SEC and Other Investigations of Illegal Trading
- KLR
- Sinewave
- Kirk
- Sinewave
- reporter20
- Kirk
- Sinewave
- SteveT
- KLR
- SteveT
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» KLR - JACK GRUBMAN ADMITS HYPING TOYS ‘R’ US STOCK
In response to message posted by SteveT:JACK GRUBMAN ADMITS HYPING TOYS ‘R’ US STOCK IN EXCHANGE FOR CHICKEN DANCE ELMO
Batteries Not Included, Citigroup Claims
Salomon Smith Barney star analyst Jack Grubman admitted today that he raised his rating on Toys ‘R’ Us stock in the hopes of securing a hard-to-find Chicken Dance Elmo toy for his twin children.
Emails exchanged between Mr. Grubman and Sanford Weill, the CEO of Solomon’s parent company Citigroup, reveal the lengths to which Mr. Grubman was willing to go to obtain the coveted chicken-dancing toy before the holiday shopping season got under way.
“Sandy, I am prepared to rate Toys ‘R’ Us a ‘strong buy’ in exchange for a Chicken Dance Elmo,” Mr. Grubman wrote in one of the emails, published today in The Wall Street Journal. “But whatever you do, don’t let the Wall Street Journal ever get their hands on this email.”
Mr. Weill, trying to control damage from the roiling Chicken Dance Elmo scandal, issued a statement today minimizing the quid-pro-quo nature of Mr. Grubman’s hyping of Toys ‘R’ Us stock.
“While Mr. Grubman did in fact obtain a Chicken Dance Elmo from Toys ‘R’ Us, batteries were not included,” the statement read.
News of the scandal pummeled the stock of Toys ‘R’ Us, which was already in a free-fall last week after the retailing giant admitted “a major grammatical error” in its company name.
“It should be We 'R' Toys,” the terse company statement read.
The company also admitted discovering that the “R” in its logo was printed backwards and estimated that it would cost upwards of $30 billion to correct the mistake.
-- posted by KLR
» Sinewave - Wall Street faces $1 billion in fines
Here's an interesting investor confidence booster...Citigroup faces $500 million in fines
By Charles Gasparino
THE WALL STREET JOURNAL
Nov. 22 — Regulators from the New York state attorney general’s office, the Securities and Exchange Commission and others are discussing fines against Wall Street that could total more than $1 billion, as they head into the final stages of a broad investigation into whether securities firms misled small investors with faulty research during the stock-market boom of the 1990s.
CURRENTLY UNDER DISCUSSION are fines that could be more than $500 million from Citigroup Inc. and about $200 million from Credit Suisse Group’s Credit Suisse First Boston securities unit, according to people close to the matter. Spokeswomen from Citigroup and CSFB had no comment.
At the same time, regulators are seeking fines of about $75 million each from several other major securities firms, including Goldman Sachs Group, Morgan Stanley, Lehman Brothers Holdings Inc., Deutsche Bank AG, UBS AG and Bear Stearns Cos., according to people familiar with the matter. Representatives of these companies declined to comment.
Regulators could also be seeking fines of less than $60 million each from the U.S. Bancorp Piper Jaffray unit of U.S. Bancorp, and Thomas Weisel Partners LLC, these people say. A Piper Jaffrey spokeswoman said “based on everything we know the findings from the regulators would not be characterized as egregious.” A Weisel spokeswoman said she would “be surprised if those were regulators’ conclusions because they would be inconsistent with the facts and the firm’s own review of the issue.”
The penalties have yet to be finalized, and these terms could ultimately change if the firms adopt strong internal controls that reflect what the regulators have been seeking. And it isn’t clear whether the firms would admit to any misconduct as part of the accords. In such securities-law pacts, firms often agree to pay fines without admitting or denying the allegations.
In any event, the upshot is that Wall Street’s largest firms could end up paying penalties totaling more than $1.1 billion. This would surpass the largest case so far brought by regulators investigating the securities industry, the $1 billion civil settlement to resolve charges of price-fixing on dealers’ price spreads for stocks traded on the Nasdaq Stock Market in 1996.
The penalties sought by regulators involved in the investigation mark the first time that regulators have identified the firms they believe are most culpable for misleading investors with overly optimistic research on investment-banking clients. Beginning Friday, investigators from New York Attorney General Eliot Spitzer’s office, as well as the SEC, the New York Stock Exchange and the National Association of Securities Dealers, will begin holding meetings with the firms to determine final fine levels, according to the people familiar with the matter. Regulators could speak to officials from Piper, Bear Stearns, Citigroup and CSFB as early as Friday, and Weisel on Monday, but the timing could change.
The penalties would be part of a broad settlement that could change the way Wall Street firms distribute stock research to small investors. Regulators currently are negotiating a plan with Wall Street firms to pay as much as $1 billion over five years for independent research to be distributed to small investors along with their own analysis. Thus, the firms ultimately could pay more than $2 billion to end the long-running regulatory investigation. Big institutional investors regularly conduct their own research, as well as receive analysts’ reports from the securities firms.
In recent days, regulators have set several tiers of Wall Street firms based on the level of evidence they have gathered alleging research conflicts. Citigroup’s Salomon Smith Barney investment-banking unit and CSFB are at the top of the list, followed by firms such as Piper, Weisel, Lehman, Morgan Stanley and Goldman Sachs.
