from the money-money-money-moooooneeyy dept.
The Securities and Exchange Commission today announced that Morgan Stanley & Co. LLC has agreed to pay $7.5 million to settle charges it used trades involving customer cash to lower the firm's borrowing costs in violation of the SEC's Customer Protection Rule.
[...] According to the SEC's order, Morgan Stanley had its affiliate, Morgan Stanley Equity Financing Ltd., serve as a customer of its U.S. broker-dealer, a relationship that allowed the affiliate to use margin loans from the U.S. broker-dealer to finance the costs of hedging swap trades with customers. The margin loans lowered the borrowing costs incurred to hedge these swap trades and reduced the U.S. broker-dealer's customer reserve account deposit requirements by tens to hundreds of millions of dollars per day.
The SEC order finds that Morgan Stanley's affiliated transactions violated the Customer Protection Rule and that as a result of inaccurately calculating its customer reserve account requirements, it submitted inaccurate reports to the SEC. Morgan Stanley provided substantial cooperation during the SEC's investigation and has agreed to review its compliance with the Customer Protection Rule and to take remedial steps to improve its calculation processes. Morgan Stanley also significantly increased the amount of excess funds it maintains in its customer reserve account.
Source: The Securities and Exchange Commission
(Score: 3, Insightful) by ikanreed on Wednesday December 21 2016, @09:08PM
N/T
(Score: 5, Insightful) by edIII on Wednesday December 21 2016, @10:24PM
Why? They're going to get worse, or better?
These are light slaps on the wrist that don't impress me one iota. I'll believe there is justice when the executives themselves pay the fines out of their own bank accounts. I'll feel even better when there are NO FINES. We make the executives clean up trash on the highway every weekend for 3 years. If they hurt us too much, it's Federal Pound Me In The Ass Prison.
Seriously. There are two sets of laws. One book for the slaves, and one book for the elites. Some brown guy is sitting in prison for stealing $100 to eat (and gave back the change), while these fucks have their behavior handled by an accountant under their employ.
These stories are a disgusting reminder of how unequal we really all are.
Technically, lunchtime is at any moment. It's just a wave function.
(Score: 5, Interesting) by Thexalon on Thursday December 22 2016, @01:24AM
There are more than 2 sets of laws. There are somewhere around 5:
1. The completely unprosecutable: These are political and business leaders who can commit horrendous crimes and never face justice. Think Dick Cheney, who announced on CNN that he committed war crimes, which the US is required by treaty to do something about, and notice that nothing happens to him.
2. Rich people: These folks can commit crimes with impunity unless they are against other rich people. Think Bernie Madoff: His real mistake was ripping off rich people rather than poor people like Wells Fargo did.
3. Middle class white people: These get something akin to the justice system taught in high school civics.
4. Working class white people, middle-class non-white people: These folks get bullied into accepting bad plea bargains, have poor or no legal representation, and are basically screwed the moment they get arrested.
5. Working non-white people, underclass: Can be summarily executed by police without any consequences to the cops.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 1, Informative) by Anonymous Coward on Thursday December 22 2016, @04:48AM
https://soylentnews.org/submit.pl?op=viewsub&subid=17550¬e=&title=French+Court+Finds+IMF+Chief+Christine+Lagarde+Guilty+of+Negligence+but+Doesn%27t+Impose+Penalty [soylentnews.org]
"n1 [soylentnews.org] writes:
A French court Monday found Christine Lagarde, head of the International Monetary Fund, guilty of negligence during her time as the country’s finance minister, but the fund’s board expressed full confidence in her.
The court imposed no penalty on Ms. Lagarde, who had pleaded not guilty over allegations of negligence stemming from her role in settling a long-running legal battle between the French state and business tycoon Bernard Tapie. She wasn’t in court for the ruling, but her lawyers said they were taken aback after the prosecutor in the case last week argued against a guilty verdict.
Source: Wall Street Journal [wsj.com]"
No paywall version http://www.bbc.com/news/world-europe-38369822 [bbc.com] "guilty of negligence" and still giving "advices" from IMF chair, with no fines, prision or even being noted in criminal record.
Lagarde must be from group 2, and while she plays along she will be OK. Strauss Kahn pissed someone, but who? Maybe he rocked the USD boat? http://www.telegraph.co.uk/finance/currency/8316834/International-Monetary-Fund-director-Dominique-Strauss-Kahn-calls-for-new-world-currency.html [telegraph.co.uk]
(Score: 0) by Anonymous Coward on Thursday December 22 2016, @10:46AM
See also: https://en.wikipedia.org/w/index.php?title=MF_Global&oldid=696690260#October_2011:_MF_Global_transfers_client_account_funds_to_its_own_account [wikipedia.org]
(Score: 4, Insightful) by Anonymous Coward on Wednesday December 21 2016, @09:12PM
First, good on the SEC for identifying and punishing this behavior.
Second, how much money did Morgan Stanley save by undertaking this scheme. The key point is that the $7.5 Million needs to be substantially above the amount they saved, or else it is just the cost of doing business and they (and everybody else in industry) will continue to undertake maleficence. I'll take a "heads I win, tails I break even" bet any day.
(Score: 1) by RS3 on Wednesday December 21 2016, @10:03PM
In towns near me, people where parking illegally and paying $5-10 fines because it was (much) cheaper than the cost of all-day parking in lots and garages. Govt. finally got smart about that.
I agree- the fines need to be MORE than Morgan Stanley made on the deals.
(Score: 1) by RS3 on Wednesday December 21 2016, @10:10PM
I meant to add: I'm glad the SEC is FINALLY doing what We the Taxpaying People are paying them to do, rather than this: http://abcnews.go.com/WN/sec-pornography-employees-spent-hours-surfing-porn-sites/story?id=10451508 [go.com]
I had other links but they're now broken...
