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Public comments on compensation for inside trading CPA partner

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There are a range of comments in public about the comp package for former KPMG partner Scott London, who is now in federal prison for insider trading. How can we reconcile those amounts?

Before my book on Mr. London goes into print, I wanted to write one more post about the salary numbers I’ve seen. Will roll this into the book. Hope to start the final, final editing, proofing, and link verification very soon.

High estimate

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Public comments on compensation for inside trading CPA partnerRead More »

Public comments on compensation for inside trading CPA partner Read More »

Standard Chartered draws $300M fine for money laundering issues

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As mentioned yesterday, StanChart did get a $300M fine for running afoul of their 2012 agreement. Their software to monitor wires for possible violations of money laundering laws didn’t pick up on one or several million wires that should have been flagged.

In addition to the fine, the bank agreed to permanently halt US dollar settlement for about 300 high-risk clients in Hong Kong and UAE.

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Standard Chartered draws $300M fine for money laundering issuesRead More »

Standard Chartered draws $300M fine for money laundering issues Read More »

Standard Chartered penalty rumored to be $300M for this round of money laundering issues

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Financial Times is reporting StanChart faces fresh $300M US settlement.

This is up from the previously rumored amount of $100M, and would be close to the amount from the previous settlement.

Article says an agreement may be signed this week.

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Standard Chartered penalty rumored to be $300M for this round of money laundering issuesRead More »

Standard Chartered penalty rumored to be $300M for this round of money laundering issues Read More »

Standard Chartered under review for money laundering issues. Again.

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Standard Chartered is in trouble again for money laundering issues.

Either I’ve been blogging long enough to see cycles repeating or the too-big-to-fail banks are getting more casual in their casual efforts to comply with US law. Or maybe I’m just suffering from confirmation bias.

Their software that is supposed to flag suspicious transactions allegedly failed to identify a million transactions that should have been reported to US authorities for review. That is according to the monitor installed to watch their compliance.

Unknown yet how many, if any, of the million suspicious wires were actually illegal.

Settlement negotiations are underway. Discussion in the air suggests a fine of $100M is possible. The bank’s chief executive has reportedly flown to New York to participate in the negotiations.

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Standard Chartered under review for money laundering issues. Again.Read More »

Standard Chartered under review for money laundering issues. Again. Read More »

Law to prevent tax evasion, FATCA, likened to a nuclear weapon

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A new law went into effect July 1, 2014 in the United States that requires all foreign banks to report to the US information on their customers that are US citizens.

This will create a huge amount of paperwork.

It is quite unpopular. Many perceive it as yet one more example of extraterritoriality, the US forcing everyone outside the US to comply with US law or else.

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Law to prevent tax evasion, FATCA, likened to a nuclear weaponRead More »

Law to prevent tax evasion, FATCA, likened to a nuclear weapon Read More »

Fine against BNP Paribas for money laundering in context of their financial statements

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Previously discussed that maybe BNP Paribas got off easy for illegally laundering $190 billion.

This post will give some context to the fine.

The $8,973M fine is equal to 6,593M Euros.

For the rest of this article, all amounts are in millions of Euros.

The bulk of the evasion of sanctions ran from 2002 through 2009 but continued into 2012, well after the bank knew the investigation was underway. That is concentrated on 8 years but stretched out to about 11 years. Let’s assume the volume was actually dropping in ’11 and ’12 so it is essentially a 10 year run of money laundering.

That means the fine was paid in one year, but it is an accumulation of 10 years activity. Thus we can amortize the fine over 10 years

Fine in relation to financial statements

Let’s look at the fine in relation to the 2013 consolidated financial statements, which can be found here on this page of their website.

Balance sheet (page 126)

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Fine against BNP Paribas for money laundering in context of their financial statementsRead More »

Fine against BNP Paribas for money laundering in context of their financial statements Read More »

Those horrid penalties on BNP Paribas. Are they just a cost of doing business?

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Let’s look at the fines and penalties from a different perspective.

Perhaps the consequences are just a cost of doing business. Perhaps the bank got off easy.

Let’s look at the penalties:

  • $8,973B fine
  • Guilty pleas on one federal criminal count and two state criminal counts
  • 13 individual staff terminated
  • 12 month ban on dollar settlements for six departments

Looking closer…

Fine – public comments are it will not have any impact on the bank. …

Those horrid penalties on BNP Paribas. Are they just a cost of doing business?Read More »

Those horrid penalties on BNP Paribas. Are they just a cost of doing business? Read More »

Total BNP Paribas fine is $8.97 billion for money laundering

1 Comment / Fraud, Other stuff /

I previously mentioned the total penalty BNP Paribas agreed to pay for laundering money to evade U.S. trade sanctions was $8,833.6M. The updated WSJ article said the total settlement is $8.97B. After realizing the disconnect, I went back to the federal plea deal. I missed that amount until this morning.

