Other stuff

Surprise! Enforcement efforts against money laundering have unintended consequences.

Leave a Comment / Other stuff, Pondering /
Image courtesy of DollarPhotoClub.com.
Image courtesy of DollarPhotoClub.com.

Severe fines against large banks for violating anti-money laundering rules has led the banks to place a heavy focus on making sure their customers are legit. The result is a closing accounts of customers who have too high a risk of being shady. The unintended consequence is legitimate businesses and legitimate charities have difficulty finding a place to do their banking.

In a wonderful irony, articles at The Wall Street Journal on two successive days illustrate the tension. The articles leave you wondering in opposite directions. One article makes you think the banks ought to get serious about screening clients and shut down a bunch of accounts. The other article makes you wonder why these charities doing such wonderful work are getting all their accounts closed for no good reason.

First, charities finding themselves without bank accounts.

3/30 – Wall Street Journal – Cautious Banks Hinder Charity Financing / Account shutdowns and holdups of money transfers hinder ability to deliver aid to refugees – A charity that funds a school in Turkey which provides education to around 400 refugees from Syria had their account closed by JP Morgan for no stated reason. After an inquiry from the WSJ, the bank reversed their decision.

Another charity that operates a hospital in Syria had their accounts closed by BofA. After moving to Wells Fargo, their accounts were closed there. Staff at the hospital went four months without pay while the charity tried to figure how to get money into the country.

Authors have spoken to eight other charities who have had their accounts closed. Many others have had money transfers going into Syria, Turkey, or Lebanon held up for varying lengths of time.

Article mentions that banks are under pressure from the U.S. federal government to monitor their customers accounts and close those accounts which could be related to money laundering, whether related to drug running, terrorist financing, or other illegal activity.

…

Surprise! Enforcement efforts against money laundering have unintended consequences.Read More »

Surprise! Enforcement efforts against money laundering have unintended consequences. Read More »

More good stuff for CPAs: fees increasing and level of change increasing

Leave a Comment / Accounting, Audits, Other stuff /
Image courtesy of DollarPhotoClub.com
Image courtesy of DollarPhotoClub.com

Two articles for your consideration:

  • We need to figure out how to ‘surf’ the massive waves of changes surrounding us.
  • Some CPAs are able to post fee increases. From my perception, that is a big change after seven years of economic hangover from the Great Recession.

3/24 – Tom Hood on LinkedIn – Why Accountants Must Learn How to Ride These Big Waves of Change – There are massive waves of change on the horizon. Risks of getting drowned are high for accountants and auditors.

We need to understand what those two comments mean and how to cope with the implications. Tom Hood’s article points toward those waves that are soon to crash down on our heads.

It’s a VUCA world

Major changes we are in can be summarized by that phrase: …

More good stuff for CPAs: fees increasing and level of change increasingRead More »

More good stuff for CPAs: fees increasing and level of change increasing Read More »

Where did the money go from all those mortgage settlements? Mostly the government.

Leave a Comment / Other stuff /
Image courtesy of DollarPhotoClub.com
Image courtesy of DollarPhotoClub.com

Yes, the majority of the cash from those multi-billion dollar settlements was kept by the federal government.

The Wall Street Journal wonders Big Banks Paid $110 Billion in Mortgage-Related Fines. Where Did the Money Go?

…

Where did the money go from all those mortgage settlements? Mostly the government.Read More »

Where did the money go from all those mortgage settlements? Mostly the government. Read More »

Another Olympus fiasco, with $640M penalty. No individual prosecutions.

Leave a Comment / Fraud, Other stuff /
Image courtesy of DollarPhotoClub.com
Image courtesy of DollarPhotoClub.com

The U.S. unit of Olympus admitted it made payments to doctors and hospitals as an inducement to buy Olympus equipment. The company agreed yesterday to pay $646M and enter into two deferred prosecution agreements in return for settling two criminal charges.

I don’t usually follow Foreign Corrupt Practices Act settlements, but this one caught my eye. I’ve not previously been aware of the Anti-Kickback Statute, which prohibits kickbacks from vendors to health care providers in the federal medical reimbursement marketplace. Olympus admits to violating both sets of laws.

