J.P. Morgan Securities Settles SEC Charges in Jefferson County Swap & Bond Case
Wall Street Journal, Washington - J.P. Morgan Securities Inc. and two of its former managing directors on Wednesday settled charges with the U.S. Securities and Exchange Commission for their roles in an unlawful payment scheme that enabled them to win business involving municipal-bond offerings and swap-agreement transactions with Jefferson County, Ala.
J.P. Morgan Securities, a unit of J.P. Morgan Chase & Co., will pay a penalty of $25 million, make a payment of $50 million to Jefferson County, and forfeit more than $647 million in claimed termination fees, the SEC announced.
The settlement comes as the SEC is examining several municipal investment contracts. Jefferson County has faced credit-rating downgrades and possible bankruptcy after its investments in over-the-counter derivatives.
J.P. Morgan said in a statement that the company is pleased to have settled the Jefferson County matter.
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GE to pay $50 million in fines to settle SEC fraud charges
Here is my favorite quote: “GE bent the accounting rules beyond the breaking point, Overly aggressive accounting can distort a company’s true financial condition and mislead investors.” Funny how GE will get this statement made against it but nothing for many of the banks that have used off-balance sheet transactions to hide massive amounts liabilities in various derivatives. This stuff is not even hidden, just look at the capitalization of the top 25 banks and they have a nice little line for derivative exposure (Page 22). To be fair, GE does have a finance unit and they are treated as a bank holding company but I would like the SEC to review other institutions as well, I think many of the accounting practices used over the last 5 years needs to be seriously reviewed for there impact on investors and the financial system as a whole.
Reuters, Boston - General Electric Co will pay a $50 million civil penalty to settle charges by the U.S. Securities and Exchange Commission that it misled investors with some fraudulent accounting in 2002 and 2003.
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Bernard Madoff settles civil fraud charges with SEC without admitting wrongdoing
Bottom-line, my gut tells me that this was purely political on the basis that if all the facts came to light, I am sure the SEC would have looked either complicit or incompetent. Either of those findings would have reduced any remaining credibility the SEC had after this massive fraud took place for so long under their supposed “watchful” eye.
It seems to me in this country we are good at having outrage initially but the follow through has been quite lackluster. I would really like to see some more teeth when we prosecute these white-collar and financial crimes. Maybe after we do not have any meaningful investigations, we will see some real outrage to get our “balls” back.
News (Reuters):
Bernard Madoff, who ran the biggest investment fraud in history, was allowed to settle civil fraud charges with the U.S. Securities and Exchange Commission without having to admit any wrongdoing.
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SEC adopts new oil and gas reserve reporting standards
I am not sure the benefit on probable and possible reserves, hopefully it will spur more investment in the sector but with that said, some investors might get duped by investing on numbers that are not the reality of what the energy company will really produce. The average price rule will give an improved outlook on revenue. If someone has a strong opinion for or against this, I would love to read what you have to say.
News:
U.S. securities regulators adopted rules giving investors a more complete picture of the oil and natural gas reserves that a company holds, the Securities and Exchange Commission said on Monday.
Under the new SEC rules that are supported by the energy industry, oil and gas companies will be allowed to disclose their probable and possible reserves to investors. Current rules require disclosure of only proved reserves, but many companies provide all three.
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SEC delays action on credit rating agency rules
Not too much of delay but they really need to get these rules in place. Also I feel that a hard look should be looked at in terms of how the credit rating agencies played a part in this crisis. If people broke the law, then they should have to answer for their actions.
News:
U.S. securities regulators on Wednesday delayed action on adopting stricter rules to rein in the credit rating agencies until Dec. 3.
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SEC head calls for transparency on credit default swaps (CDS)
Its great to know that is takes a crisis with global implications to ruin many economies for us to finally to demand disclosure on these huge positions using credit default swaps (CDS). The SEC head, Chris Cox even admitted that the $55 trillion credit defaults market is more than the GNP of all the world’s nations combined, and that credit default swaps “play an important role in the smooth functioning of capital markets.” How can we even talk about this as it is a walk in the part. I believe this is the central reason for the freezing in the global credit markets. No one would want to deal with counter-parties that have this kind of exposure? It will be very interesting in how the various government bodies decide to deal with this problem and the precedence it will set for decades to come.
News Release:
SEC Chairman Christopher Cox has called on Congress to pass legislation that would make so-called credit default swaps more transparent, including requiring that dealers in over-the-counter swaps publicly report their trades and the trades’ value.
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SEC extends short-sale disclosure order for added transparency
I would like to see naked shorting stopped and enforced and if we can do it without forcing market participates to disclose their transaction data then I am for that as well. Naked shorting seems to be the problem in manipulating companies without actually obtaining the shares to go short.
Release:
On Wednesday the SEC said the short sale reports will supply the agency with important information about the size and change in short sales in particular companies by particular investors.
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