EIC/Wall Street investigations
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Jul 27, 2011

SEC builds new tips machine to catch the next Madoff

WASHINGTON/NEW YORK (Reuters) – For more than three years, U.S. securities regulators investigated allegations of accounting fraud at a small telecom firm called China Voice Holding Corp, but could not make a case.

Then last November, they got an unexpected break. A Texas-based tax consultant doing work for a firm affiliated with China Voice contacted the U.S. Securities and Exchange Commission with information about suspicious money transfers she’d detected.

Jul 27, 2011
via Reuters Investigates

Can the SEC learn from its mistakes?

All too often, the U.S. Securities and Exchange Commission gives its critics plenty of ammunition to complain about.

The SEC’s spectacular failure to detect the massive Ponzi scheme being run by Bernie Madoff is only the most high-profile miss by the agency. Over the years, the nation’s top securities cops have been slow to police abusive trading by hedge funds and spread of complex structured products–including subprime ones–churned out by Wall Street banks.

Jul 27, 2011

Exclusive: SEC builds new tips machine to catch the next Madoff

WASHINGTON/NEW YORK (Reuters) – For more than three years, U.S. securities regulators investigated allegations of accounting fraud at a small telecom firm called China Voice Holding Corp, but could not make a case.

Then last November, they got an unexpected break. A Texas-based tax consultant doing work for a firm affiliated with China Voice contacted the U.S. Securities and Exchange Commission with information about suspicious money transfers she’d detected.

Jul 25, 2011

As US lawmakers fiddle, investors primed to profit

NEW YORK, July 25 (Reuters) – U.S. money managers sitting
on piles of cash are sniffing out opportunities to make a
killing on the political circus in Washington over raising the
nation’s debt ceiling.

Just eight days before the critical deadline to raise the
debt ceiling before the United States would default on its debt
obligations, Republicans and Democrats were still locked in a
stalemate on Monday. The prospect of U.S. politicians failing
to reach a deal before the Aug. 2 deadline is finally rattling
some investors’ nerves, judging by Monday’s declines in global
equity markets.

Jul 25, 2011
via Unstructured Finance

A bank account free from political posturing?

By Matthew Goldstein

A measure aimed at protecting companies from community bank failures may be finding new life as a way to guard against the fallout from the political squabbling in Washington, D.C. over raising the debt ceiling.

Even though much of Wall Street believes that sanity will prevail in the end and the nation’s politicians will not allow a U.S. debt default to occur next week, the level of anxiety in the financial world has risen in the past few days. And that unease has led some money managers to begin looking at a post-financial crisis measure aimed at protecting non-interest bearing bank accounts as a potential safe haven.

Jul 24, 2011
via Unstructured Finance

S&P as the decider?

By Matthew Goldstein

Derivatives guru Janet Tavakoli is a long-time critic of the rating agencies and in particular the role the raters played in the subprime debt crisis. And she says given the shabby job the rating agencies did in giving the green light to the subprime debt boom, it’s odd to think of firms like Standards & Poor’s playing such a big role in the ongoing US debt ceiling negotiations.

“Standard & Poor’s lost its credibility due to a long history of misrating financial products,” says Tavakoli.

Jul 7, 2011
via Unstructured Finance

Kinnucan v. Ainslie

By Matthew Goldstein and Svea Herbst-Bayliss

John Kinnucan, a research consultant who’s been linked to an ongoing insider trading probe, claims Maverick Capital founder Lee Ainslie has stiffed him by not paying all of the hedge fund’s bill from last year.

The Portland, Oregon-based Kinnucan tells Reuters/ Unstructured Finance that Maverick owes him $15,000 for research information he provided on technology companies in the second-half of 2010. The consultant says it was anger over Maverick’s outstanding tab that prompted him to send a brief and alarming email this week to Ainslie warning him that his $11 billion fund may “soon be charged with insider trading.”

Jul 6, 2011

SEC case vs Rajat Gupta on hold after prosecutor inquiry

NEW YORK (Reuters) – U.S. securities regulators’ insider-trading case against former Goldman Sachs Group Inc board member Rajat Gupta was put on hold after federal prosecutors intervened, documents show.

The intervention suggests continuing interest by U.S. Department of Justice prosecutors in Gupta, whom they had named as an unindicted co-conspirator in the criminal case against hedge fund billionaire Raj Rajaratnam.

Jul 6, 2011

SEC case vs Gupta on hold after prosecutor inquiry

NEW YORK, July 6 (Reuters) – U.S. securities regulators’
insider-trading case against former Goldman Sachs Group Inc
(GS.N: Quote, Profile, Research, Stock Buzz) board member Rajat Gupta was put on hold after federal
prosecutors intervened, documents show.

The intervention suggests continuing interest by U.S.
Department of Justice prosecutors in Gupta, whom they had named
as an unindicted co-conspirator in the criminal case against
hedge fund billionaire Raj Rajaratnam.

Jun 29, 2011
via Unstructured Finance

Lightsquared loans suffer from interference

By Matthew Goldstein

It looks like the problems that Phil Falcone’s upstart wireless network may cause with some airline navigation systems may be impacting the price of the more than $1 billion in high-yield debt LightSquared has sold to hedge funds and mutual funds.

Over the past two weeks, the prevailing market price of LightSquared”s four-year term “junk” loans has slumped to about 95 cents on the dollar. That’s still a solid price for the high-yield offering that carries a 12 percent coupon. But it’s down considerably from late May, when the loans were fetching as much as 102 cents on the dollar.