Financial News

[southsider2k5]

..so if they never face problems if they turn a blind eye to these trades that eventually wind up positive after enough bets, how do you get to this:

 

 

 

 

Or are you saying that what this guy did never ends up profitable?

 

I have yet to talk to anyone who has had something like this come out profitable on a scale like this.

[southsider2k5]

I have yet to talk to anyone who has had something like this come out profitable on a scale like this.

 

It is also worth pointing out that regulatory oversight is not done internally, at least in the US. ROC's have to be filled with people who are not employed by the firm, and they have a fiduciary duty to catch this stuff. If they intentionally ignored something like this, they would go to jail too.

[StrangeSox]

Hey jenks, I know you've pushed for student loan forgiveness in here before. Now you have an ally in MoveOn!

 

 

[southsider2k5]

So it sounds like this UBS guy was losing in the index funds. Sounds like his initial bet wasn't very big at all, but it snowballed. Apparently they do require hedges, so he faked them. He also used UBS ETFs as his hedges, which kept everything internal. Also it will be an independent third party to conduct the investigation, and not the British or Swiss regulatory agencies, which is weird.

[Jenksismyhero]

Hey jenks, I know you've pushed for student loan forgiveness in here before. Now you have an ally in MoveOn!

 

Makes me feel dirty, but I'll take it. And I don't even want total forgiveness. Just give a year or 2 year break. Total US Student Debt is going to hit a trillion dollars this year. That's a lot of money to stimulate the economy.

[StrangeSox]

[NorthSideSox72]

Yeah, overregulation isn't really the main problem for most industries. For some it is, and for others it is the regulatory uncertainty, but mostly the fear of supposed overregulation is overblown by Republicans for political reasons.

 

And um... why does Competition from Big Corporations get two mentions?

 

[Balta1701]

And um... why does Competition from Big Corporations get two mentions?

[StrangeSox]

huh, it looks like someone modified (or screwed up when extracting) that graph from the original pdf report

 

http://www.smallbusinessmajority.org/energ...port_092011.pdf

[Cknolls]

Isn't #2 a result of #6?

[StrangeSox]

possibly

[southsider2k5]

So very clear hiring practice and Chinese Wall issues at UBS.

 

http://www.securitiestechnologymonitor.com...lyClose__091911

 

ROGUE TRADER, Take 3: It's More than a Systems Issue. It's a People Issue

 

September 19, 2011

Tom Steinert-Threlkeld

 

TORONTO, Can. -- The problems that led to billion-dollar frauds at Barings Bank in 1995, Societe General in 2008 and now UBS represent a recurring problem, the chief technologist for the financial services industry at Hewlett-Packard Co. said Monday.

 

Like what you see? Click here to sign up for Securities Technology Monitor's weekly newsletter to get the latest news and analysis that matters to the effective operation of capital markets.

 

In each case, the trader, be it Nick Leeson, Jerome Kerviel or Kweku Abodoli, had control not just over the front office, where trades are placed, but the middle and back office, where trades are confirmed and settled.

 

That's a governance issue, said Larry Ryan, the HP technologist, in an interview at SIBOS 2011, the global banking and securities operations conference.

 

In the most recent case, Abodoli first worked in UBS' back office and learned in apparently intimate detail how its systems for affirming, confirming and settling trades worked. He then could put his knowledge to use as a trader, when his positions put him in a corner.

 

"This is really a governance policy issue,'' said Ryan. "You really have to keep them separate."

 

First, Abodoli appears to have covered his tracks by creating false trades with internal desks at UBS. Then, he proceeded to create false trades in exchange-traded funds with outside parties, when his position got worse.

 

In effect, knowledge of systems can trump systems -- unless your systems watch not just for unusual trades, but unusual behavior.

 

"It's more than a systems issue,'' Ryan said. "It's a people issue."

 

This does not necessarily mean that a trading firm should never hire anyone from the firm's back office, although that might be an increasing trend in governance, after the UBS events.

 

But auditing all trading and looking for patterns in wider arrays of data than in the past will become a norm, Ryan said. Tracking where data goes and starting to collect data from those sources will become part of the ongoing operations at investment banks, he suggests.

 

"Auditability is absolutely key,'' he said. "You have to capture more than you think."

 

That's because there's no preset set of flags that captures all flagrant behavior.

 

"Very often these behaviors may be very difficult to know about, ahead of time,'' he said

[NorthSideSox72]

So very clear hiring practice and Chinese Wall issues at UBS.

 

http://www.securitiestechnologymonitor.com...lyClose__091911

Well, that was precisely one of the two scenarios I mentioned as possible.

 

A lot of firms, including one I used to work for, specifically forbid moving from any sort of back office tech, compliance or ops position, into a position involving trading, or vice versa... for exactly this reason. And those who don't forbid it, rule number one is, if someone moves from one area to another, you have to TURN OFF THEIR OLD ACCESS. There aren't enough DUH's in the world for this. It may even rate an 80's style DUH HICKEY!!!

 

Also, even if this is all true, there is still a significant chance that someone else knew about it. Furthermore, even if all that and more is true, UBS also must have some compliance and audit issues in addition to a Chinese Wall problem, in order for this to occur in this way.

 

UBS really, really f***ed up here.

