Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Posts Tagged ‘banking

Talk about pinching your pennies – HSBC had an evasion scheme for customers to avoid paying a 15% withholding tax on interest earned on hidden money.

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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: Read the rest of this entry »

Written by Jim Ulvog

February 12, 2015, 5:00 am at 5:00 am

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More good stuff on the banking fiascos – 2/10/15

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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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Written by Jim Ulvog

February 10, 2015, 7:07 am at 7:07 am

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To get $1.5 billion settlement, S&P doesn’t have to admit wrongdoing and Justice Department doesn’t have to admit retaliation. Split the dollar positions and it’s a done deal.

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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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Written by Jim Ulvog

February 6, 2015, 7:58 am at 7:58 am

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My first baby steps to understand dark pools and high frequency trading

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I’m blogging to learn. Writing means you need to understand, which means you need to read and think, which means you learn and then you can write.

One item on a really long list of things I don’t get is dark pools and high-speed trading. I understand the basic concept, but know there is a lot I’m missing. If you don’t get it either, join me for a few steps in the journey to get a clue.

Here’s an article that tells me there is a problem: Read the rest of this entry »

Written by Jim Ulvog

January 22, 2015, 8:40 am at 8:40 am

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What is behind the record $56 billion in bank fines in 2014?

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Here are a few possibilities for the record level of settlements for bank in ’14: Wrapping up the legacy issues from the financial crisis. Regulators are getting serious about pushing big banks to improve their operations. Or maybe regulators just want more money. Or maybe banks are getting worse at obeying the law.

Some articles for you to ponder:

12/30 – Wall Street Journal – For Banks, 2014 Was a Year of Big Penalties – Here’s my interpolation of the fines and legal costs for the largest banks, as presented in the article’s graph:

  • $  3B – 2009
  • $  3B – 2010
  • $23B – 2011
  • $44B – 2012
  • $46B – 2013
  • $65B – 2014

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Written by Jim Ulvog

December 31, 2014, 9:23 am at 9:23 am

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So you think tons of bankers should be in jail? Getting a jury to agree seems to be a problem.

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Looks like it is really hard to prove individual culpability for conspiracy when a banker’s employer was aiding tax evasion. (I don’t use the word alleged in a sentence saying a bank committed a crime because UBS has already ‘fessed up and paid a $780,000,000 fine.)

11/4 – Wall Street journal – Acquittal in UBS Case Sets Back Tax Probe – A senior executive of UBS was on trial for allegedly helping Americans evade income taxes. The feds alleged that the banker ran a conspiracy to launder money and evade taxes, with said conspiracy involving cloak and dagger techniques to hide from authorities that the bank was knowingly and intentionally laundering money for its clients.

Didn’t turn out well for those who want to see a new federal penitentiary built to hold all the bankers who belong in jail.

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Written by Jim Ulvog

November 6, 2014, 8:20 am at 8:20 am

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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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Written by Jim Ulvog

July 25, 2014, 7:28 am at 7:28 am

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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 $190B

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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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Written by Jim Ulvog

June 30, 2014, 20:34 pm at 8:34 pm

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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: Read the rest of this entry »

Written by Jim Ulvog

June 18, 2014, 6:47 am at 6:47 am

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Now for a completely different perspective – US harassment of French banks.

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Here’s a different point of view: US efforts to impose draconian penalties on foreign banks for providing financial services in countries that the US doesn’t like it is really just a case of imposing our political preferences on the world.

Since access to dollar-based accounts essentially requires settling transactions in New York-based systems at some point in the transaction, the U.S. is leveraging the location of dollar settlements to force everyone to comply with our foreign policy.

For an explanation of this perspective, check out this article in Financial Times: America prosecutes its interests and persecutes BNP. (Snappy title, by the way – wish I could write that well.)

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Written by Jim Ulvog

June 16, 2014, 9:19 am at 9:19 am

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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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Written by Jim Ulvog

May 30, 2014, 7:18 am at 7:18 am

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Another multibillion settlement for JP Morgan – this time for not filing suspicious activity reports on Madoff accounts

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JP Morgan signed a deferred prosecution agreement with the Department of Justice for not reporting suspicions raised by Morgan’s own staff that the trading in Madoff’s accounts was suspicious.

The Wall Street Journal reports: J.P. Morgan to Pay $1.7 Billion to Victims of Madoff Fraud.

The DPA, which you can read here, says Read the rest of this entry »

Written by Jim Ulvog

January 7, 2014, 11:02 am at 11:02 am

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Is the $13B JPMorgan settlement actually greenmail?

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Jonathan Weil compares the $13B settlement by JP Morgan to greenmail in his article, The JPMorgan Settlement Isn’t Justice.

After having read the settlement, he realizes this is worse than the typical case of neither admit nor deny guilt wording we usually see in settlements. In spite of the press releases from the government saying JPM admitted misrepresentation, the settlement and statement of facts is worded so vaguely that there aren’t actually any details of what the government believes was done wrong.

Thus, there is nothing to deny: Read the rest of this entry »

Written by Jim Ulvog

November 26, 2013, 7:34 am at 7:34 am

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For $13B, JP Morgan settles a slew of legal issues

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JP Morgan and the Department of Justice announced a huge settlement that covers a host of legal claims against the bank.

Price tag is $13 billion, but keep in mind that claims credit for $4B the bank separately negotiated with Fannie and Freddie. The Wall Street Journal report is J.P. Morgan, U.S. Settle for $13 Billion.

A few of the key terms: Read the rest of this entry »

Written by Jim Ulvog

November 20, 2013, 9:22 am at 9:22 am

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Is that $13B settlement with JP Morgan justice or a travesty?

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If J.P. Morgan pays out $13 billion to settle claims over residential securities as expected, is it reasonable justice or is it unjust?

There is a divergence of opinion on that question. This post will explore both schools of thought.

Two main issues

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Written by Jim Ulvog

October 31, 2013, 10:23 am at 10:23 am

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