Late Tuesday, Synovus Financial (SNV) confessed that it's facing an informal inquiry by the Securities & Exchange Commission (SEC). In a regulatory filing, Synovus disclosed that the SEC is attempting "to determine whether any person or entity has violated the federal securities laws." The financial firm was first informed of the informal investigation in a letter from the SEC dated Dec. 15, 2009.
Synovus said it intends to cooperate fully with the SEC's inquiry, but declined to provide further information on the matter. "We cannot discuss any details of the informal inquiry," explained spokesman Gregory Hudgison. "As stated in our public filings, the SEC has not asserted that Synovus or any person or entity has committed any securities violations."
Continue reading Synovus Financial Slides on SEC Inquiry
China Investment Corp. (CIC), a sovereign wealth fund responsible for managing China's foreign exchange reserves, has disclosed to the SEC that its holdings in major U.S. companies now total $9.6 billion. According to reports, the fund totals nearly $2.5 trillion. Using that capital, and acting as a passive investor, CIC is buying minority positions in major companies. The stakes that CIC holds in major U.S. corporations represent small pieces by percentage, but the total investment to date is worthy of note.
Manufacturing.net has reported that CIC has disclosed the following: "... small holdings in dozens of companies including, $353.8 million in Visa Inc., $6.3 million in Apple Inc., $9 million in Coca-Cola Co. and $1.4 million in Goodyear Tire & Rubber Co. It also listed a $1.7 billion stake in Morgan Stanley." It should be noted that these are all minority holdings in publicly traded companies. Beijing is intentionally avoiding investments that might be deemed politically sensitive.
Continue reading Keeping an Eye on China's U.S. Investments, Manufacturing
This is a fascinating story -- a behind-the-scenes scenario that is the stuff of conspiracies.
During the housing bubble, a huge number of questionable mortgages were created in what is called the subprime market. Many of the home buyers had shaky credit and, eventually, fell into foreclosure. Goldman Sachs (GS) held some of these securities but wanted protection against default. Where do you buy such insurance? American International Group (AIG), of course.
Under the terms of the insurance, Goldman was entitled to collect payments if the securities fell below certain agreed-upon values. You guessed it. When the housing bubble started to burst, Goldman demanded $2 billion from AIG to cover its losses.
Continue reading SEC to Probe Goldman's Role in AIG's Downfall
Another week, another tale of gross incompetence, bureaucratic bumbling, stupidity, laziness, and arrogance at the SEC.
This time, it comes from Eric Kolchinsky, an executive at Moody's, who called the SEC in September to warn the agency that his company might be committing securities fraud. Ya know, the kind of the thing you'd think the SEC would be interested.
Continue reading More SEC Incompetence: Warnings of Moody's Fraud Ignored
The New York-based Nathan Cummings Foundation is seeking the support of other Goldman Sachs Group Inc. (GS
) shareholders for a proposal that would ask the company's compensation committee to produce a report comparing the earnings of the company's top executives to average employees -- and assess whether pay might be excessive and in need of change.
But the foundation tells Reuters that Goldman informed it that it would ask the SEC to block the proposal from appearing on the proxy ballot sent to shareholders -- effecting stopping the plan dead in its tracks.
Continue reading Goldman Sachs Looks to Block Proxy Access for Dissident Shareholder
The Securities & Exchange Commission filed new charges against Bank of America (BAC
) today, accusing the company of hiding "staggering financial losses" at Merrill Lynch prior to the consummation of the merger between the two companies.The Associated Press has details
, but there are a few interesting things about this latest development:
- Current Bank of America CEO Brian Moynihan was the general counsel of Bank of America at the time of the alleged disclosure improprieties. Just saying.
Continue reading SEC Brings New Charges Against Bank of America
Today started out as a down day and it stayed that way. The market tried to recover mid-morning, but that failed. The financial sector was under pressure from guidance and from fears of more reprisals out of Washington D.C. that never seem to go away. The rest of the market pressure was on earnings and a pressure of earnings warnings hitting the stocks.
Here were today's unofficial closing bell levels:
Dow 10,626.81 -37.18 (-0.35%)
S&P 500 1,136.21 -10.77 (-0.94%)
Nasdaq 2,282.31 -30.10 (-1.30%)
Top Analyst Upgrades
Top Analyst Downgrades
Continue reading Closing Bell: Earnings Season's Tough Start (AET, AA, BAC, CVX, ERTS, KBH, HIG)
Veteran Bloomberg reporter Susan Antilla wonders in her latest column whether Securities and Exchange Commission (SEC) chair Mary Schapiro is the right person to have at the helm of the SEC.
