A sad anniversary – 2/24 – The Guardian – Barings collapse at 20: How rogue trader Nick Leeson broke the bank
Twenty years ago Barings Bank was taken down by one trader, Nick Leeson. The bank was founded in 1762. It was London’s oldest merchant bank.
Barings was 233 years old when it failed.
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Perhaps HSBC is only getting all this massive attention because the huge leak of confidential data came from someone working at that bank. What would we know if there was a similar data dump of the 100,000 largest customers at all the other Swiss banks?
That idea was prompted by this article:
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Here’s a scary thought. Maybe HSBC isn’t the worst at helping tax evaders.Read More »
Here’s a scary thought. Maybe HSBC isn’t the worst at helping tax evaders. Read More »
Investment News has discovered a documentary produced by Morgan Stanley chronicling the harsh competition between branches that is encouraged by their home office. Some news reports suggest this is a parody, but I don’t think so.
Click to see the ten minute video:
Some of my favorite scenes:
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If your clients have old payroll checks or old payments to vendors that have never cleared the checking account and your client can’t find the employee or vendor, at some point in time they need to turn that money over the State of California. I think there are similar laws in most states.
I’m guessing lots of your clients may not have realized that. I’ll make another guess that they aren’t alone.
Just read a background article on the issue, which is referred to as escheat. I learned there is a 12% annual penalty on any amounts that should have been turned over to the state but were not.
Since I’m making lots of guesses, here’s another one. As hungry as the state is for tax revenue, we may someday see auditors from the State Controller’s Office start looking for money from businesses and charities that haven’t escheated funds. Twelve percent over three or four years could add up to some decent return on an auditor’s time.
You remember that old question about what to do with those old outstanding checks that haven’t cleared?
Writing them off doesn’t work as the answer anymore. Those outstanding checks belong to somebody else.
The correct answer is look again for the payee and then after the proper time runs (3 years according to the article), you should start the specified two-step process and eventually get the money to the Controller’s Office.
A word to the wise is sufficient. Remember that 12% per year penalty. That is some expensive money.
Following article appeared in the California Board of Accountancy’s newsletter Update #77 and is reprinted with permission of the California State Controller’s Office and the California Board of Accountancy.
(For ease of reading, this will not be posted with quotes around the whole article.)
CPAS CAN HELP CLIENTS MEET UNCLAIMED PROPERTY REPORTING REQUIREMENTS
Written by the State Controller’s Office for use by the California Board of Accountancy
Do you have clients who are holding unclaimed property? Perhaps it is a returned security deposit or refund check. Or, it could be stocks, bonds, safe deposit box contents, or other property. With $7.6 billion in unclaimed property received by the State Controller’s Office (SCO) and an estimated 28.6 million owner accounts available to be claimed, chances are, you may have clients who need your guidance in this area.
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Where is the fence?
When an auditor finds several problems in one small area of the accounting, a typical approach is to put a fence around it. That means, figure what the outer boundaries are. Is it just one month’s worth of transactions in one department of one branch? If a little testing at the boundaries indicates the problem is localized, you can start working on the problem.
On the other hand, if the problem carries across to the whole year, or it affects many other branches, there is bigger problem. If you realize several other departments have the same issue, then you have no idea how big the problem is.
The worst situation is when every time you think there is a fence around the problem, the problem jumps the fence. An auditor has a horrible feeling when there just doesn’t seem to be any boundary.
That is how the banking fiascos have felt over the last year or two. A minor inquiry from DoJ or some other regulator turns into full-blown investigation, then multiple regulators, and then six months or a year later most banks hand over a few billion collectively.
Then another investigation sprouts out of that one. And then there is half a dozen benchmark interest rates that have been manipulated.
Where is the fence showing the outer limits of fiascos created by the TBTF banks? I can’t see it.
Is there anything they aren’t playing games with?
There IS no fence showing the boundary or limit or end of fiascos
What’s next?
Possibly manipulating gold and silver prices?
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Where is the fence showing the outer limit of banking fiascos?Read More »
Where is the fence showing the outer limit of banking fiascos? Read More »
He is still residing at the Lompoc United States Penitentiary. His scheduled release is still July 23, 2015. That has been the visible release date all along. He reported July 19, 2014, so he is a day over the 7 month point. Five months to go.
Why do I mention this? As a visual and practical reminder that a 14 month sentence with a 53 day reduction if he follows the rules is a very, veeeery long time.
The rest of the accounting world is dealing with 1040s, 1120s, and the audit busy season after a fun holiday season. Looking forward to spring and summer. He is still in jail.
Where is Scott London? Still in the federal pen. Read More »
PricewaterhouseCoopers has settled the class action lawsuit about not paying overtime to non-licensed accountants. More details and humongous amounts of whining in the comments can be found at Going Concern: PwC Settling California Wage & Hour Lawsuit for $5 Million
A few tidbits from the settlement, as motivation for you to do everything you can to avoid litigation: …
Hints of what big litigation look like from the PwC overtime caseRead More »
Hints of what big litigation look like from the PwC overtime case Read More »
Not much new reporting in the last week or so on HSBC. There has been a huge amount of political blowback in Europe, especially England. I’m not going into that turmoil.
