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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

#71

Post by bobbyi_settv »

josephlord wrote: post #57
ck2 wrote: post #50

What percent of their profit was that and how few months will it take for them to make it up? I think society would happily trade that for actual prison time for a bunch of execs who knew exactly what was going on.

Did you read the full article? I was expecting some evil screwing of their customers and putting themselves massively short on Madoff and them to have got off lightly but actually (based solely on this Bloomberg article) got the impression that the punishment was harsh. From the TFA they were long but in the process of unwinding their position (albeit slightly faster than they helped their customers to do) and they f…

They were obligated to unwind their customers. They were obligated to report the crimes to UK authorities. I'm not impressed by the fact that there are aspects of this where they actually didn't break any laws, and it isn't a compelling defense for why they shouldn't be fined for the parts where they did.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#72

Post by cdash »

3825 wrote: post #60
colinbartlett wrote: post #21

Earlier quoted context omitted.

You did if you had prior evidence that the bad guy was going to murder the CEO.

If I know of a criminal conspiracy and don't report it am I a criminal? It sounds unfair, doesn't it? I mean I didn't take part in the conspiracy or the crime...

Does not sound unfair to me, by not reporting it you have taken part in the conspiracy in my mind, that is if you actually believe it is a real conspiracy and not a bunch of talk.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#73

Post by abofh »

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…

Nobody has a problem with JPM being right; They have a problem with JPM selling wrong while buying right, as that generally suggests negligent advice or fraudulent advice. They can choose, and pay the fine accordingly, like all our citizens.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#74

Post by retube »

bonemachine wrote: post #47
spinlock wrote: post #38

Earlier quoted context omitted.

> When assessing risks of this size, I am glad that JPM seemed to be asking all the right questions about Madoff (which no one else, not even the SEC, was asking), it is funny JPM is being penalized for this. It's amazing what JPM is being held liable for. I think it sets a terrible precedent that they were basically fined $13B for acquiring WaMu and Bear Sterns in the financial crisis. I can't imagine another bank c…

they were basically fined $13B for acquiring WaMu and Bear Sterns in the financial crisis. Ugh. They were fined for selling bad mortgage bonds. Not for acquiring Bear and WaMu. It also ends up being closer to $5B due to tax breaks and other incentives, BTW.

His point is that the majority of the fine levied (80%) against JPM was in relation to WaMu and Bear Stearns behaviour BEFORE JPM bought them. The real crazy tho is that JPM _knew_ that some potentiually dodgy stuff had been going on at WaMu/BS and sought assurance from the regulators that they would not be held liable if they bought these two firms - which they were basically doing as a favour for the US Gov. Then the regulators fucked them anyway.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#75

Post by retube »

twoodfin wrote: post #17
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.

Oh Matt Taibbi is a hack of the worst kind. His bullshit and propaganda infuriate me.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#76

Post by Ntrails »

RockyMcNuts wrote: post #56
bd_at_rivenhill wrote: post #54

Earlier quoted context omitted.

They didn't tell Madoff's banker probably because they couldn't as a result of Chinese wall requirements between the two businesses. They didn't tell the SEC because they were in London, but they did tell the UK authorities. Why didn't the UK authorities figure it out? Why should JPM, which sort-of has the job of detecting fraud, be expected to do better than the regulators for whom it is their primary purpose?

SEC examiner gets duped by fake records and doesn't check the real bank records -> should probably be fired and the agency investigated JPMorgan banker, who has all the cash flows, doesn't bother to notice they don't add up and billions are missing -> should probably be fired and JPMorgan should be fined. One person's incompetence doesn't excuse the other's. Especially when one gets fake records and the other knows t…

Out of all of this the failure of the SEC to say "shit guys, we really could have noticed this, sorry" is pretty damned aggravating.

JPM has plenty they could and should have done better doubtless deserve censure, but it would be nice for the regulators to admit that they did a poor job.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#77

Post by josephlord »

bobbyi_settv wrote: post #71
josephlord wrote: post #57

Earlier quoted context omitted.

