The WSJ.com reported that Groupon is being investigated for unusual stock trading activity right before the company released positive financial information. The stock actually rose 18.5% percent from its previous close and trading volume was around 4 times the 30 day average just before the good news was released to the public. It is still not clear if the Securities and Exchange Commission(SEC) is going to investigate this possible corporate financial irregularity.
This week federal judge Jed S. Rakoff rejected a $285 million settlment between Citigroup and the SEC. The rejected settlement concerned Citigroup’s selling of toxic mortgage securities to investors back in 2007. Allegedly, Citigroup knew these were bad investments so they bet against their own customers resulting in $160 million in profit for Citigroup and $700 million in losses for investors.
Judge Rakoff seemed particularly irked that the SEC’s settlement agreement did not require Citigroup to admit any guilt or wrongdoing regarding this matter.
Or perhaps the judge was just angry upon realizing he had zero use for the weather balloon he was going to receive with all his Citi “Thank You Points”.
The New York Times reports that the Citigroup fraud settlement deal with the SEC may be in trouble. Federal Judge Jed S. Rackoff is questioning the Securities and Exchange Commission as to why the proposed settlement with Citigroup for its alleged role in the selling of junk mortgage securities is so light.
While the $285 million that Citigroup would pay may seem like a lot, it is really little more than pocket change for them and, perhaps most importantly, Citigroup would not have to admit any wrongdoing.
The SEC will get it’s chance to respond to Judge Rackoff’s concerns at a hearing next month.
My guess is that the they will probably ratchet up the penalty by asking Citigroup to also give every Citi credit card holder ten extra Thank You Points. Harsh…
The NYTimes.com is reporting that Standard & Poors received a “Wells” notice from the SEC. A Wells notice is apparently just a letter from the SEC to say hi and to let a company know that it is under investigation. Such a notice does not mean that there are currently or will ever be any official charges.
This “just having a look around” by the SEC is apparently related to a mortgage security S&P rated in 2007.
In S&P’s defense they had no incentive to give companies/securities high ratings, other than for the fact that client companies might stop using S&P if they received bad ratings. But I ramble, as such a scenario would mean that Standard & Poors was only in it for the money.
The WSJ.com is reporting that Spencer D. Mindlin allegedly misused his position at Goldman Sachs to let his father, Alfred, know of some information that they used to net $57,000.
Goldman Sachs released a statement claiming that since the trades were conducted using a TD Ameritrade account they had nothing to do with it:
“All of the trading was conducted in private, undisclosed accounts held outside of Goldman Sachs and none of the trading involved client information.”
Not really the strongest defense, but I’ll leave it to the experts at Goldman Sachs to explain the intricacies of insider trading and how they are never involved.
According to Reuters.com, in a newly released report from the Securities and Exchange Commission Inspector General, former General Counsel David Becker had a conflict of interest regarding his work on the Bernie Madoff case. The IG report states that David Becker:
“…participated personally and substantially in particular matters in which he had a personal financial interest by virtue of his inheritance … and that the matters on which he advised could have directly impacted his financial position.”
It is a bit of a complicated and depressing situation, so I suggest reading the whole article. Although READER DISCRETION IS ADVISED when you get to the part where SEC Chairman Mary Schapiro actually describes Mr. Becker as a “talented, highly skilled lawyer.”