Monday, May 3, 2010

Public Commits Fraud We Go to Jail. Big Companies? A Small Fine.


U.S. futures regulators fined Morgan Stanley (MS.N) $14 million for failing to report a big block oil trade and fined Moore Capital $25 million for attempting to manipulate palladium and platinum futures.

The two settlements come as the Commodity Futures Trading Commission begins to exert more authority over the markets it regulates and as Congress contemplates handing it far more power over the vast over-the-counter derivatives markets.

The CFTC also ordered UBS Securities Inc (UBSN.VX) to pay a $200,000 penalty tied to the Morgan Stanley settlement.

The firms neither admitted nor denied the charges, the CFTC said.

In the Morgan Stanley agreement, the CFTC said a trader from the company arranged a block crude oil trade with a UBS broker for Feb. 6, 2009, but the two agreed to delay reporting the trade until after the market closed.

10 comments:

  1. By Robert Frank

    It’s well known that the rich have an outsized influence on the economy.

    The nation’s top 1% of households own more than half the nation’s stocks, according to the Federal Reserve. They also control more than $16 trillion in wealth — more than the bottom 90%.

    Yet a new body of research from Citigroup suggests that the rich have other, more-surprising impacts on the economy.

    Ajay Kapur, global strategist at Citigroup, and his research team came up with the term “Plutonomy” in 2005 to describe a country that is defined by massive income and wealth inequality. According to their definition, the U.S. is a Plutonomy, along with the U.K., Canada and Australia.

    In a series of research notes over the past year, Kapur and his team explained that Plutonomies have three basic characteristics.

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  2. 1. They are all created by “disruptive technology-driven productivity gains, creative financial innovation, capitalist friendly cooperative governments, immigrants…the rule of law and patenting inventions. Often these wealth waves involve great complexity exploited best by the rich and educated of the time.”

    2. There is no “average” consumer in Plutonomies. There is only the rich “and everyone else.” The rich account for a disproportionate chunk of the economy, while the non-rich account for “surprisingly small bites of the national pie.” Kapur estimates that in 2005, the richest 20% may have been responsible for 60% of total spending.

    3. Plutonomies are likely to grow in the future, fed by capitalist-friendly governments, more technology-driven productivity and globalization.

    Kapur says that once we understand the Plutonomy, we can solve some of the recent mysteries of the American economy. For instance, some economists have been puzzled (especially last year) about why wild swings in oil prices have had only muted effects on consumer spending.

    Kapur’s explanation: the Plutonomy. Since the rich don’t care about higher oil prices, and they dominate spending, higher oil prices don’t matter as much to total consumer spending.

    The Plutonomy also could explain larger “imbalances” such as the national debt level. The rich are so comfortably rich, Kapur explains, that they have started spending higher shares of their incomes on luxuries. They borrow much larger amounts than the “average consumer,” so they have an exaggerated impact on the nation’s debt levels and savings rates. Yet because the rich still have plenty of wealth and healthy balance sheets, their borrowing shouldn’t be a cause for concern.

    In other words, much of the nation’s lower savings rate is due to borrowing by the rich. So we should worry less about the “over-stretched” average consumer.

    Finally, the Plutonomy helps explain why companies that serve the rich are posting some of the strongest growth and profits these days.

    “The Plutonomy is here, is going to get stronger, its membership swelling” he wrote in one research note. “Toys for the wealthy have pricing power, and staying power.”

    To prove his point, he created a “Plutonomy Basket” of stocks, filled with companies that sell to the rich. The auction house Sotheby’s is on the list, along with fashion houses Bulgari, Burberry and Hermes, hotelier Four Seasons, private-banker Julius Baer and jeweler Tiffany’s. Kapur says the basket has risen an average of 17% a year over the past year, outperforming the MSCI World Index.

    Of course, Kapur says there are risks to the Plutonomy, including war, inflation, financial crises, the end of the technological revolution and populist political pressure. Yet he maintains that the “the rich are likely to keep getting even richer, and enjoy an even greater share of the wealth pie over the coming years.”

    All of which means that, like it or not, inequality isn’t going away and may become even more pronounced in the coming years. The best way for companies and businesspeople to survive in Plutonomies, Kapur implies, is to disregard the “mass” consumer and focus on the increasingly rich market of the rich.

