More Illusions Bite the Dust
The Party Line:
So fundamental to our American way of life, securities markets enable businesses to raise capital by offering shares of stock or by issuing bonds. The New York Stock Exchange encourages extensive public involvement in this economic process by serving the interests of the companies which have listed their securities on the Exchange -- more than 3,000 of them listing more than 253 billion shares of stock valued at over $11 trillion.
It's interesting to note how the Times, in the article reprinted below, treats the B of A/stock market scandal like the discovery of a dead rat in the kitchen closet during a family gathering or the news that their aunt Minerva has been arrested for prostitution in Times Square. Lacking that bite of moral outrage they can work up whenever they report on, say, an attempt by the DPRK to develop atomic weapons to defend themselves from a thuggish superpower, they merely reprinted the Financial Times of London's version of the indiscretion. And the trained headline writer, with years of experience at this sort of thing, created a headline [...Reportedly Ready to Settle...] which is guaranteed to sneak the story under the average reader's radar.
Note to the reader: The Times article did not include the
illustrations, which I added for irony. The Hoover quote is from his
book, "Masters of Deceit: The Story of Communism in America and How to
Fight It," Holt, Rhinehart and Winston, NY 1958 p. 323.
In practice this has simply meant that the end justifies the means. That is why a Communist can commit murder, pillage, destruction, and terror, and feel proud; lie and feel no compunction... Communism has turned the values of Western civilization upside down.
Either Bush is an All-american Texas Communist or we can replace Communism by Capitalism in the above quote. Take your choice.
March 5, 2004
Bank of America Reportedly Ready to Settle Fund ScandalBy DAVID WELLS and DAVID WIGHTON, FT.com
The New York attorney-general is close to agreeing to a penalty with BofA for allegedly helping a hedge fund engage in illegal trading in mutual fund shares, according to people familiar with the plans.
The settlement will follow months of investigation into BofA's dealings with Canary Capital, a hedge fund that has agreed to pay $40m in connection with mutual fund trading abuses.
BofA's decision to settle comes as it tries to persuade investors and regulators to approve its $48bn takeover of FleetBoston Financial. BofA is embroiled in several other scandals, including Parmalat and Adelphia.
FleetBoston has its own regulatory problems involving mutual fund trading abuses and improper trading at the New York Stock Exchange.
BofA, which intends to compensate investors hurt by the scandal, has co-operated fully with Mr Spitzer's investigation. Although the attorney-general refused to comment, the bank's behaviour helped avert charges, people familiar with the negotiations said.
In other cases, the mutual fund scandal has led to charges against employees of leading investment managers, brokers and banks including Alliance Capital Management, Amvescap, Prudential Securities and Canadian Imperial Bank of Commerce.
BofA has fired employees involved with Canary. However, Richard Demartini, head of BofA's asset management business, remains in place and will be paid as much as $4.5m this year, according to recent regulatory filings. Mr Spitzer has alleged that Mr Demartini was aware of the arrangement with Canary.
According to e-mails released by Mr Spitzer, a BofA broker who now faces criminal charges wrote a memo to his bosses urging them to allow the trades. "While the requests they are making may seem a bit unorthodox, they have made it clear they are not only willing to play by the guidelines we agree on, but also pay us for the value we can add," he wrote.
BofA's critics blame its problems partly on its aggressive pursuit of business outside its traditional retail and commercial banking expertise. In particular, it has focused on wooing companies run by wealthy families and providing them with a range of different products from across the bank.
The bank said: "We have a rigorous and effective risk management process in place at the bank. The bank manages its businesses separately. When individuals fail to adhere to the rules, we act quickly and decisively."
Regulators have used settlements of mutual fund trading allegations to extract penalties and pledges from fund companies to reduce their fees. The largest settlement so far has come from Alliance Capital Management, which agreed to pay a penalty of $250m and cut fees by 20 per cent. Massachusetts Financial Services, a unit of Sun Life Financial, agreed to pay $225m and reduce fees by $125m over five years.