Grand Jury Indicts Hedge Fund Manager Nadel

A U.S. grand jury indicted jailed Florida hedge fund manager Arthur Nadel on 15 charges of running an investment fraud amounting to about $360 million, according to court documents released Tuesday.

Nadel, who is jailed in New York because he has not been able to meet conditions for a $5 million bail, was on the run for two weeks in January before his arrest on the initial charges, according to prosecutors.

Sarasota, Florida-based Nadel, 76, was indicted on securities, mail and wire fraud charges that prosecutors said stemmed from a 10-year-long scheme to bilk investors. They said in court papers that he created false and fraudulent client account statements.

More than 350 clients invested more than $360 million with six of Nadel's funds and he received tens of millions in fees, the government said.

Westgate chief charged with $150m fraud

The president of New York-based investment firm Westgate Capital Management has been indicted on criminal charges relating to an alleged $150 million investment fraud.

James Nicholson faces four felony charges in all, including securities fraud and investment adviser fraud, acting US attorney for the Southern District of New York Lev Dassin said.

The indictment alleges that Mr Nicholson began the fraud in approximately 2004. He is said to have told investors that Westgate had assets under management ranging in value from $600 million to $900 when in fact, the true value of its assets was materially less.

Furthermore, prosecutors contest that marketing brochures for Westgate funds showed "uniformly positive" returns for every month between October 1999 and August 2008, except September 2001. In reality, the indictment states that the funds' performance was materially lower.

Mr Nicholson is also accused of withdrawing $400,000 from various Westgate accounts in 50 transactions small enough to avoid reporting requirements.

In December 2008, prosecutors said a number of Westgate investors tried to redeem their investments and received checks totalling almost $5 million - but all of the checks bounced.

Last month, a judge froze the assets of Mr Nicholson and Westgate, and appointed a receiver for the company.

Nadel Investor to Return Money

A trust that pocketed just over $300,000 in false profits -- payouts that exceeded the original investment -- has volunteered to return 90% of the money in an agreement with a court-appointed receiver.

Unable to post $5 million bail, Nadel, 76, is awaiting indictment in the Metropolitan Correctional Center in New York City. He faces up to 40 years in prison if convicted on federal securities fraud and wire fraud charges.

more at

http://www.heraldtribune.com/article/20090424/ARTICLE/904241025/2055/NEWS?Title=Nadel-investor-to-return-money

CBOE profit down 21% last quarter

Chicago Board Options Exchange profit fell 21% last quarter as CEO William Brodsky plowed money into developing an all-electronic trading outpost even as volume dropped on the CBOE’s existing platform.

Net income dropped to $24.3 million in the first quarter, from $30.6 million a year earlier, the CBOE said in a memo to members Friday.

Revenue fell 5% to $98.6 million, after 12 straight quarters of double-digit gains, as trading declined 3%. Expenses rose 13% to $58.2 million, driven largely by investments in the CBOE’s planned electronic exchange in New York as well as payments to traders rewarding them for doing business at the CBOE.

Mr. Brodsky is building a separate all-electronic market called C2 that will cater to rapid-fire large-volume traders in a bid to further cement the CBOE’s place as the nation’s leading stock-options market. Meanwhile, the recession has dampened trading at the CBOE, which offers a mix of electronic and face-to-face trading.

China's GDP to overtake U.S. by early 2020s, says Deutsche Bank

China will overtake the U.S. in terms of economic output within a decade, according to estimates released Thursday by Deutsche Bank, which said it had to accelerate its forecast of the mainland's leadership in the global economy in view of favorable growth dynamics in emerging markets.

China's growth will be underpinned by a rapid expansion in emerging market economies, which will account for about 70% of global GDP growth in the coming decade, Deutsche Bank's Chief Economist for Greater China, Jun Ma, told an investment conference in Hong Kong.

China will "massively invest" in these emerging economies using its nearly $2 trillion in foreign exchange reserves, extend its leverage by extending loans to the International Monetary Fund, and allow the yuan to appreciate in preparation for the currency's potential reserve status. 

more at

http://www.marketwatch.com/news/story/chinas-gdp-overtake-us-early/story.aspx

China's gold reserves double

China's has added to its gold reserves and now holds 1,054 metric tons of the yellow metal, according to a Friday report by the Xinhua News Agency, which cited comment by Hu Xiaolian, head of the State Administration of Foreign Exchange. A Dow Jones Newswire report said the figure cited was nearly double China's reported gold reserves as of the end of last month, but noted that it wasn't clear what measure of gold holdings Hu was referring to. Spot gold prices shot up 0.8% to $911.40 an ounce shortly after news broke.