Did you read the full article? I was expecting some evil screwing of their customers and putting themselves massively short on Madoff and them to have got off lightly but actually (based solely on this Bloomberg article) got the impression that the punishment was harsh. From the TFA they were long but in the process of unwinding their position (albeit slightly faster than they helped their customers to do) and they f…

They were obligated to unwind their customers. They were obligated to report the crimes to UK authorities. I'm not impressed by the fact that there are aspects of this where they actually didn't break any laws, and it isn't a compelling defense for why they shouldn't be fined for the parts where they did.

I'm not saying that some punishment may have been appropriate but 1.7Bn plus damages on top seems plenty based on my understanding from the article rather than that they got off lightly as suggested by the post I was responding to.

The relevance of the report in the UK is that it suggests not reporting to the US was oversight rather than a decision to take commercial advantage of the knowledge rather than bring in the authorities (unless they were counting on the UK authorities being useless).

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#78

Post by ddebernardy »

spinlock wrote: post #67
ddebernardy wrote: post #64

Earlier quoted context omitted.

> No, the Apple example is excellent. I forget what the name of the blog is but there's an investor who investigates firms for fraud, shorts their stock, then publishes his finding. It's not illegal in the slightest and is a public service. Err... If you're thinking about the handful of self-proclaimed "activist investors" who frequently end up massively short after "investigating" the stocks they abandon, please spe…

I'm thinking of Guys like Chanos. http://en.m.wikipedia.org/wiki/James_Chanos

Ya, check him out on deepcapture. His name shows up every so often, and not in very good light.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#79

Post by guimarin »

spinlock wrote: post #69
guimarin wrote: post #42

That dimon is still being targeted astounds me. This is an example of why even those in power should not be the nail that sticks out. In case you're wondering why dimon, why JP Morgan it all traces back to this [1] event. 1. in 2008/2009, can't find it on Google bc why have a date search anymore. Jamie Dimon was called before the finance committee to explain the financial meltdown. He allegedly stormed out after repr…

Congress shouldn't have that much influence over the SEC. I always assumed it was because Dimon is the only CEO able to admit he's not infallable. I also think JPM is ahead of the curve on action against them. Again, they'll admit mistakes and take the fines. The rest of the street is denying everything but I believe they'll eventually be targetted as well.

I think you're framing the situation incorrectly. Wall Street is at a state of regulatory capture. Sorry I'm not an SEC apologist, but from what I've seen they walk a fine line between incompetence and brilliance. Everyone on Wall Street makes 'mistakes', and that's because individuals make decisions but there are more rules/laws/best practices than an individual can know. When everyone is operating under prosecutorial discretion, the law disappears, and it's cheaper to cut in, see regulatory capture, your oversight than it is to attempt compliance. Though the litigation industry on wall street might have a bone to pick here. The problem for Dimon is that capture is industry wide, not by an individual or company, as in the case of GE or the big three.

Lets take a real example. Bad things happened in 2008. Congress has to come in and 'clean up'. But Congress is a second order proxy for Wall Street, so clean up means they have to figure out a way to look good to their 'voters' while not putting any of their 'donors' in jail. This is harder than it seems. They tried for a few years to do nothing, because it was 'confusing' and 'complex', people weren't buying it. There was seriously bad mojo for congress, that could possibly threaten a reset on regulation for the entire financial industry. So they needed to find a scapegoat. A few congressmen were pissed at having their hands tied, and Dimon is probably the most visibly brilliant guy on wall street, and he had pissed people off, so he was chosen to be thinned from the heard.

What surprises me is that they haven't stopped. this is probably due to dimon's success, if he had been a little less competent in the intervening years, my bet is he would be less under the gun now. Still this is a valuable lesson to all of us paying attention.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#80

Post by spinlock »

bronson wrote: post #70
spinlock wrote: post #65

Earlier quoted context omitted.

That happened in 2008.

It all happened in 2008. So what? - Countrywide: January 2008 - Bear Stearns: March 2008 - WaMu: September 2008

So, the fines were levied in 2012. Causality's a tricky thing but events in the future can't usually impact those in that happened in the past.
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