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    FINES & CRIMES

    SEC ENFORCEMENT ACTIONS – IS THIS A JOKE?
    Key Statistics (through Dec. 16, 2011)
    · Concealed from investors risks, terms, and improper pricing in CDOs and other complex structured products:
    · Citigroup – SEC charged Citigroup’s principal U.S. broker-dealer subsidiary with misleading investors about a $1 billion CDO tied to the housing market in which Citigroup bet against investors as the housing market showed signs of distress. The proposed settlement would require a payment of $285 million by Citigroup that would be returned to harmed investors. (10/19/11)
    · Goldman Sachs – SEC charged the firm with defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter. (4/16/10)
    o Goldman Settled Charges – Firm agreed to pay record penalty in $550 million settlement and reform its business practices. (7/15/10)
    · ICP Asset Management – SEC charged ICP and its president with fraudulently managing investment products tied to the mortgage markets as they came under pressure. (6/21/10)
    · J.P. Morgan Securities – SEC charged the firm with misleading investors in a complex mortgage securities transaction just as the housing market was starting to plummet. J.P. Morgan agreed to pay $153.6 million in a settlement that enables harmed investors to receive all of their money back. (6/21/11)
    · Stifel, Nicolaus & Co. – SEC charged the St. Louis-based brokerage firm and a former senior executive with defrauding five Wisconsin school districts by selling them unsuitably risky and complex investments. (8/10/11)
    o RBC Capital Markets – SEC charged the firm for misconduct in the sale of unsuitable CDO investments to five Wisconsin school districts. The firm settled the charges by paying $30.4 million to be distributed to the school districts through a Fair Fund. (9/27/11)
    · Wachovia Capital Markets – SEC charged the firm with misconduct in the sale of two CDOs tied to the performance of residential mortgage-backed securities as the housing market was beginning to show signs of distress. Firm settled charges by paying more than $11 million, much of which will be returned to harmed investors. (4/5/11)
    Made misleading disclosures to investors about mortgage-related risks and exposure:
    · American Home Mortgage – SEC charged executives with accounting fraud and misleading investors about the company’s deteriorating financial condition as the subprime crisis emerged. Former CEO settled charges by paying $2.45 million and agreeing to five-year officer and director bar. (4/28/09)
    · Citigroup – SEC charged the company and two executives with misleading investors about exposure to subprime mortgage assets. Citigroup paid $75 million penalty to settle charges, and the executives also paid penalties. (7/29/10)
    · Countrywide – SEC charged CEO Angelo Mozilo and two other executives with deliberately misleading investors about significant credit risks taken in efforts to build and maintain the company’s market share. Mozilo also charged with insider trading. (6/4/2009)
    o Mozilo Settled Charges – Agreed to record $22.5 million penalty and permanent officer and director bar. (10/15/10)
    · Fannie Mae and Freddie Mac – SEC charged six former top executives of Fannie Mae and Freddie Mac with securities fraud for misleading investors about the extent of each company’s holdings of higher-risk mortgage loans, including subprime loans. (12/16/11)
    · IndyMac Bancorp – SEC charged three executives with misleading investors about the mortgage lender’s deteriorating financial condition. (2/11/11)
    · New Century – SEC charged three executives with misleading investors as the lender’s subprime mortgage business was collapsing. (12/7/09)
    o Executives Settled Charges – Paid more than $1.5 million and each agreed to five-year officer and director bars. (7/30/10)
    Concealed the extent of risky mortgage-related and other investments in mutual funds and other financial products:
    · Charles Schwab – SEC charged entities and executives with making misleading statements to investors in marketing a mutual fund heavily invested in mortgage-backed and other risky securities. The Schwab entities paid more than $118 million to settle charges. (1/11/11)
    · Evergreen – SEC charged the firm with overstating the value of a mutual fund invested primarily in mortgage-backed securities and only selectively telling shareholders about the fund’s valuation problems. Firm settled charges by paying more than $40 million, most of which was returned to harmed investors. (6/8/09)
    · Morgan Keegan – SEC charged the firm and two employees with fraudulently overstating the value of securities backed by subprime mortgages (4/7/10)
    o Morgan Keegan Settled Charges – Firm agreed to pay $100 million to the SEC and the two employees also agreed to pay penalties, including one who agreed to be barred from the securities industry. (6/22/11)
    · Reserve Fund – SEC charged several entities and individuals who operated the Reserve Primary Fund for failing to provide key material facts to investors and trustees about the fund’s vulnerability as Lehman Brothers sought bankruptcy protection. (5/5/09)
    · State Street – SEC charged the firm with misleading investors about exposure to subprime investments while selectively disclosing more complete information to specific investors. State Street agreed to repay investors more than $300 million to settle the charges. (2/4/10)
    o Two Former State Street Employees Charged – Accused of misleading investors about exposure to subprime investments. (9/30/10)
    · TD Ameritrade – SEC charged the firm with failing to supervise representatives who mischaracterized the Reserve Fund as safe as cash and failed to disclose risks when offering the investment to customers. Firm settled charges by agreeing to repay $10 million to certain fund investors. (2/3/11)
    Others
    · Bank of America – SEC charged the company with misleading investors about billions of dollars in bonuses being paid to Merrill Lynch executives at the time of its acquisition of the firm, and failing to disclose extraordinary losses that Merrill sustained. Bank of America paid $150 million to settle charges. (2/4/10)
    · Brooke Corporation – SEC charged six executives for misleading investors about the firm’s deteriorating financial condition and for engaging in various fraudulent schemes designed to conceal the firm’s rapidly deteriorating loan portfolio. Five executives agreed to settlements including financial penalties and officer and director bars. (5/4/11)
    o Former CEO Settled Charges – The sixth executive agreed to an officer and director bar and financial penalty. (9/8/11)
    · Brookstreet – SEC charged the firm and its CEO with defrauding customers in its sales of risky mortgage-backed securities. (12/8/09)
    o Brookstreet Brokers Charged – SEC charged 10 Brookstreet brokers with making misrepresentations to investors in sale of risky CMOs. (5/28/09)
    · Colonial Bank and Taylor, Bean & Whitaker (TBW) – SEC charged executives at the bank and the major mortgage lender for orchestrating $1.5 billion scheme with fabricated or impaired mortgage loans and securities, and attempting to scam the TARP program.
    o Lee Farkas, Chairman of TBW (6/16/10)
    o Desiree Brown, Treasurer of TBW (2/24/11)
    o Catherine Kissick, Vice President at Colonial Bank (3/2/11)
    o Teresa Kelly, Supervisor at Colonial Bank (3/16/11)
    o Paul Allen, CEO of TBW (6/17/11)
    · UCBH Holdings Inc. – SEC charged former bank executives with misleading investors about mounting loan losses at San Francisco-based United Commercial Bank and its public holding company during the height of the financial crisis. (10/11/2011)
    Number of Entities and Individuals Charged 87
    Number of CEOs, CFOs, and Other Senior Corporate Officers Charged 45
    Number of Individuals Who Have Received Officer and Director bars, Industry Bars, or Commission Suspensions 25
    Penalties Ordered > $1.2 billion
    Disgorgement and Prejudgment Interest Ordered > $393 million
    Additional Monetary Relief Obtained for Harmed Investors $355 million*
    Total Penalties, Disgorgement, and Other Monetary Relief $1.97 billion
    · * In settlements with Evergreen, J.P. Morgan, State Street, and TD Ameritrade