British economy: Sharpest decline since '79

First-quarter GDP falls at 4.1% annual rate. Analysts had expected a 3.8% contraction.

Britain's economy shrank at its sharpest rate in 30 years in the first three months of 2009 and more dramatically than expected, official data showed on Friday, suggesting the recession may be deeper than feared.

more at

http://money.cnn.com/2009/04/24/news/international/Britain_Q1GDP.reut/index.htm

CME Group profits plunge 30%

Profits at the CME Group, operator of the world's largest futures exchange, plunged by 30 per cent in the first three months of the year from the same period in 2008, as the effect of deleveraging by a crisis-ridden Wall Street continued to echo through the financial trading industry.

more at

http://www.ft.com/cms/s/0/d97f660e-2fff-11de-a2f8-00144feabdc0.html

Electronic Foreign Exchange: Booming in Crisis

In the midst of the global financial crisis, electronic foreign exchange experienced a boom in 2008, with overall e-forex trading volume surging 37% year-on-year.

Foreign exchange markets the world over have been lifted by historic levels of volatility and by the inflow of investors seeking liquid markets and “plain vanilla” assets. But new research from Greenwich Associates shows that the growth of e-forex last year far outpaced the expansion of foreign exchange trading as a whole. In fact, the 37% growth rate in electronic trading was almost triple that of the 13% year-over-year increase in total FX trading volume. As a result, the proportion of global foreign exchange trading volume executed through electronic systems jumped to 53% in 2008 from 44% in 2007.

“The severity of the global banking crisis makes the continued strength of e-forex and foreign exchange markets all the more impressive,” says Greenwich Associates consultant Peter D’Amario. “Despite a crisis of confidence that caused counterparties to stop trading with certain banks altogether and to reduce the trading lines they were willing to extend, the market managed to sustain its momentum and grow to new record levels.”

(Note: Greenwich Associates tracks foreign exchange volume among a universe of 1,440 end user customers; volume figures reported in this report exclude inter-bank transactions and volume generated from other sources. Interviews were conducted in September, October and November 2008, and the research covers the prior 12-month period.)

Europe Leads eFX Surge

E-trading growth was strongest in Europe, where electronic trading volume jumped some 78% in the United Kingdom and 37% in continental Europe from 2007 to 2008. The share of total FX volume routed through electronic trading systems climbed to 57% from 47% on the Continent and to 58% from 41% in the United Kingdom. Growth in U.S. e-trading volumes was only slightly more modest at almost 20%. Overall, the biggest increase in electronic trading volumes last year came from retail aggregators, whose total e-forex volume grew 43% year-over-year. E- trading volume increased by 26% among corporate users and by 40% among financials.

A modest inflow of new e-forex customers helped expand 2008 trading volumes. Globally, the proportion of foreign exchange traders using electronic systems for at least a portion of their FX trading business increased modestly to 57% in 2008 from 55% in 2007. Driving the growth in the e-forex client base was an increase in the proportion of corporate FX traders using electronic systems, which climbed to 45% from 42%. Usage was highest among the world’s largest foreign exchange traders — institutions and companies generating at least $50 billion in annual FX volume — of which 82% trade FX electronically.

Seventy percent of U.S. FX traders used e-forex systems in 2008, up from 67% in 2007. Usage rates increased to 69% from 64% in continental Europe and to 68% from 64% in the United Kingdom. In Japan, electronic trading adoption rates continued to lag those seen in these western markets, despite the fact that the share of Japanese FX traders using e-trading systems increased to 40% in 2008 from 34% in 2007 (primarily due to the influence of retail aggregators in that market). Across the rest of Asia, e-forex use was flat at 46%. Canada remains the one true outlier in this business. Only about a quarter of Canadian FX traders trade FX electronically — less than the proportion using eFX in 2007.

Third-Party Platforms Positioned for Growth

The research results do suggest that usage might be reaching a natural plateau among existing e-forex users. Around the world, the typical eFX user executes just short of two-thirds of its total foreign exchange trading volume through electronic channels — a share that was unchanged from 2007 to 2008. In fact, the proportion of total FX trading volume routed to electronic systems actually declined in some regions. In the United States the share of total FX volume executed electronically by users of e-forex systems dropped to 61% in 2008 from 68% in 2007; in the United Kingdom it fell to 64% from 67% and in non-Japan Asia it declined to 63% from 67%. The only regions to see increases were continental Europe, where the average rose to 67% from 63%, and Japan, where it increased to 75% from 70% among a much smaller group of eFX users.