The forfeiture is $8,833.6M, which represents the amount the feds say on page 1 of the plea deal is …

Total BNP Paribas fine is $8.97 billion for money launderingRead More »

Total BNP Paribas fine is $8.97 billion for money laundering Read More »

Guilty plea to 3 criminal counts, $8.8B fine, and 1 year ban on dollar settlements for BNP Paribas’ laundering of $190B

1 Comment / Fraud, Other stuff /

BNP Paribas has settled up for their systemic efforts to use the U.S. banking system to launder money for Iran, Sudan, and Cuba.

Criminal pleas

Here are the plea agreements:

  • federal level, 1 guilty plea – 1 count of violating the International Emergency Economic Powers Act
  • state level, 2 guilty pleas – 1 count Falsifying Business Records in First Degree and 1 count Conspiracy in the Fifth Degree.

Volumes

The dollar amount of laundered money is 6 times larger than any previous press reports suggest. All earlier comments said about $30B was involved.

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Guilty plea to 3 criminal counts, $8.8B fine, and 1 year ban on dollar settlements for BNP Paribas’ laundering of $190BRead More »

Guilty plea to 3 criminal counts, $8.8B fine, and 1 year ban on dollar settlements for BNP Paribas’ laundering of $190B Read More »

BNP Paribas settlement expected Monday

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That’s a report from DealBook – BNP Paribas Expected to Plead Guilty and Pay $8.9 Billion Fine.

Leaks to the newspaper say the plea deal could be announced on Monday, June 30. Final details will be worked out this weekend.

Looks like most of the transfers were from 2002 through 2009, but some carried on into 2012.

Sanctions are starting to shape up as follows:

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BNP Paribas settlement expected MondayRead More »

BNP Paribas settlement expected Monday Read More »

Another perspective on BNP Paribas – centralized control of French economy

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Previously mentioned another perspective on possible penalties on BNP Paribas for violation U.S. sanctions on trade in some countries – could it be U.S. harassment of banks who don’t bow to U.S. foreign policy?

At The Feed, Walter Russell Mead provides perspective on why there has been such a strong reaction from the French government – Hollande’s Top Priority: Save BNP. His discussion is quite helpful for me.

The article explains that the government, big companies, and the banking system in France are tightly linked. There are overlapping ownership interests, centralized control, close coordination, and wide revolving doors between the government and private sector.

The article explains: …

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Another perspective on BNP Paribas – centralized control of French economy Read More »

Illustration of false positive and false negative

Leave a Comment / Audits, Other stuff /

False positive is the idea of getting a result that incorrectly tells you the result is true or correct or positive.

False negative is a result that incorrectly tells you the result is wrong or incorrect or negative.

A great visual at Marginal Revolution: Type I and Type II Errors Simplified.

A few examples from the illustration, life, and auditing:

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Illustration of false positive and false negativeRead More »

Illustration of false positive and false negative Read More »

Maneuvering in settlement talks for BNP Paribas and BofA

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The extensive efforts by French government officials to intervene on behalf of BNP Paribas in order to reduce any penalties against the bank fell flat when President Obama announced that it is the Department of Justice that determines settlements and he will not intervene.

That according to a Wall Street Journal report, Obama Says He Has No Role in BNP Paribas Penalties.

Efforts to change the mind of US regulators include: …

Maneuvering in settlement talks for BNP Paribas and BofARead More »

Maneuvering in settlement talks for BNP Paribas and BofA Read More »

More info on the negotiating positions in the settlement talks for BNP Paribas evading trade prohibitions and pushback from France

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A few more details on settlement talks mentioned earlier.

The N.Y state Department of Financial Services wants to see a dozen or more staff fired, including an unspecified number of executives.

The government position is fine of $10B or more.

So here’s the combined government position: …

More info on the negotiating positions in the settlement talks for BNP Paribas evading trade prohibitions and pushback from FranceRead More »

More info on the negotiating positions in the settlement talks for BNP Paribas evading trade prohibitions and pushback from France Read More »

Negotiations underway for multi-billion dollar settlement with BNP Paribas for violating trading sanctions

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Wall Street Journal reports Justice Dept. Seeks More Than $10 Billion Penalty Form BNP Paribas.

At issue is a large volume of transactions and dealings with countries for which the U.S. has banned any financial dealings. We’re talking loaning money and holding (likely hiding) deposits for countries like Iran, Sudan, and North Korea, along with businesses and individuals in those countries.

Negotiations are reportedly underway between the bank and the Justice Department, Manhattan U.S. Attorney, and Manhattan DA. From the article it sounds like the N.Y. Department of Financial Services is in the discussions. After reading about the Credit Suisse settlement, I’ll guess the SEC, FDIC, and OCC are in the conversation as well. Maybe the FRB.

What are the negotiating positions?

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Negotiations underway for multi-billion dollar settlement with BNP Paribas for violating trading sanctionsRead More »

Negotiations underway for multi-billion dollar settlement with BNP Paribas for violating trading sanctions Read More »