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JPMorgan Pays for Shorting Madoff Without Telling Anyone

bloomberg.com

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Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#11

Post by spinlock »

colinbartlett wrote: post #2

JPMorgan "Pays" but barely. $1.7 billion is nothing out of $100 billion in annual revenue and $2.5 trillion in assets.

So, you think the punishment should fit the revenue rather than the crime? JPM reported Madoff to the SEC in the 90's. They also reported him to the British banking authorities much more recently. The "crime" is actually looking at Madoff's activities and divesting themselves from him.

I have no problem with JPM shorting or otherwise taking advantage of this fraud. Given that the SEC is asleep at the switch, the shorts are the best way to protect the financial system.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#12

Post by joosters »

spinlock wrote: post #11
colinbartlett wrote: post #2

JPMorgan "Pays" but barely. $1.7 billion is nothing out of $100 billion in annual revenue and $2.5 trillion in assets.

So, you think the punishment should fit the revenue rather than the crime? JPM reported Madoff to the SEC in the 90's. They also reported him to the British banking authorities much more recently. The "crime" is actually looking at Madoff's activities and divesting themselves from him. I have no problem with JPM shorting or otherwise taking advantage of this fraud. Given that the SEC is asleep at the switch, the shor…

I have no problem with JPM shorting or otherwise taking advantage of this fraud

How is that not profiting from crime?

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#13

Post by cma »

pfraze wrote: post #7
this_user wrote: post #5

Earlier quoted context omitted.

Revenue is not income. $1.7 bn is a non-trivial amount even for them. Add to that the $13 bn they had to pay on fraudulent mortgage-bonds some weeks ago and things are starting to sum up.

Wasn't like 7 bn of that tax-deductible?

They paid taxes on the ill-gotten gains, so when the gains are taken away in a judgement, there is no need to pay whatever weird quasi-reverse taxes you are thinking of. If the judgment isn't enough after a tax deduction, then just up the judgement.

Don't complicate the tax code even further making it start taxing losses.

(One fair point might be if they paid capital-gains rates or foreign taxes in Ireland or something on the gains from shorting Madoff and yet could deduct the judgment from full US taxes. I don't think that was the case.)

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#14

Post by latj »

this_user wrote: post #5
colinbartlett wrote: post #2

JPMorgan "Pays" but barely. $1.7 billion is nothing out of $100 billion in annual revenue and $2.5 trillion in assets.

Revenue is not income. $1.7 bn is a non-trivial amount even for them. Add to that the $13 bn they had to pay on fraudulent mortgage-bonds some weeks ago and things are starting to sum up.

"them".

This is the problem. "They" made billions of dollars illegally. Now, "they" are paying back 1.7 billion dollars. The question is- is it still the same "humans" behind the pronoun?

Certainly Madoff is not paying the lifetime of fuck-you money he has blown. At least now he is in jail (or "camp" as he thinks of it).

The rest of "them" wont do a single day in prison.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#15

Post by twoodfin »

joosters wrote: post #12
spinlock wrote: post #11

Earlier quoted context omitted.

So, you think the punishment should fit the revenue rather than the crime? JPM reported Madoff to the SEC in the 90's. They also reported him to the British banking authorities much more recently. The "crime" is actually looking at Madoff's activities and divesting themselves from him. I have no problem with JPM shorting or otherwise taking advantage of this fraud. Given that the SEC is asleep at the switch, the shor…

I have no problem with JPM shorting or otherwise taking advantage of this fraud How is that not profiting from crime?

If you believe, say, that Apple has been faking its revenue and profit numbers for the last 10 years, you can go ahead and short them on the expectation that they'll get caught, Tim Cook will go to jail and the stock will tank. In the meantime, the presence of your short will in some small way drive down the price of AAPL, or at least signal to the rest of the market that somebody believes things are not as rosy for the company as the current price indicates.

That's profiting from crime, in a way, but it's all you can do when it's not within your power to subpoena Apple internal memos or what have you.

As I read this article, this is more or less this is what JPM is being punished for doing, because in theory the small exotics group in the UK could have called the US headquarters and inspired them to contact the SEC, which didn't happen.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#16

Post by andylei »

joosters wrote: post #12
spinlock wrote: post #11

Earlier quoted context omitted.

So, you think the punishment should fit the revenue rather than the crime? JPM reported Madoff to the SEC in the 90's. They also reported him to the British banking authorities much more recently. The "crime" is actually looking at Madoff's activities and divesting themselves from him. I have no problem with JPM shorting or otherwise taking advantage of this fraud. Given that the SEC is asleep at the switch, the shor…

I have no problem with JPM shorting or otherwise taking advantage of this fraud How is that not profiting from crime?

Let's say I had a short equity position in some company. Now, some bad guy comes and murders the CEO of that company, tanking the equity. A crime was committed, and I profited. Did I profit from a crime? Did I do something wrong?

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#17

Post by twoodfin »

rayiner wrote: post #8

Nice summary of the situation. This is the takeaway for me: "If you think of JPMorgan's businesses as operating more or less independently, but occasionally making each other money by cross-selling, then this mess makes more sense. A London investment bank that considered and rejected a derivative-linked investment in Madoff would have no obligations to report its suspicions to U.S. regulators. A boring custody bank…

Agreed. All I could think reading this was how much I wish every Matt Taibbi "bankster" screed posted to hn or reddit had been replaced with a link like this.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#18

Post by dman »

rayiner wrote: post #8

Nice summary of the situation. This is the takeaway for me: "If you think of JPMorgan's businesses as operating more or less independently, but occasionally making each other money by cross-selling, then this mess makes more sense. A London investment bank that considered and rejected a derivative-linked investment in Madoff would have no obligations to report its suspicions to U.S. regulators. A boring custody bank…

Bloombergs coverage has always been pretty balanced and factual.

Disclaimer: I worked for them in a past life but continue using their website as my primary news source long after having left the company.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#19

Post by sjehay »

joosters wrote: post #12
spinlock wrote: post #11

Earlier quoted context omitted.

So, you think the punishment should fit the revenue rather than the crime? JPM reported Madoff to the SEC in the 90's. They also reported him to the British banking authorities much more recently. The "crime" is actually looking at Madoff's activities and divesting themselves from him. I have no problem with JPM shorting or otherwise taking advantage of this fraud. Given that the SEC is asleep at the switch, the shor…

I have no problem with JPM shorting or otherwise taking advantage of this fraud How is that not profiting from crime?

If they are short Madoff, it's in their interest for its value to go to zero - i.e. him getting shut down by law enforcement makes them a lot of money, so their incentives are very much aligned with those of the regulators. (If you're cynical, you might argue that in an ideal world they'd like the rest of the world to remain in the dark for long enough for them to build up a sizeable position first). Conversely, investors would benefit from it finding more investors before being shut down so they could cash out first.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#20

Post by colinbartlett »

refurb wrote: post #3
colinbartlett wrote: post #2

JPMorgan "Pays" but barely. $1.7 billion is nothing out of $100 billion in annual revenue and $2.5 trillion in assets.

Did you read the article? The basically got fined for not doing the SEC's job.

Yes, I read the article.
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