Happy Thursday. To our great relief, Bill Ackman has never accused the Morning Six-Pack of being a pyramid scheme.» Read More
CFO's commit accounting fraud because of greed and because of pressure from their bosses.
The Wall Street Journal has revealed the identity of the government's cooperating witness CW-2.
According to the article by Susan Pulliam, CW-2 is Karl Motey — a 46 year old technology analyst who runs Coda Group, a research firm in Los Altos, California.
The Journal cites a "person familiar with the matter" as the source of the revelation: Neither Motey, nor the FBI, nor the Manhattan U.S. attorney's office would comment.
The Journal reports that "Mr. Motey [is] near the center of the action in helping federal authorities develop evidence to bring charges" We already know about the witness, identified as CW-2, from the government's complaint.
The WSJ reports that: "A key cooperating witness working for the U.S. in a major insider-trading investigation made more than 60 calls with corporate managers, seeking to gather evidence for the government…"
Animal rights radicals have been harassing Goldman Sachs employees in Washington, DC, according to a lawsuit filed in a DC Superior Court.
The radicals are members of two groups Stop Huntingdon Animal Cruelty (SHAC) and Defenders of Animal Rights Today and Tomorrow (DARTT). They accuse Goldman of earning blood money and torturing puppies.
Goldman filed a complaint alleging that the SHAC and DARTT members have been showing up with bullhorns and placards alleging that Goldman murders dogs. They've also been showing up at the home of Michael Paese, Goldman's head of government affairs.
The suit seeks a permanent injunction against members of the group from committing violence, trespassing or making threats against Goldman employees.
Citigroup analyst Jessica Fashano, 27, jumped to her death from the roof of the Trump Place apartment tower on Riverside Boulevard yesterday.
Why she chose the Trump building, where she did not live, is among the many unanswered questions surrounding her death.
A woman who is a resident of the building reported seeing Ms. Fashano in the elevator: Fashano reportedly asked the woman how she could get to the roof.
Executives at Lehman Brothers and Ernst & Young should breathe a sigh of relief upon hearing the news that New York prosecutors are planning to file civil fraud charges alleging the accounting firm was complicit in misleading investors in the investment bank .
The charges will reportedly arise from Lehman's infamous Repo 105 transactions deals that Lehman allegedly put in place to make its balance sheet look healthier at the moment it was reporting its quarterly results to investors. Basically, Lehman said it was selling assets in deals that were really nothing more than short-term loans. The bankruptcy examiner highlighted these loans back in March.
Why should executives at Lehman and Ernst & Young be relieved?
The decision by the European Union last week to create a permanent bailout fund may not end the sovereign-debt crisis but it will—eventually—end the European Union as we know it.
The idea behind a common currency was to allow free trade and investment between European countries without the risk of competitive currency devaulations. It was supposed to make Europe more inviting to global capital and credit investment. It was an attempt to create monetary stability without the imposition of a centralized fiscal and political regime.
All of these were noble goals. But the attempt has failed.
The permanent bailout fund will create moral hazard, inviting euro zone members to engage in budgetary brinksmanship and free-riding that will make bailouts more likely. To ameliorate the moral hazard—and to satisfy the demands of the Germans—the Europeans promise that the bailouts will come with “strict conditionality.”
Quantitative Easing at Least Modestly Successful, Says Fed's Bullard (CNBC) "US economic growth will be stronger than previously expected in 2011 and quantitative easing has been "at least modestly successful so far," James Bullard, President of the Federal Reserve Bank of St. Louis said on Monday. 'I do think GDP will be stronger in 2011 than people thought ...60 days ago,' Bullard told CNBC. Squawk Box is live at FedEx's main hub in Memphis, which falls under the St. Louis district. 'The holiday season is looking good, retail sales are good. That bodes well for the current quarter and the coming quarters,' he said."
Tensions Rising on Korean Peninsula (Wall Street Journal) "South Korea on Monday afternoon test-fired artillery from an island North Korea attacked last month, defying North Korean threats of another attack and asserting its rights in a maritime area it has controlled since the Korean War of the 1950s. North Korea called Monday's drills, which began at 2:30 p.m. local time (12:30 a.m. Eastern time) at a marine outpost on Yeonpyeong Island, a 'reckless military provocation.' But North Korea said after the drills ended that it was holding its fire because Seoul had changed its firing zones. The two Koreas have been drawn to the brink of open fighting by North Korea's apparent effort to redraw the maritime boundary near the island and four others controlled by South Korea in the Yellow Sea off the countries' west coast."
Defining Employment Down: Temps Become Larger Share of Labor Market (CNBC via New York Times) "Despite a surge this year in short-term hiring, many American businesses are still skittish about making those jobs permanent, raising concerns among workers and some labor experts that temporary employees will become a larger, more entrenched part of the work force. This is bad news for the nation’s workers, who are already facing one of the bleakest labor markets in recent history. Temporary employees generally receive fewer benefits or none at all, and have virtually no job security. It is harder for them to save. And it is much more difficult for them to develop a career arc while hopping from boss to boss."
CNBC's Jeff Cox Reports on Pimco's Shift into Preferred Stock (CNBC) "Bond king Bill Gross' move into preferred stocks could act as a catalyst for an investment class struggling to regain its luster after the financial system collapse. Pimco's somewhat surprising disclosure this week in a regulatory filing that it would be moving as much as 10 percent of its assets from the Pimco Total Return Fund into preferreds and convertibles is a relatively strong indictment against the bond market's prospects."
Incoming House Infrastructure Committee Chair Sees Build America Bond 'Reincarnation' (Bloomberg) “I can almost guarantee a reiteration of the Build America Bond program,” Mica, a Florida Republican, said in an interview in Washington today. “We’re working to find a reincarnation.”
Huge $7.2 Billion Settlement in Madoff Trust Case \(Wall Street Journal\) "The estate of Jeffry Picower, a major investor in Bernard Madoff's Ponzi scheme, has agreed to repay $7.2 billion to victims of the fraud in a settlement with the trustee overseeing the investment firm's bankruptcy and federal prosecutors in Manhattan, according to people familiar with the situation. The settlement is by far the largest related to the Ponzi scheme, and would quadruple the amount of money recovered for victims to date. Preet Bharara, the U.S. Attorney in Manhattan, called the settlement a "truly staggering sum, which was really always other people's money."
The Bank of England and the European Central Bank announced a new swap line agreement today. But Portugal, Greece, and Spain need not apply—it only benefits the Emerald Isle.
Specifically, the BoE/ECB agreement creates a facility for providing Ireland with up £10 billion in sterling liquidity, should the need arise.
A swap line is a mechanism for central banks to exchange currency.
The technical name—a central bank liquidity swap—makes the concept sound more difficult than it is. The idea is pretty straightforward: Two central banks agree to exchange a fixed amount of currency, while simultaneously arranging a future date to swap the currencies back, effectively unwinding the position. The central bank on the receiving end can then inject the foreign currency into its own economy. This is useful, because private firms often have payables in foreign currencies. \(In this example, firms in Ireland may owe payments in British pounds.\) You can read more about swap lines on The Federal Reserve Bank of Atlanta's blog .
Some government authorities question whether misdeeds are not just a few bad actors, but rather a flaw that runs through the banking industry. The NYT reports.
"You're trapped. Every individual you know is finally saying, 'I got to get in … I missed it,'" Welch told CNBC on Thursday.
U.S. monthly retail sales figures are expected to show a recovery from January's weak, weather-battered performance.