Irony alert: last article I’ll mention suggests that money laundering may now be illegal in Switzerland, land of the numbered bank account.
Here is the last of the major Guardian articles:
2/12 – The Guardian – HSBC files: Swiss bank hid money for suspected criminals – Part 5. Depressing read.
Alleged crooks HSBC dealt with: …
HSBC helped assorted bad guys hide their money Read More »
There is a lot of change around and the pace of change is increasing.
A friend of mine, Professor David Albrecht, has started a new blog, Skills for Young Professionals. His lead blog is The Summa.
I suggest to you the new blog is every bit as useful for seasoned professionals as for the young professionals.
Walk with me through the first three posts:
Introducing ‘Skills For Young Professionals’
Technical skills aren’t enough. Professionals need
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Advice for young professionals that applies even more so to seasoned professionalsRead More »
Advice for young professionals that applies even more so to seasoned professionals Read More »
Maybe, just maybe, there may be some criminal charges individually and corporately.
2/9 – New York Times – Justice Department Is Seeking Felony Pleas by Big Banks in Foreign Currency Inquiry
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Maybe some criminal prosecutions this time around from HSBC and forex investigationsRead More »
Maybe some criminal prosecutions this time around from HSBC and forex investigations Read More »
Superb map of where the laundered money at HSBC is coming from. Used with permission.
Graph posted on February 11. Published by Martin GrandJean. You can find it at SwissLeaks: the map of the globalized tax evasion
From the linked article: Map of the HSBC accounts amounts per country. Full size here (CC) license – freely reusable with link to this post.
Fine print in the corner you may not be able to read: …
Good grief.
Not only are we talking tax felons. We’re talking cheap tax felons.
2/10 – The Guardian – HSBC files: Swiss bank aggressively pushed way for clients to avoid new tax – Part 3. HSBC developed a specialized product they presented to lots of their clients. Lots bought it.
Problem: If you have money hidden in Switzerland, there is a tax treaty that requires the banks to withhold 15% on the interest earnings and turn the withholding over the British treasury. No reporting of individual names or amounts, just one lump sum sent to England. Apparently letting the crown have 15% of your interest is too much for some blokes.
Wrinkle: …
The coverage by The Guardian and ICIJ mentioned in yesterday’s post is kicking off a lot of coverage. Twitter is lighting up with a few hundred tweets in a few minutes, but I’m learning that interest typically fades in a few days. By Friday, the twitterverse will be on to its next outrage.
Here are two more articles I found interesting. First is on UBS maybe having more trouble on aiding tax evasion. Second, when stock analysts say one of the too big to fail banks is too big to manage, it is capitalists making the criticism, not people outside the business world.
2/4 – Wall Street Journal – UBS Faces a New Tax-Evasion Probe – Authorities Investigate Whether Swiss Bank’s Clients Used ‘Bearer Securities’ to Hide Cash
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More good stuff on the banking fiascos – 2/10/15 Read More »
Major breaking news this weekend is the extent of shady dealings at HSBC’s subsidiary in Switzerland. Lots of dirty money accepted for deposit at the bank and lots of assistance provided to money launderers and tax evaders.
HSBC says they have cleaned up their act since 2008.
2/8 – The Guardian – HSBC files show how Swiss bank helped clients dodge taxes and hide millions – Part 1. Large volume of leaked files show a HSBC subsidiary in Switzerland actively helped clients evade taxes.
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HSBC: One of the ATMs available to tax evaders Read More »
Oh, and bring in some jelly donuts when the deal is getting close and you can bridge that last third of a billion difference.
S&P reached a settlement with the Department of Justice and a bunch of states over the ratings S&P gave to mortgage securities before the financial crisis. Top line settlement amount is $1.5B. See Wall Street Journal article, S&P to Pay $1.5 Billion to Resolve Crisis-Era Litigation.
Be advised the ridicule and abuse in this post will soon flow thick…
Settlement negotiations
Starting point from the DoJ side was $5B and acknowledgement of wrongdoing. S&P wanted under a billion and acknowledgment of the whole deal being in retaliation for S&P downgrading the federal credit rating.
My version of the back and forth haggling that got them to common ground:
$5B.
Drop admission of guilt.
DoJ: Okay, $3.2B. S&P: We’ll break the billion mark.
DoJ drop to $1.5B and S&P up to $1.2B.
Bring in those yummy donuts. You know, the ones with the jelly filling and sprinkles. Then drop the retaliation claim and agree on $1.3B.
Done? Yup.
Everyone’s happy. Nobody has to admit they did anything wrong. Both claim complete, total vindication.
That’s my loose paraphrase. For the unabridged version, see the WSJ article How the Justice Department, S&P Came to Terms.
A different look at the sequencing
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