Back in 2006, Schapiro was the head of the National Association of Securities Dealers when the organization decided to merge its regulatory functions with the NYSE to create Finra -- the Financial Industry Regulatory Authority. Now a pair of Finra-member firms are suing Finra and Schapiro, alleging breach of fiduciary duty, misleading statements and unjust enrichment.
Continue reading SEC Chair on the Hot Seat? Finra Scandal Could Put Her There
The Securities & Exchange Commission announced today
that it has charged the former CEO, CFO, and controller of former subprime behemoth New Century Financial with securities fraud.
Facing charges are former CEO and co-founder Brad A. Morrice, former CFO Patti M. Dodge, and former controller David N. Kenneally. All are accused of failing to warn investors about the risks in the company's business model, and of violating GAAP rules in making undisclosed accounting changes to mask the rapidly deteriorating performance of the company's subprime loans.
Continue reading SEC charges New Century Financial officers with securities fraud
How do you know the green finance sector has arrived? Well, it got its first Ponzi scheme! Allegedly.
The SEC filed charges against four people and two companies in a Denver federal court on Monday. Mantria Corp. and its principals, Troy Wragg and Amanada Knorr, stand accused of running raising $122 million from more than 300 investors in what could be a dozen fraudulent offers of securities. Mantria engaged Speed of Wealth LLC, run by Wayde and Donna McKelvy, to dump the cash out of their retirement plans and tap their home equity to "invest" in Mantria, which they said was offering returns ranging from 17% to "hundreds of percent" every year.
Continue reading Ponzi goes green, SEC in pursuit
Normal tech support phone call: "Press 1 for help with e-mail. Press 2 to have your password reset."
Madoff tech support phone call: "Hello, how can I help you dummy up some trading records today?"
The investigation of Bernie Madoff's fraudulent financial empire is leading to more arrests. Jerome O'Hara and George Perez, both computer programmers employed by the Ponzi schemer, were arrested by the FBI on Friday morning. The charges include conspiracy for falsifying books and records. They are accused of doing the deed for the boss and accepting hush money -- in the form of 25% raises and net bonuses of $60,000 -- to keep the scam afloat.
Continue reading Two more arrests in Madoff saga
Investors are calling for an inquiry into mutual fund fees, but the Supreme Court is reminding them that it isn't beholden to public opinion. The mutual fund industry is being accused of charging "excessive" fees, which could be particularly harsh on individual investors who use these tools as their primary way to access the market. Currently, the mutual fund industry has more than $10 trillion in assets under management, some of it through retirement and 529 college savings plans.
The Court doesn't seem inclined to step into the fray, saying that regulatory agencies are better equipped to address the situation. Chief Justice John Roberts, for example, said during arguments that "It makes a lot more sense to have the SEC regulate rates than to have courts do it, doesn't it?"
Continue reading Supreme Court pushes back on mutual fund issue
So, I was flipping through some articles in Rolling Stone
, when I found a very interesting economic story - yes, in Rolling Stone
. The article, "Wall Street's Naked Swindle
," takes a look at what happened in the options pits leading up to the death of Bear Stearns and Lehman Brothers. According to the article, an unknown option buyer made "one of the craziest bets Wall Street has ever seen," by shorting Bear Stearns. The unknown trader felt that Bear Stearns would lose "more than half" of its value in nine days or less, a bet that one financial analyst likened to buying 1.7 million lottery tickets.
What is crazy is that this bet paid off, leading to only one conclusion: insider trading (cue dramatic music). When Bear Stearns dropped from roughly $63 to $2 per share on March 17th (just six days later), the person purchasing the options made roughly $270 million. Senator Chris Dodd from the Senate Banking Committee thought that something wasn't on the up and up with this trade, and the Securities and Exchange Commission (SEC) promised it would look into the trade. Of course, nothing has happened since.
Continue reading Who profited from Bear Stearns' collapse? One insider did, and got away with it
Two New York investors have filed a lawsuit against the Securities & Exchange Commission, accusing the SEC of a "pattern of incompetence" in failing to detect and put a stop to Bernie Madoff's Ponzi Scheme.
"Had the SEC carried out its functions with even a minimum of reasonable due care, many, if not most, of Madoff's victims would have been spared the financial ruin they face today," the complaint said
Continue reading Madoff victims sue SEC: silly
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