    A tough message — but one worth considering.

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  3. SHEEPLE, It's all by DESIGN! Figured it out yet?

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  4. with comments like 9:28 made, no wonder why George Ure donated a whole penny. i don't think even the wealthiest would like a boot licking douche-bag working for them.

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  5. Did George Ure really donate ONE cent? Was it a joke, or is this how he treats other informative websites?

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  6. This is the whole point of a corporation. The rights of an individual (never was supposed to be that way) but the corporate liability shield.

    Best of both worlds.

    The USA itself is not really a country per se, but a giant corporation. Our parent corporation is the British congolmerate of banking cartels.

    As a corporation, we have no morals, just the quest for profit. A president, treasurer, VP, secretary, etc. These are the STOOGES. The real power, the real decisions, are made back in the boardroom with the door closed.

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  7. I don't take George Ure or his future predictive linguistics crap seriously anymore.
    He failed to predict EVERYTHING that has happened since he began declaring himself a prophet.
    His future report said nothing about an oil spill.
    He did say Isreal would nuke Iran and release a gigantic cloud of evil toxic radiation gas that would circle the globe 9 times killing everything.

    Didn't happen.

    His wife has ENORMOUS boobs and looks pretty hot. I think George has a happy face most of the time.

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  8. I knew a person like that, actually, who was dedicated to things like money, but on the inside imprisoned and depressed. It made them sadistic, or they were sadistic from birth. Some of our genes are screwed up through the generations. Theres nothing we can do about that at this point. I suppose the great cleansing will sort that all out.

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  9. Al-CIA-duh set up another stooge and guess what? He's a Muslim! What a surprise! Now the media can do its job and hype it up to scare the sheeple.

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  10. The White Settler Horde “American” economy that was formed on a promise of share /cut in national plunder for the Labour ristocracy, first as White Cracker slave drivers ,or a cut in the profits from Indian and Mexican Land as small farmer settlers , then ,later as foremen over imported immigrant Factory labour ,then still later over the cheap labor third World Empire.This imperialist Empire for Spreading poverty in the third world is imploding into a pile of debt shit doo doo.

    The Constitutional compact, the ideological basis in the nation for unity between the classes and sectors as a plundering horde “America” is breaking up in a sea of accumulated Military deficits, current trade accounts debt from “free Trade”. But with most profitable manufacturing industry exported as the bribes and subsidies for unproductive of profit for capital from internal American labour are impossible.
    With foreign credit ,supply running after the collapse of the money markets in 2008 , the rich have turned to looting the National Treasury and plundering the American Middle class as the only sources of profit left.
    Ordinary Americans, bought up in the traditions and culture of that America now for 200 +years are sickened by the venality, corruption and “un-constitutional” plunder by the rich class and the finance sector .
    They are are sickened in their American "National" Horde soul at this betrayal of the old America by the rich and the financial coup for the looting and plunder of the wealth of their own American middle class and labour aristocracy.
    They cannot understand why it is game over.
    The economic social basis of the old Unity of the White Settler Horde “America” is disappearing and Americans now on the break up of the system adopt a new extreme individualist Non- Social - America ideology of “arm and Save Yourself” .
    The rich laughs all the way to the bank and with their control of the media encourage the majority to blame and fight amongst themselves especially on racial lines. And for the old the better off midle class believers of the old way of life against the bludging poor that have become ,without regular productive jobs in a services economy ,dependent on handouts from the state.
    The tendency to falling Rate of profit on capital has caught up with a worn out fat and lazy bankrupt America . Even the upkeep of the old physical infrastructure, including its highways and bridges and even its schools becomes impossible in the sea of paying up interest and dividends debts to the rich bondholders. The Rich after all create the poor and the poor create the rich.
    Say goodnight to the Mongol economy of plunder of the White Settler Horde “America”.
    The national basis for the unity has gone as the plunder ran out .The chickens are coming home to roost!
    I predict an internal 30 Years civil war madness between those seeking to return to the old past golden times and constitutional dream and those groups and internal national minorities and the poor seeking to build a new productive economy .

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