrorize 30 customers, Williams opened fire. He stopped pursuing and firing after the wounded thugs ran out the door, which Williams then locked behind them.
A flash mob of around 300 teenagers vandalized a Walmart store in Jacksonville, Florida. They robbed the store of around $1,500 of merchandise and threw food at each other. Then one of the group uploaded video of the crime to YouTube.
“You’ve got a large number of people going and coming at the same time they are throwing produce,” Jefferson said. “They are stealing items, they are all over the store. You can imagine how fearful the customers were who were in there at that particular time.” — Ken Jefferson, Crime Analyst, Channel 4.
Also on July 16, a flash mob of around 40 teens ages 13 to 15 invaded an Albertson’s in Troutdale, Oregon to steal.
Security officers chased the thieves out, but no one was captured. They also left employees pretty shaken up, including one woman who was in tears after getting terrorized by the robbers. “They [thieves] were bragging and laughing about how much stuff they stole and what they did in the store,” one witness told KGW.
A heavily armed gunman later alleged to be James Holmes killed at least 12 people and wounded 58 more during an early Friday morning screening of The Dark Knight Rises, the new Batman movie, in Aurora, Colorado. Holmes was later charged with 24 counts of murder — two separate charges for each killing — among other charges. Charges cited his “attitude of universal malice manifesting extreme indifference to the value of human life generally.”
No criminal indictments have yet been issued in connection with the alleged looting of more than $1.2 billion from the customer accounts prior to the October 31, 2011 bankruptcy of MF Global. But Bloomberg News’s Silla Brush reported that a Commodity Futures Trading Commission (CFTC) review found that Jon Corzine, MF Global’s former CEO, wasn’t too close to Gary Gensler, chairman of the CFTC, because (among other things) they didn’t attend each other’s weddings, and Corzine didn’t attend the bat mitzvahs of Gensler’s daughters. Both men worked together at Goldman Sachs for many years, but they apparently hadn’t socialized for around 14 years. Gensler recused himself from the post-bankruptcy investigation into MF Global. Jon Corzine is also a former Senator and former Governor of New Jersey and a top campaign bundler for President Obama.
Also on July 30, Vanity Fair and 60 Minutes released the results of a joint poll. Americans seem to feel their parenting is just fine. When asked if they were as good or better at parenting than their own parents, 59 percent said they were the same, 36 percent said they were better parent, (95 percent said they were the same or better) 3 percent said they were worse. The remaining 2 percent apparently took the Fifth:
Nearly 6 out of 10 parents feel that, as parents, they measure up to their own parents; more than a third think they’re even better than that. And 70 percent of us say we’re comfortable trusting our own moral compass, as opposed to the law or religion or anything/anyone else, to keep us from behaving badly.
The poll also revealed that only 14 percent of Americans correctly identified Jamie Dimon as a New York banker, despite the fact that he’s been all over the news in recent months and is the CEO of JPMorgan Chase, the largest U.S. bank by assets.
I was unable to reach the parents of Bob Diamond (former CEO of Barclays Bank who “resigned” in the wake of the LIBOR fixing scandal), Jamie Dimon (current CEO of JPMorgan Chase, whose CIO unit lost $5.8 billion in risky trades for the first half of 2012 alone — losses that continue to mount — while the bank materially restated first quarter earnings and raised questions of potential fraud), Russell Wasendorf Sr. (former CEO of PFG Best now in custody), and Jon Corzine (former CEO of bankrupt MF Global) for comment.
Endnote: Jane Wollman Rusoff interviewed me for Research Magazine’s May cover story, “Finding the Culprits of the Crisis,” about the deep monetary bi-partisan connections of Wall Street and Washington and the corrosive effect it has had on the economy and the Republic.
Janet Tavakoli for Huffington Post
UPDATE - The online petition was started 2 weeks ago, already has more than 650,000signatures, and is growing by 1,000 names every few hours.
Though focused on criminal EU bankers, the signatures are global in origin.
Jon Corzine, your time is coming…
Big banks have been caught in a massive scam to rig global interest rates, ripping off millions of people on their mortgages, student loans and more! We’d go to jail for this, but Barclays bank has only been fined, and just a fraction of their profits! Outrage is mounting — this is our chance to finally turn the tide of the banks’ reign over our democracies
And here’s another:
h/t Daily Bail
JPMorgan said today that it recently discovered information that suggests some individuals at the company may have been trying to avoid showing the full amount of the losses. All employees working on synthetic credit derivatives in the CIO have left the bank, the company said today.
Evidence of fraud within a bank is not just a fireable offense. It is also evidence of a criminal offense which must be investigated and acted upon.