    http://www.sec.gov/spotlight/enf-actions-fc.shtml



    GOD’S WORK? I DON’T THINK SO!

     

    APRIL 12, 2012

     

     

    Today the Huff Post reported on the latest Goldman Sachs criminal enterprise Houdini escape from prosecution.

    Sure, nothing new here, just the same old run of the mill illegal activities that you or I would go to jail for. In fact,

    people have gone to jail for insider trading,  but not Goldman “Houdini” Sachs.  Not Lloyd “I have no idea what happened” Blankfein.  Jail for them, why they are doing God’s work. You wouldn’t jail a guy for doing God’s work, would you?

     

    http://www.huffingtonpost.com/mobileweb/rj-eskow/the-latest-secgoldman-sac_b_1422537.html?ref=business

     

    When the fines never fit the crimes, we all witness the repetitive childlike result of no consequences.   A $22 million dollar agreement with Goldman for what is certainly insider trading by the SEC announced today wherein Gold-man Houdini Blankfein “neither confirms nor denies wrongdoing” is yet another example of crime pays.

     

    A number of repeat offenses compiled by the New York Times for these SEC deals is mind-blowing.

     

    “Huddles” information was shared with  “a select group of Goldman’s top clients” under a program called the “Asymmetric Service Initiative,” or “ASI.” I want to know who the “clients”
    were, don’t you?  No doubt the ASI clients were names we all know well and part of the criminal enterprise we call our financial system.

     

    From the SEC: “Between January 2007 and August 2009, there were hundreds of instances when a ratings change occurred within five business days after the stock was discussed at a huddle, referenced in a huddle script …”

     

     (See also “Another SEC Sweetheart Deal: Five Reasons to be Outraged.”)

     

    Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America’s Future and the host of The Breakdown, broadcast Saturdays nights from 7-9 pm on WeAct Radio, AM 1480 in Washington DC.

     

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