Salomon Smith Barney, for its part, has been the subject of several high-profile investigations over the past seven months into the research of its former telecommunications analyst Jack Grubman. More recently, the inquiries, led by Mr. Spitzer’s office, have taken a turn by focusing additionally on the activities of senior Citigroup officials, including its chief executive, Sanford Weill. Mr. Spitzer’s office is scrutinizing whether he pressured Mr. Grubman to rethink his outlook on a major corporate customer, AT&T Corp. Citigroup, and Messrs. Weill and Grubman have denied wrongdoing.
The agreement is far from complete. Mr. Spitzer, for one, has shied away from talking about specific numbers as his team continues to develop evidence in its wide-ranging case against Citigroup. Meanwhile, in recent weeks, Wall Street firms have persuaded regulators to back off a key aspect of the plan: the formation of a panel that would monitor Wall Street research including the distribution of the independent analysis. Instead, regulators and the firms now are examining the possibility of distributing to investors at least two independent sources of stock research in addition to their own, according to people familiar with the matter.
On several occasions, Mr. Spitzer has threatened to break away from the negotiations and bring either civil or criminal cases against firms if the research plan gets watered down. Indeed, Mr. Spitzer recently ordered his top investigators to begin preparing a case against Citigroup sometime after the Thanksgiving holiday if he believes the global resolution falls short, people close to matter say.
Although the broad outlines of a settlement have been under discussion for about a month, both sides now are hoping to reach an agreement after Thanksgiving. The talks have been punctuated by the resignation of SEC Chairman Harvey Pitt and by gains in both houses of Congress by Republicans, who traditionally haven’t been inclined to impose regulations over the securities industry.
-- posted by Sinewave
» Kirk - Re: Wall Street faces $1 billion in fines
In response to message posted by Sinewave_03:Who gets the money? If they divide it up between all of us who invested in the market, then I'll say Yipee! I'd vote for EQUAL distribution... the small time investor with $10K in an Enron or WorldCon 401K was hurt far more than the person with $100M in the market and knew the game.
I say divide the money equally between all that can prove they invested in the stock market.
How many have 401K's? 100M?
$2B divided between 100M people would give us all $20. If there were only 50M, the we get $40. After paying to administer the program, I bet we get two bits.
Of course, the lawyers will charge their fees... it reminds me of the smoking crap where they take money from the cancer stick companies and use it to fund government.... with nothing going to the actual people damaged....
Maybe we have a new role for government? Punish companies that generate cash by using the legal system to take it away from them. Hell, free advice is worth what you pay for it. I do feel sorry for the retail customers who thought their brokers had their best interests in mind rather than the commission they'd earn for churning their accounts with these "analysts reports" that only served to aid in churning.
-- posted by Kirk
» Sinewave - Re: Re: Wall Street faces $1 billion in fines
In response to message posted by Kirk:Who gets the money? If they divide it up between all of us who invested in the market, then I'll say Yipee! I'd vote for EQUAL distribution... the small time investor with $10K in an Enron or WorldCon 401K was hurt far more than the person with $100M in the market and knew the game. I say divide the money equally between all that can prove they invested in the stock market. How many have 401K's? 100M? $2B divided between 100M people would give us all $20. If there were only 50M, the we get $40. After paying to administer the program, I bet we get two bits.
Kirk,
I agree with you about the equal distribution part. I believe the money will go to the state and not to the investors.
The $1 to $2 billion dollars in fines is chump change compared to the $10 trillion dollars they have stolen so far...
From my cynical, bearish, point of view...it's a ploy to instill investor confidence into the first few months of next year...
-- posted by Sinewave
» reporter20 - Re: Re: Re: Wall Street faces $1 billion in fines
In response to message posted by Sinewave_03:Sine
I hope the ploy works 
-- posted by reporter20
» Kirk - Re: Re: Re: Wall Street faces $1 billion in fines
In response to message posted by Sinewave_03:It is a ploy to line the pockets of Spitzer's office or the State of NY is what I fear.... Then he can run for some sort of larger office. It also allows the crooks to say "We've paid our dues".
Kudlow says it is more like McCarthy witch trial as they leaked evidence and such to the press and seemed to settle without trial or due process...
It stinks to high heaven to me... and I feel Citigroup shareholders pay the fine and the true crooks go unpunished and will get their bonus from the board of directors.
-- posted by Kirk
» SteveT - Re: Re: Re: Re: Wall Street faces $1 billion in fines
In response to message posted by Kirk:Kirk I agree Citi shareholders have paid dearly. As well for all shareholders.
Another group that has or will pay is employees. Having a large fine hanging over their heads is a good excuse to tell employees, sorry no raise this year. Those that are required to take and hold company matching 401(k) contributions in company stock may end up paying double. The whole thing stinks!
-- posted by SteveT
» KLR - Securities and Exchange Commission said it brought its first enf
In response to message posted by SteveT:SEC brings Reg FD enforcement actions (RAY, SCUR, SEBL) By Matt Andrejczak
The Securities and Exchange Commission said it brought its first enforcement cases concerning violations of Regulation FD, the rule that stipulates public companies must simultaneously disclose material information to Wall Street firms and small investors. Raytheon (RAY) , Secure Computing (SCUR) , and Siebel Systems (SEBL) each entered into undisclosed settlements, the SEC announced.
-- posted by KLR
» SteveT - Re: Securities and Exchange Commission said it brought its first
In response to message posted by KLR:KLR, thanks for passing that on. It is about time the SEC nail 'em! Since FD went into effect I can't count the number of times I have heard analysts or fund managers admit the violated the spirit of FD on TV or other media outlets.
-- posted by SteveT
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