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The Financial Crisis Primer published by the four Republican members of the Financial Crisis Inquiry Commission is pretty damn good.
Liberal critics of the Primer will be upset that it doesn’t mention their usual hobby-horses: no lambasting of pay structures, no tut-tutting about deregulation, no wailing about predatory lending, none of the tin-foil hat crowd’s worries about “shadow banking.”
Instead, the Primer gets right down to answering a few very basic—and very important—questions. The main questions are:
The Securities and Exchange Commission has begun digging into the earliest stages of the mortgage securitization process, according to Reuters .
Sources tell Reuters that the SEC is looking into whether loans were properly transferred to the trusts that issued mortgage-backed securities. The commission has sent Bank of America, Citigroup, JP Morgan Chase, Goldman Sachs, Wells Fargo and others subpoenas asking about their role as "master servicers" in mortgage securitization deals.
The latest probe is apparently an off-shoot of the probe into foreclosure practices.
The good news about yesterday's arrests is that federal authorities only arrested people who, if the allegations are correct, are truly bad guys.
There has been a lot of fear that the government was seeking to criminalize legitimate research that uncovered non-public information, which could affect the price of publicly traded securities. Much of the information we had about the nationwide insider-trading dragnet has come through leaks to The Wall Street Journal, creating an atmosphere of uncertainty and paranoia. Did the government have some new theory of insider trading that could include a much broader range of conduct?
In a word, the message of Wednesday’s meeting between President Obama and a group of invited CEOs was: jobs. After the meeting, my job was to stand outside the appointed venue \(Blair House\) and target CEOs for commentary. Some of them stopped—here’s what they had to say:
Moody's Cuts Ireland Five Steps (New York Times) "Even as Europe’s leaders were praising the Irish government’s deficit-cutting efforts, the country received a dramatically different verdict Friday from a credit rating agency: a steep downgrade and a warning of more to come. Having pledged late Thursday to do 'whatever is required' to contain the debt crisis and defend their embattled currency, European Union leaders reconvened for the final day of a summit meeting. In the draft of a closing statement, the leaders welcomed the 'impressive progress' in Dublin toward meeting the stiff conditions set for its recent bailout, including adoption of steep budget cuts. Moody’s Investors Service had a different assessment, however. It cut Ireland’s credit rating by five notches to Baa1, with a negative outlook, from Aa2 and it warned further downgrades could follow. The rating remains investment grade but if it were to move down by three more notches, Irish debt would be classified as junk."
"Markets torn by EU debt deal, Irish downgrade" \(Yahoo Finance via AP\) "European stocks traded flat Friday after EU leaders agreed to create a system to solve future debt crises, but a sharp ratings downgrade of Irish government bonds underscored the scale of Europe's short-term problems. Outside Europe, sentiment was buoyed somewhat by upbeat U.S. economic figures and indications Chinese policymakers are reluctant to raise interest rates. Asian shares rose and U.S. pre-open futures pointed slightly up. Britain's FTSE 100 and Germany's DAX were both flat, at 5,879.38 and 7,022.21. France's CAC-40 was 0.3 percent higher at 3,898.40. Asian markets closed mostly higher and Wall Street was expected to edge up on the open—Dow futures were 3 points higher at 11,434 and Standard & Poor's futures were up 0.1 point at 1,238.60."
CNBC's John Carney on Today's Arrests(CNBC) "Federal authorities arrested four suspects on insider trading charges involving a wide range of technology companies, escalating the recent crackdown on Wall Street hedge funds and expert networks. The arrests occurred Thursday in Boston, Massachusetts, Round Rock, Texas, Santa Clara and San Diego, California. The charges include four different counts of wire fraud and securities fraud. More arrests are expected in January."
4 Arrested in Insider Trading Investigation \(NY Times DealBook\) The arrests advance the government’s focus on so-called expert-network firms, which have emerged over the past decade as the research departments of large investment banks have retrenched. Another reason for their growth is Regulation Fair Disclosure, a decade-old Securities and Exchange Commission rule that requires publicly traded companies to disclose material information to all investors at the same time. That rule, known as Reg FD on Wall Street, left information-hungry hedge funds looking for new ways to gain an investment edge.
No doubt more than a few eyebrows will be cocked when the eyes below them come across Advanced Micro Devices statement that it was the victim of insider trading.
“It appears that AMD is the victim of an insider trading scheme,” AMD said in statement.
Why is it that we don't see more media coverage in the U.S. about the debt crisis in the Eurozone?
Such questions often have complex cultural, geopolitical explanations.
But maybe not this time. The answer may be as simple as this: Because it's not our money.
Let's begin with a specific example.
While hedge fund employees breathed a sign of relief today when they learned that none of their numbers had gone down in the big insider trading sweep today, a close read of one of the criminal complaints filed in federal court today reveals that New York hedge funds have a mole in their midst.
The mole is referred to as CW-5 in the criminal complaint filed in a federal court in New York City today. According to the complaint, CW-5 is an employee of a New York based “hedge fund” referred to as “Hedge Fund -2.” \(“Hedge Fund -1” is most likely Spherix Capital, which was started by Richard C.B. Lee, a former SAC Capital employee who is identified as CW-1 in the complaint.\)
The New York attorney general's office has subpoenaed about a half-dozen high-frequency trading firms, a source told CNBC.
China's Weibo has priced its initial public offering at $17 per American Depository Share, at the bottom of its planned range.
Two high profile tech earnings misses soured the mood after-hours Wednesday and could weigh on stocks.