Category Archives: Regulations and regulators

Elizabeth Warren Throws Down Gauntlet, Calls for Genuine Financial Reform

Elizabeth Warren makes a bold call for wide-ranging, serious financial reform.

“God Damn the Pusher Man” – Especially when Enabled by the FDA Revolving Door

Lambert here: Here, as generally, “the revolving door” seems a barely adequate metaphor for the pervasiveness of corruption involved; after all, the doors constantly revolve in a house of ill-fame, and it’s the nature of the house itself, not the wear and tear on the hinges of its doors, that is at issue.

Belvedere Management: Massive Criminal Enterprise or Defamed Fund Manager?

David Marchant says Belvedere Management is a “Massive Criminal Enterprise”. Has he gone mad, or hit the investigative journo’s jackpot?

The SEC’s Andrew Bowden to Leave the Agency

From the SEC this morning:

The Securities and Exchange Commission today announced that Andrew Bowden, Director of the Office of Compliance Inspections and Examinations (OCIE), will leave the agency at the end of April to return to the private sector.

Don Quijones: “Bad Bank” Mania Spreads in Europe

Yves here. I’m not as negative about “bad banks” as Don Quijones is. He does mention the positive result in Sweden, and I hope Swedish Lex will pipe up in comments to add more insight. But the Spanish case is a horrorshow and others in Europe are troubling.

SEC Starts Issuing Wells Notices to Private Equity Firms (Updated)

We tweeted last week:

Rumor from a private equity source: "Heard a bunch of alts firms got Wells notices from the SEC"

— Yves Smith (@yvessmith) April 2, 2015

Our source was correct.

Presentation Shows Private Equity Investors Knowingly Sign Contracts With Waivers of Fiduciary Duty, Other Terms Stacked Against Them

We’ve pointed out that private equity investors, known in the trade as limited partners, enter into agreements with private equity firms that do a terrible job of protecting the investors’ interests. That sad reality is contrary to the urban legend propagated by the general partners, that the agreements are negotiated, that the limited partners are sophisticated and understand full well what they are getting into.

The evidence on the ground strongly suggests otherwise. Today, we’ll go through a document presented by a top lawyer for limited partners that shows how the general partners continue to skew the agreements even more in their favor, yet the outside legal guns fail to beat back these terms.

SEC Regulatory Capture Scandal: Andrew Bowden’s Fawning Over Private Equity Was No Mistake

Two weeks ago, we discussed how the head of the SEC’s examination unit, Andrew Bowden, gushed about the private equity industry at a conference at Stanford Law School, including joking about how he’s told his son to work in the industry.

Defenders of Bowden might argue that he had the government official version of a bad hair day, attempting to inject some levity in a dry conference and having the remarks go wildly off the rails.

But it turns out that Bowden has been making the same type of statements, save the “Gee it would be great for Cole to work in private equity” part since at least last fall.

Tom Adams: The Ocwen Meltdown: When a Company Discloses Conflicts of Interest, You Should Believe Them

By Tom Adams, securitization professional for over 20 years and partner at Paykin, Krieg & Adams, LLP. You can follow him on Twitter at @advisoryA It’s been a while since I wrote here about Ocwen Financial Corporation http://www.nakedcapitalism.com/2015/02/tom-adams-ocwens-servicing-meltdown-proves-failure-of-obamas-mortgage-settlements.html , the large non-bank mortgage servicer, but things haven’t gotten any better for the company or its […]

Central Banks Warn: Investors May Get Crushed When They All Run for the Exits

This post illustrates how remarkably short investors’ memories are. Or they may be betting that if they have a big enough hissy fit when monetary authorities raise rates, as they did during the taper tantrum of 2013, that central banks will lose their nerve.

Bill Black: Meet Citi’s Ethical Underwriter Who Fought and Won: Sherry Hunt

How Citi ran into a buzz saw and lost a False Claims Act case when it tried stymieing whistleblower Sherry Hunt. But true to form, the DoJ took the easy way out.

Bill Black: How FCIC Spurned Its One Chance at Greatness

How the FCIC not merely ignored but actually suppressed information that revealed what and more important, who, drove the crisis.

Matt Taibbi Takes Up SEC’s Andrew Bowden Regulatory Capture Scandal

Matt Taibbi has written a characteristically informative, incisive piece about the embarrassing spectacle of the SEC’s Director of Compliance Inspections and Examinations, Andrew Bowden, making sycophantic remarks about the private equity industry at a recent conference, a story we broke early last week.

Bill Black: The DOJ and the SEC Spurn their Ace in the Hole – Richard Bowen

This is the second post in a devastating series on why major banks and their executives got away with large-scale, systematic fraud in the runup to the crisis. Bill Black uses Citigroup whistleblower Richard Bowen as a case example of how derelict the DOJ and SEC were in the performance of their duties.

Here, Black describes how historically frauds and criminal conduct were pursued primarily by regulators and the FBI. However, not only were regulations were weakened, but the Bush Administration ended criminal referrals: “References to the criminal referral coordinators disappeared or were removed from the bank examiners’ manuals.” FBI staffing for white collar crime was cut drastically as the war on terror was given precedence.

That meant, as Black describes, whistleblowers became more important than ever as not just a source of information for civil and criminal prosecutions, but as key witnesses. Yet in many cases they are problematic. They are often disaffected former employees who call out the bad conduct they saw after they were terminated, or were so badly roughed up by their former employer for becoming an internal dissident that they were traumatized and don’t hold up well on the stand. Hence, as Black explains, the failure to take advantage of a stellar whistleblower like Richard Bowen. As Bowen put it, “Not only did they bury my testimony, they locked it up.”