 

[StrangeSox]

GOP leaders have sent a letter to Bernenke demanding that he ignore the fed's dual mandate and do nothing to help the stagnant economy.

[southsider2k5]

Well, that was precisely one of the two scenarios I mentioned as possible.

 

A lot of firms, including one I used to work for, specifically forbid moving from any sort of back office tech, compliance or ops position, into a position involving trading, or vice versa... for exactly this reason. And those who don't forbid it, rule number one is, if someone moves from one area to another, you have to TURN OFF THEIR OLD ACCESS. There aren't enough DUH's in the world for this. It may even rate an 80's style DUH HICKEY!!!

 

Also, even if this is all true, there is still a significant chance that someone else knew about it. Furthermore, even if all that and more is true, UBS also must have some compliance and audit issues in addition to a Chinese Wall problem, in order for this to occur in this way.

 

UBS really, really f***ed up here.

 

Yep. I do agree someone else was involved. It seems way too easy otherwise.

[southsider2k5]

Email going around today...

 

There is a growing concern over an organized attack on several financial institutions planned for high-noon today. That includes:

 

The Fed

B of A

Wells Fargo

Goldman

Citi

NYC Police

… and others

 

Up to date information can be found here:

 

http://anonpad.org/ep/pad/view/WallStDDOS/y55FgxYx4s

 

[NorthSideSox72]

Email going around today...

LOL, no way I'd click that link. And since when is NYPD a financial institution?

 

[southsider2k5]

LOL, no way I'd click that link. And since when is NYPD a financial institution?

 

Trust me, its safe.

[StrangeSox]

I'd guess it's related to the #occupywallstreet protests going on this week. It's past 12PM ET so maybe this was a hoax or they called it off?

[southsider2k5]

I'd guess it's related to the #occupywallstreet protests going on this week. It's past 12PM ET so maybe this was a hoax or they called it off?

 

I'm not sure about that or not, but I will say it was taken very seriously by those who matter.

[southsider2k5]

You'll excuse me while I go shoot myself for agreeing with Bill Clinton now.

 

http://www.politico.com/news/stories/0911/64024.html

 

Former President Bill Clinton says now is not the time to hike taxes.

 

“I personally don’t believe we ought to be raising taxes or cutting spending, either one, until we get this economy off the ground,” Clinton told Newsmax in an interview on Tuesday. “This has been a dead flat economy.”

 

Clinton, who is hosting the Clinton Global Initiative’s annual meeting in New York City this week, said that until the country’s debt is reduced, he doesn’t believe cutting or raising taxes or boosting spending are the solution to bringing the country to a full employment economy.

 

“If we cut government spending, which I normally would be very inclined to do when the deficit’s this big, with interest rates already near zero, you can’t get the benefits out of it,” Clinton said. “So what I’d like to see them do is come up with a bipartisan approach, starting with the payroll tax cuts because they have the biggest return.”

 

He added, “What I would like to say to both Speaker Boehner and to the president is, OK, you both have your deal. Go work it out. Meanwhile, focus on putting America back to work now, because it just confused Americans.”

 

Earlier this week, Clinton suggested that Republicans should stop arguing against Obama’s proposal to raise taxes on the rich.

 

“The Republicans in Washington always say the same thing,” Clinton said, accusing the GOP of being locked in to opposing ending the Bush-era tax cuts.

 

“It’s an insult to those people [the wealthy],” Clinton added. “They don’t mind being asked to pay their fair share.”

 

Clinton criticized the GOP’s “anti-government extreme position” on tax hikes, saying, “It scares people around the world.”

 

President Barack Obama’s $3 trillion deficit-reduction plan includes a tax code reform that would raise $1.5 trillion in new revenues, mostly from the country’s wealthiest income earners.

 

In the Newsmax interview, Clinton also cautioned against new government regulations.

 

“What I find is a lot of business people can be supportive of new regulations and new standards, but particularly in a fragile time they don’t like to have too many things changing at once,” he said. “A business can’t do five things at once and decide whether to get back into the investment business after it’s slow.”

 

Read more: http://www.politico.com/news/stories/0911/...l#ixzz1YbWagyIv

[southsider2k5]

Growth rates were slashed around the world, Europe's manufacturing contracted, and now a slow down in China manufacturing have markets all over the world getting hammered 2-3% overnight. The dollar is up handle, while energies are down 3-4%.

 

Let the double-dipping begin.

[StrangeSox]

AUSTERITY NOW, PROSPERITY SEVERAL DECADES FROM TOMORROW!

[southsider2k5]

AUSTERITY NOW, PROSPERITY SEVERAL DECADES FROM TOMORROW!

 

But that can't be right... the stimulus worked!

[NorthSideSox72]

Growth rates were slashed around the world, Europe's manufacturing contracted, and now a slow down in China manufacturing have markets all over the world getting hammered 2-3% overnight. The dollar is up handle, while energies are down 3-4%.

 

Let the double-dipping begin.

LOL, come on Mike, you see one day like this as any indicator of any long term anything? You know better than that. The other day when we saw big jumps in stocks, big jumps in home sales, and a slight surprise better UE filings report, that didn't mean RECOVERY!!!! either.

 

I'm not convinced of a double-dip just yet. Wouldn't dismiss it either though.