It's interesting that this and other similar stories are coming out- at the end of Obama's presidency.
(Score: 2) by fishybell on Wednesday December 21 2016, @11:21PM
My favorite part of the story? The employee who bypassed the porn filter by using a flash drive. I assume this means he used some live-usb type deal, which means the filters were always on the desktop OS, meaning they were really always meant to be broken and bypassed. Maybe he used Tails, and was really sneaky, but tor default ports should still be blocked at the network level.
(Score: 2) by Hairyfeet on Thursday December 22 2016, @01:40AM
Well look on the bright side, at least they were just looking at regular porn instead of child porn like the pentagon was.
But lets be honest folks...this is a joke, and a bad joke at that. Think a company this size is gonna do anything that nets them "only" 7.5 million dollars? I have zero doubt that this "fine" doesn't even come to 10% of what they actually made on the scam which makes this NOT a fine but simply a kickback, just a cost of doing business that will have zero effect on whether or not they do something like this in the future.
ACs are never seen so don't bother. Always ready to show SJWs for the racists they are.
(Score: 0) by Anonymous Coward on Friday December 23 2016, @07:30PM
If I'm a mere employee and the company pays the fine for the illegal stuff the bosses ask me to do it's more tempting for me to go along with it. Even if the company is unable to pay the fine and goes bust, they can always start a new one and they might hire me again since I helped them make money.
But if I'm threatened with imprisonment, I'll start digging out evidence that it was the bosses orders- if I'm going down I'll take them with me or use them in my plea bargain. And even if I was stupid enough not to get the evidence, more of my colleagues would insist on it in the future, making it harder for the bosses to make them do illegal stuff.
And even if the fine is personal lots of the rich bosses can afford multi-million dollar fines. What hurts them more is going to prison. If they pay the fine, they can still travel, live a nice lifestyle. If they go to prison, they can't. It's easier for a multimillionaire to make back 7 million bucks than for him to make back 5 years of his life in prison.
The opportunity cost of prison becomes greater the richer you are. Since when you are rich there's so much you can do (whether you want to or not), but once you're stuck in prison, you can't do most of that.
(Score: 0) by Anonymous Coward on Wednesday December 21 2016, @09:58PM
Next they'll be auditing the "take a million, leave a million" tray [wikimedia.org] in the lobby.
(Score: 0) by Anonymous Coward on Thursday December 22 2016, @12:33AM
I don't quite understand what went on between the two branches of Morgan Stanley, can I have a car analogy please?
(Score: 1, Informative) by Anonymous Coward on Thursday December 22 2016, @01:20AM
Lets say you want to buy a car.
You have 10,000 dollars. But you need 10,000 to buy the car.
Now you take out a loan against the 10,000 dollars with the 10k cash as collateral. This gives you 20k 'cash' to buy the car. A car bought 'on margin'. You still have the collateral sitting in the bank. Earning interest and you can deduct any interest payments made on the loan. https://www.westpac.com.au/personal-banking/investments/the-share-market/how-a-margin-loan-works/ [westpac.com.au]
In this case though the original 10k cash is someone elses savings account.
Basically MS was borrowing large sums of money using customers money and putting it a risk and not paying them the interest.
(Score: 0) by Anonymous Coward on Thursday December 22 2016, @01:32AM
Thanks, but I think:
You have 10,000 dollars. But you need 10,000 to buy the car.
should be:
You have 10,000 dollars. But you need 20,000 to buy the car.
(Score: 0) by Anonymous Coward on Thursday December 22 2016, @03:39AM
You can do it either way. Just beware the 'margin call'.
(Score: 1) by Francis on Thursday December 22 2016, @06:15AM
Yes, but with interest rates being what they are, you're better off just using the cash to buy the car and then you don't have to worry about anything other than wrecking the car.
Coincidentally, that's one of the reasons why so few Americans have enough savings. Why bother to save when the interest rates in savings accounts are typically below 1% and the Federal Reserve purposefully keeps inflation at 2-3% under the misguided belief that perpetual inflation is good for the economy. It's not good for the economy any more than perpetual deflation is. The only difference is that it takes a lot longer for the ill-effects of inflation to appear than deflation.
Having inflationary or deflationary expectations for decades into the future is a serious problem. If you're expecting inflation into the future, then it makes sense to own things rather than save money. If you're expecting deflation, then the opposite strategy is the safer bet as your money gains value over time. Both lead to serious economic problems over the long term.
The correct monetary strategy is to permit the economy to have period of inflation and deflation, but to manage it so that they are kept within a few percent of zero and are kept shorter rather than longer. That way you don't have perverse incentives to either hoard cash or go deep into debt knowing that the debt will inexpensive to repay in the future.
(Score: 2, Informative) by Anonymous Coward on Thursday December 22 2016, @02:49AM
While your car is at the garage for repairs, the mechanic starts renting it out to other people, thus making a profit from using your car, and at the same time, risking having your car destroyed by whoever he has rented it to.
(Score: 2) by arslan on Thursday December 22 2016, @02:08AM
There goes the bonuses of all the peons at the bottom of the food chain! Yea, you IT and administrative folks...
(Score: 0) by Anonymous Coward on Thursday December 22 2016, @02:49AM
Bonuses for IT staff? Face With One Eyebrow Raised!
(Score: 2) by tibman on Thursday December 22 2016, @06:24PM
Hah, too late! The CTO already gave me my Christmas Bonus in the form of a 5$ scratch off ticket.
SN won't survive on lurkers alone. Write comments.
(Score: 2) by arslan on Thursday December 22 2016, @09:40PM
Merry Christmas! You sure he/she isn't just mark-to-marketing your paycheck in advance?