Is the Federal Reserve Right?

Federal Reserve

    At the recent FOMC meeting, Bernanke was not clear about timing and even course of the Federal Reserve in ending bond buying program.  Perhaps intentionally, his uncertainty created a lot of volatility in the market. Given this volatility, I think it would be very difficult for the Federal Reserve to signal any type of exit strategy without causing some form of market response. In a way, it makes Federal Reserve a hostage to the markets. … [Read more...]

Swap Regulators consider $3 Billion threshold for swap-dealer registration

U.S.  Swap Regulators are considering a threshold above $3 billion for determining which banks, hedge funds and energy firms are swap dealers under the Dodd-Frank Act. According to various news sources, the SEC and CFTC are discussing when the “aggregate gross notional value” of a company’s dealing business requires registration as a swap-dealer.      The initial proposal of $100-million threshold was made in 2010.     This … [Read more...]

Compliance Comes to Capitol Hill

President Obama signed into law a bill tightening insider-trading rules on members of Capitol Hill and other government officials prohibiting them from profiting on material nonpublic information they gain access to during their employment. The new legislation referred to as the STOCK Act, the Stop on Congressional Knowledge Act.  The Act prohibits lawmakers, their families and staff, as well as other executive and judicial branch employees … [Read more...]

EU Approved Clearing Rules for OTC Derivatives

To protect financial markets, EU approved legislation that would force trading of some over-the-counter derivatives through clearinghouses. The legislation consists of set of rules that allows European Union regulators to decide on types of derivatives that should be centrally cleared.     The law also sets rules on transparency, management of clearinghouses, including capital reserves they must hold to protect themselves from … [Read more...]

High-Frequency Traders May Face EU Fees

Under European Union plan to limit market abuse, high-frequency traders and similar investors may be required to pay penalty fees when they create market volatility by placing excessive numbers of canceled orders. The introduced fees would be similar to the fee structure introduced last year on Nasdaq OMX Group Inc. (NDAQ) exchanges in Nordic countries. The plan addresses May 2010 “flash crash” during which the Dow Jones Industrial … [Read more...]

Bank of America Settle Mortgage Securities Action for $315 Million

Bank of America Corp. reached a $315 million settlement with a group of investors who sued its Merrill Lynch unit claiming they were misled about mortgage- backed securities. According to a court filing, holders of the asset-backed certificates sued Merrill Lynch in December 2008 claiming false and misleading prospectus statements related to the securities. The investors argued that inaccurate statements were made about qualifications of … [Read more...]

CME May Face Liability Related to MF Global

According to various sources, CME Group, Inc may face liability for misleading regulators over what it knew about MF Global Holdings Ltd.     Examiners from Chicago-based CME Group found unexplained wire transfers at the broker-dealer unit of MF Global and a $900 million shortfall in client funds during the weekend the failing broker MF Global was talking with possible buyers.    CME, the world’s largest futures exchange oversees its … [Read more...]

Japan Regulators and Tokyo Stock Exchange team up on Olympus Fraud

Japan’s Financial Service Agency will work closely with the Tokyo Stock Exchange to urge Olympus Corp. to disclose facts behind its loss cover-up. Olympushas lost more than 500 billion yen ($6.4 billion) of market capitalization since mid-October, when the company ousted President Michael C. Woodford after accusations of fraud.    Since Woodford’s whistle blowing, the company has disclosed that three executives helped conceal decades of … [Read more...]

SEC Suspended Employees and Cut Pay for Oversight Related to Madoff

The U.S. Securities and Exchange Commission (SEC) disciplined eight employees for agency’s oversight related to Bernard Madoff’s Ponzi scheme.    The punishments are ranging from suspensions to written reprimands. The sanctions were based on Inspector General H. David Kotz’s 2009 report on the agency’s dealings with Madoff.   According to the report, the SEC could have uncovered the Ponzi scheme well before Madoff confessed in … [Read more...]