…

Another Olympus fiasco, with $640M penalty. No individual prosecutions.Read More »

Another Olympus fiasco, with $640M penalty. No individual prosecutions. Read More »

Update on LIBOR cases

Leave a Comment / Other stuff /

Has been rather quiet lately on the Libor front, other than six traders have been acquitted after a mere one day of jury deliberations. A few updates:

2/12 – The Wall Street Journal – Last Wave on LIBOR: CFTC Likely to Charge Multiple Banks for Rate Rigging – Article cites sources saying the CFTC and British Financial Conduct Authority will be likely bringing civil charges in the next few months against Citigroup and HSBC. FCA has dropped an investigation of J.P. Morgan Chase but CFTC still has that investigation open.

…

Update on LIBOR casesRead More »

Update on LIBOR cases Read More »

More trouble for prosecutors actually getting a conviction against bankers

Leave a Comment / Accounting, Other stuff /
Image courtesy of DollarPhotoClub.com
Image courtesy of DollarPhotoClub.com

Prosecutors in England failed in their efforts to convict six brokers of fixing Libor rates.

1/27 – Wall Street Journal – Six Ex-Brokers Acquitted of LIBOR Rigging in London – One key person was convicted at trial a while back and is now in prison. The six brokers just acquitted are the people he was supposedly conspiring with. Only the 6 weren’t conspiring with anyone about anything, according to the jury.

…

More trouble for prosecutors actually getting a conviction against bankersRead More »

More trouble for prosecutors actually getting a conviction against bankers Read More »

Number of Scott London’s insider trading incidents based on cross-referencing SEC action, plea agreement, and FBI complaint.

2 Comments / Audits, Other stuff /
FBI surveillance photo of Mr. Shaw passing $5,000 to Mr. London. Photo is included in the criminal complaint available in PACER system and thus is a public document.
FBI surveillance photo of Mr. Shaw passing $5,000 to Mr. London. Photo is included in the criminal complaint available in PACER system and thus is a public document.

Previously discussed the SEC enforcement action against now-felon, formerly-living-on-top-of-the-world KPMG regional audit partner Scott London for his insider trading activities.

After reading the criminal complaint along wot the SEC’s action, I now think the actual number of incidents of insider trading is two or three times more than even the SEC claims.

The enforcement action listed 18 specific incidences of insider-trading. This is larger than any number I’ve seen previously, which drew my interest. My recollection is there had been around a dozen or so incidents. Decided to compare three documents to see what they show about the extent of insider-trading. I looked at:

If you want to read the plea agreement and criminal complaint, I provided links here.

The plea agreement states there were at least 14 incidents. The criminal complaint cites a slightly small number but that is a soft estimate by Mr. London. What caught my attention is the SEC enforcement action lists 18 incidents.

The SEC’s listing includes: …

Number of Scott London’s insider trading incidents based on cross-referencing SEC action, plea agreement, and FBI complaint.Read More »

Number of Scott London’s insider trading incidents based on cross-referencing SEC action, plea agreement, and FBI complaint. Read More »

Criminal complaint against Scott London and his plea agreement

Leave a Comment / Audits, Other stuff /
Housing option earned for insider trading. Image courtesy of DollarPhotoClub.com
Long term federal housing earned for insider trading. If my opinion matters to you, I heartily recommend you avoid this housing. To do so, avoid insider trading. Might be good to avoid a lot of other things the FBI is not amused with. Image courtesy of DollarPhotoClub.com

Because the materials available from the federal PACER system are public documents, I am allowed (along with anyone else who signs up for the service) to publish them.

Thus, for your reading pleasure and future research, here is the criminal complaint against Scott London, dated April 11, 2013: …

Criminal complaint against Scott London and his plea agreementRead More »

Criminal complaint against Scott London and his plea agreement Read More »

Followup on SEC enforcement action against Scott London

Leave a Comment / Audits, Other stuff /
Housing option earned for insider trading. Image courtesy of DollarPhotoClub.com
Housing earned as reward for insider trading. Image courtesy of DollarPhotoClub.com

Back in September 2013 I briefly discussed the SEC’s enforcement action against former KPMG partner Scott London over his insider trading activities: Ex-KPMG partner banned from practice before the SEC; sentencing date is in December.