Intentionally reporting bad marks isn’t something that one should brush under the rug. In addition it is clear that Jamie Dimon exercised insufficient oversight of an office that reported directly to him.
As Janet Tavakoli has opined today, and I agree, under any reasonable standard Jamie Dimon must be fired.
Further, it appears that a material mis-statement of results occurred and one thus cannot trust the former accounting statements until and unless they are gone through with a fine-toothed comb.
I know Dimon is somewhat of a “golden boy” among both regulators and the “cognescenti”, but that’s immaterial here. This is not a “rogue trader” who is three or four levels of management removed from the CEO’s office — it is literally a direct report that not only made “bad decisions” they appear to have attempted to intentionally hide the loss, and Dimon was directly responsible for supervision of that office and failed to exercise the appropriate level of oversight and diligence.
He must go.
(Never mind that it appears that investors think he’ll not only keep his job, but the bank will be rewarded for effectively “getting away with it” — the stock is up 3%.)
Disclosure: No position in JP Morgan.
Where The “Segregated” PFG Money Is
Or rather isn’t. Just in case there is any confusion this morning as to where the “segregated” client cash may have vaporized to…
From: “Herb Kral” <firstname.lastname@example.org>
Date: Tue, 22 Nov 2011 10:07:55 -0600
Subject: RE: Follow up
All of our client funds are held at JP Morgan Chase in a segregated account. Jeffries does hold our margin money for positions.
Herb Kral, Director of Automated Trading
311 W. Monroe, Suite 1300
Chicago, IL 60606
312-775-3581 | 312-775-3095 fax
PFG Is Now MFG(lobal) Part 2 As $220 Million In Segregated Client Money Has Just Vaporized
UPDATE 2: Have no fear though since as recently as January 2012, the CFTC did not find any “material breaches of customer funds protection requirements” at FCMs (firms like PFGBest)
UPDATE 1: Account-holders may not be so surprised to find who is the custodian for the PFGBest FX accounts: none other than huge MFGlobal fans, JPMorgan!
Remember when the entire segregated account fiasco was supposedly fixed in the aftermath of the November 2011 MF Global bankruptcy, and where regulators: the CFTC, the SEC, the CME, and anyone you asked, swore up and down this would never happen again? Turns out that 7 months later, the spirit of MFG has struck again, only this time with one letter switched: it is now known as PFG, as we suggested first 3 hours ago when we broke the story. From the just filed affidavit by Lauren Brinati who is working with the National Futures Association, which in turn has just filed notice prohibiting PFGBest from operating further, and freezing all of its accounts:
- On or about June 29, 2012 PFG reported to NFA that it had approximately $400 million in segregated funds, of which more than $225 million were purportedly on deposit at U.S. Bank
- On or about July 9, 2012, NFA received information indicating that PFG’s Chairman may have falsified bank records
- On July 9, 2012, NFA made inquiry with US Bank and learned thatrather than the $225 million that PFG had reported as being on deposit at US Bank just days earlier, PFG had only approximately $5 million on deposit at U.S. Bank.
Translation: another $220 million segregated account pillage has just taken place, in the vein of none other than Jon Corzine and MF Global.
The money has now officially vaporized.
It is truly wonderful of the NFA to finally get involved, after PFG’s clients have lost about 98% of their cash held with the firm.
In other potential news, a rather prominent New York bank, recently closely associated with marine wildlife, may have just cut its Q2 losses by up to $220 million.
And now for a moment of sarcasm, courtesy of Jack Pearson.
Full NFA filing:
p Fg Best Notice
Well, at least one person got to tell Jamie Dimon exactly what the majority of people in the United States think of him and his cronies.
No folks, it’s not just one bank.
If you transacted in any loan that was tied to this rate at any time in the last several years, you probably got rooked, whether it was for pennies or thousands.
According to the WSJ:
Other banks that have disclosed they are under investigation include Citigroup Inc., C-2.77% HSBC Holdings HBC -3.88% PLC, J.P. Morgan Chase JPM -3.45% & Co., Lloyds Banking Group LLOY.LN -5.79% PLC and Royal Bank of Scotland Group PLC. None of these banks have been charged with any wrongdoing in the matter by U.S. or U.K. regulators.
Isn’t that special? Why yes, it is.
Now if we could just see something approaching accountability.
But we won’t, you know, just as we didn’t when JP Morgan was involved in the disastrous Jefferson County Alabama scheme that landed several local folks in Alabama in prison on various corrupted-related charges.
The people — who got screwed blind and sideways with permanently-larger sewer bills as a result of the corruption, got nothing back from the banksters – they are still paying for the screwing they had inflicted on them.
I’m not one for vigilante justice, but one does have to wonder — at what point do the people simply stop putting up with this crap?