Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Posts Tagged ‘banking

Efforts continuing to clean up fake account fiasco at Wells Fargo

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October 2016 photo at Wells Fargo's museum in San Diego by James Ulvog.

October 2016 photo at Wells Fargo’s museum in San Diego by James Ulvog.

There haven’t been a lot of high-profile articles about the Wells Fargo fake account fiasco recently. I’ve noticed a number of articles though, which suggest there is ongoing activity addressing the intentional, systemic failure. This disaster will not be cleared up soon.

  • How does Wells fix the indirect harm it caused?
  • New compensation plan removes cross-selling as a benchmark
  • Possible MD&A enforcement action?
  • Branches received 24 hour notice of internal inspections
  • Bank may eliminate 2016 bonuses for senior staff

12/27/16 – Wall Street Journal – Wells Fargo Is Trying to Fix Its Rogue Account Scandal, One Grueling Case at a Time – Making customers whole will be easy if the customer was only charged a few dollars a month for a while. Still simple to resolve if there were monthly charges and a bunch of overdraft fees because money was taken out of an account unknowingly which resulted in some bounced checks.

What do you do when the unpaid fees on a credit card flowed into negative information on a credit report which resulted in a customer being denied funding for a home loan somewhere else? That’s what happened to one interviewed customer.

Destroying someone’s credit is a tough thing to make right.

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Written by Jim Ulvog

February 13, 2017, 9:14 am at 9:14 am

Posted in Other stuff

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A few more updates in the ongoing world-wide banking fiascos

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

A few recent reports: Reason for no criminal prosecution of one too-big-to-fail bank is that it was TBTF, an indictment and a settlement in forex cases, and progress in the money laundering investigations.

Since I use the term a lot, here is a definition of fiasco from Google:

a thing that is a complete failure, especially in a ludicrous or humiliating way. Synonyms: failure, disaster, catastrophe, debacle, shambles, farce, mess, wreck.

Seems to me throwing away $530 million of bank capital because bank staff and leaders wanted to cheat customers meets the definition of fiasco.

7/11 – Francine McKenna at Market Watch – HSBC wasn’t prosecuted because it was ‘too big to fail’: House Committee – A House committee concluded that HSBC wasn’t prosecuted for willful AML violations because it was TBTF. One part of the violations was intentionally leaving out of wire instructions any indication that the funds were related to activity in countries with bans.

Staff recommendations were to pursue a criminal prosecution. Attorney General Eric Holder determined the systemic risk was too high and thus agreed to a deferred prosecution agreement.

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Written by Jim Ulvog

July 28, 2016, 8:17 am at 8:17 am

Posted in Other stuff

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News on regulatory oversight; insider trading, livings wills, manipulating interest rates.

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Image courtesy of DollarPhotoClub.com

Image courtesy of DollarPhotoClub.com

Interesting news from the financial world:

  • How NASDAQ watches for insider trading
  • Why bank regulators not disclosing the criteria for evaluating “living wills” causes more systemic financial risk
  • Enforcement efforts on two interest-rate manipulation fiascos

Here is how you get caught for trading on inside information

6/10 – Francine McKenna at MarketWatch – How NASDAQ watches for insider trading – Deep background on how NASDAQ monitors all the trading in the market for suspicious activity. They have a variety of tools and techniques to identify anomalies and drill down to eventually reach the individual trades.

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Written by Jim Ulvog

June 14, 2016, 7:53 am at 7:53 am

Societe Generale and their trading fiasco is back in the news. Oh, firing someone who lost $5 billion in unauthorized trades is a wrongful termination.

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Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

I can now add the French judicial system to the reeeeeally long list of things I just do not understand:

6/7 – Wall Street Journal – Court Finds Kerviel, Whose Bets Lost Bank Billions, Was Fired Unfairly – A French court awarded a fired banker US$511,000 for what we would call wrongful termination in the US.

Why was he fired? He merely cost the bank €4.9B back in 2008 after they unwound his unauthorized trades. That is only $5,530,000,000 at today’s exchange rate.

First, some background. You can check out the WSJ article on 10/6/10 for more details: Rogue French Trader Sentenced to 3 Years.

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Written by Jim Ulvog

June 10, 2016, 8:29 am at 8:29 am

Posted in Accounting, Fraud, Pondering

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Ancient finances, Alexander the Great chapter

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Image: Flickr by Carole Raddato

Image: Flickr by Carole Raddato

Image: Flickr by Carole Raddato

The Wall Street Journal has a delightful review by James Romm:  Conqueror and Squanderer. The review is of The Treasures of Alexander the Great: How One Man’s Wealth Shaped the World by Frank Holt.

I have a growing interest in ancient finances. Try thinking about how to run a large operation, such as an empire or an army on campaign when there is no banking system and no means of storing wealth other than controlling territory or possessing gold or silver. There is no way to gain any sort of liquidity. Your ability to buy something is limited to the gold in your hand.

How you pay your army today here in the field or buy supplies for 20,000 troops when your wealth is in the form of tons of gold which is a two-month march behind you?

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Written by Jim Ulvog

April 29, 2016, 9:01 am at 9:01 am

Posted in Economics, Other stuff

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Surprise! Enforcement efforts against money laundering have unintended consequences.

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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.

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Written by Jim Ulvog

March 31, 2016, 8:24 am at 8:24 am

How’s this for a brazen money laundering scheme? We can add another item to the list of at least $16 billion of fines for money laundering.

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Image courtesy of DollarPhotoClub.com

Image courtesy of DollarPhotoClub.com

Check out this plan for evading money laundering rules. Oh, it came with a money back guarantee to clients whose money was being laundered. Also, I’ve accumulated a preliminary list of industry-wide fines for getting caught busting those AML rules.

11/26 – CNN – Barclays fined $109 million for trying to hide “the deal of the century” – Staff at Barclays came up with a creative plan to hide clients’ money. The staff processed US$2.8B of deposits from “politically exposed people”, meaning people with significant political power and ability to do bad stuff to generate personal wealth.

Commission for the bank was £52M (US$77M).

According to the article, this scheme involved merely performing an Internet search to verify the source of funds as asserted by the clients, did not enter clients’ names on the internal computer systems which meant compliance staff would never find out who owned the money, and used quickly opened & closed offshore accounts to move the money.

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Written by Jim Ulvog

November 30, 2015, 8:02 am at 8:02 am

Posted in Other stuff

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