Just realized last week I had not actually read the enforcement action. So I went back and took a look at it. You can find it here.

One thing that jumped out at me was the SEC asserted there were 18 specific incidences of passing inside information. That prompted me to dig a little deeper and write this and the next post.

Why going to this detail? Seems to me there is some ongoing interest in Scott London’s case. I am not aware of anyone who has chronicled the story in the depth that I’ve gone into. Perhaps that’s because there’s relatively limited interest in an old case. Perhaps nobody else is interest in such trivial details as the exact number of insider-trading incidents. I’ll dive into the details anyway. Perhaps I’m just weird, but I’m interested.

Here goes…

Context of timing

The SEC Accounting and Auditing Enforcement is dated September 27, 2013.

…

Followup on SEC enforcement action against Scott LondonRead More »

Followup on SEC enforcement action against Scott London Read More »

Scott London interview with NPR’s Planet Money

Leave a Comment / Other stuff /

tragedy-cover

On December 23, Planet Money aired an interview with Scott London: Episode 671: An Insider Trader Tells All. He is the now-felon, formerly KPMG regional audit partner who earned 14 months in federal housing for insider trading.

There are a couple of new pieces of information in the interview. More on that in a moment.

Rumbi Bwerinofa discusses the interview at Figuring Financial Forensics: On The Record.

She was amused at the description of Mr. London’s shock at finding out the amount of the gains realized by his buddy, Bryan Shaw. In the interview Mr. London says he was in a car with his attorney driving him somewhere as Mr. London read in the newspaper the amount of the gains being in the range of over a million dollars. He asked his attorney to pull the car over because he thought he was going to be physically ill.

Ms. Bwerinofa points out fraud usually develops this way. Schemes start small and then grow to something huge. Having been given only $70,000, Mr. London thought this was still in the range of small potatoes.

She ponders whether Mr. London had previously pondered the idea that there is no honor among thieves. He apparently did not consider that his cheating friend could be cheating him.

Mr. London pointed out in the interview, and earlier comments, that the proceeds were going to be split three ways. That would imply that the total illicit gains would have been in the range of $200,000 or so. Not well over $1,000,000, perhaps as much is $1.6M.

Willfully crossing the line?

…

Scott London interview with NPR’s Planet MoneyRead More »

Scott London interview with NPR’s Planet Money Read More »

If you know what a PTIN is, yours will expire on 12/31. Time to renew.

2 Comments / Other stuff /

 

Image courtesy of DollarPhotoClub.com
Image courtesy of DollarPhotoClub.com

It is time to renew your PTIN. I just remembered today, the 28th.

Fee this year is $50.00.

For more information, you can find the IRS announcement here.

You can start the renewal process here.

In addition to the fifty bucks, it will take you about 4 or 5 minutes to renew.

If you know what a PTIN is, yours will expire on 12/31. Time to renew. Read More »

Barclays’ cost of dealing with fiascos is close to half of pre-settlement income over last 5 years

Leave a Comment / Other stuff /
Image courtesy of DollarPhotoClub.com
Image courtesy of DollarPhotoClub.com

Previously discussed Barclays drawing a £72M (US$109M) fine for breaking British anti-money laundering laws and calculating the fine is equal to about six workdays worth of net income before costs of settlements.

While calculating magnitude of costs from this settlement, I noticed the income statement shows there have been huge reserves set up for settlements.

Fines and legal fees in last 4 years

The fines and legal fees over the last four years for all of the fiascos the bank has engaged in are a large portion of net income.

…

Barclays’ cost of dealing with fiascos is close to half of pre-settlement income over last 5 yearsRead More »

Barclays’ cost of dealing with fiascos is close to half of pre-settlement income over last 5 years Read More »