There is also evidence to suggest that the extreme levels of volatility seen in the market at various points in 2008 prompted some customers to shift business from single-bank trading systems to multi-dealer platforms “When prices and spreads started moving too fast for e-trading pricing engines to keep up, certain banks became less willing to quote FX electronically,” says Greenwich Associates consultant Tim Sangston. “However, those disruptions seem to have been temporary.”

Not only have the disruptions from the first three quarters of 2008 subsided, conversations with FX dealers and Greenwich Associates Research Partners suggest that trading volumes for e-forex soared to record levels in November and December. “We expect that strength to continue through much of 2009,” says Greenwich Associates consultant Frank Feenstra. “Since credit risk concerns persist worldwide and because spreads remain wide, we believe third-party e-forex platforms are particularly well positioned for growth.”

Downturn shines spotlight on 529 plans

A report set to be released today by Morningstar selects the best and worst of the 529 college-savings plans and suggests that the recession has brought to light flaws in the plans. For example, some of the popular "age-based" plans, which shift money to more conservative investments as the student nears college age, are actually riskier than previously thought.

more athttp://online.wsj.com/article/SB124045704717946739.html

Stanford challenges SEC case

Billionaire financier Sir Alan Stanford has reportedly called on the US appeals court to intervene in the civil fraud case brought against him by market regulator the Securities and Exchange Commission (SEC). 

According to court papers cited by Reuters, the Texas-born businessman is challenging a freeze on his assets and the appointment of Ralph Janvey as receiver for his businesses, including the Stanford International Bank (SIB). 

Sir Alan was charged in February with orchestrating an $8 billion Ponzi fraud. 

The SEC contested that he was involved in a "massive" deception involving the sale of so-called certificates of deposit that promised "improbable and unsubstantiated high interest rates" through SIB. 

SIB chief financial officer James Davis and the Stanford Financial Group chief investment officer Laura Pendergest-Holt were also named in the SEC action. 

Sir Alan denies running a Ponzi scheme. 

Over the weekend, an attorney for the financier asked a federal court to release $10 million to help pay for his defense. 

Freddie Mac Acting CFO Found Dead In Vienna, Virginia

David Kellermann, Acting Chief Financial Officer and Senior Vice President of Freddie Mac, was found dead this morning.

Fairfax County Police officials said they responded to his home around 5 a.m. after his wife alerted them to his suicide.

Kellermann was 41 years old.

According to Freddie Mac's website, Kellerman was with Freddie Mac for more than 16 years and named Acting Chief Financial Officer in September.

more at

http://hosted.ap.org/dynamic/stories/F/FREDDIE_MAC_OFFICIAL_DEAD?SITE=MABED&SECTION=HOME&TEMPLATE=DEFAULT

Iraq Stock Exchange Goes Electronic

The Iraq Stock Exchange has launched electronic trading for five of the exchange's 91 companies.

The system was paid for with a $6.5 million grant from the U.S. government and has taken three years to install, the Wall Street Journal reported.

Since its launch in 2004, traders at the exchange relied on white boards displaying information. Buyers had to wait as many as 20 days before being issued stock certificates, during which time they couldn't resell.

Under the new system, traders can now monitor prices on TV screens and can resell in minutes if they so desire, the WSJ noted. The electronic system is being used to trade stocks in three banks and two hotels. 

The Iraq Stock Exchange is open from 10 a.m. to noon, three days a week, and does about $1 million in turnover per session, according to officials.

Trading through about 51 brokerage firms is dominated by wealthy Iraqis living overseas. About 10% comes from foreign investors, according to the WSJ.  

Let Wall Street Pay for Wall Street's Bailout Act (H.R. 1068)

I received the following email reply from senator Ben Cardin:

Thank you fo r contacting me regarding the " Let Wall Street Pay for Wall Street's Bailout Act" (H.R. 1068) .

On February 13, 2009, Congressman Peter DeFazio (D-OR , 4th ) introduced the " Let Wall Street Pay for Wall Street's Bailout Act , " which would levy a 0.25 percent transaction tax on the sale and purchase of financial instruments such as stock, options, and futures. The bill would reinstitute a transfer tax that was in place in the United States from 1914 to 1966. The legislation is designed to raise approximately $150 billion a year in order to help pay for the $700 billion Troubled Asset Relief Program (TARP).

Over the past few months, I have heard from thousands of Marylanders who are struggling with the after shocks of the declining stock market . I agree with your concern that this legislation will detrimentally affect people who invest money in the stock market. Be assured that Members of Congress are working to find ways to improve economic conditions . In these difficult times, I am committed to working in a bipartisan manner to find effective legislative solutions to benefit working families, who have been hardest hit by the downturn.

Again, thank you for contacting me regarding this issue and feel free to contact me with any future concerns.

This Day in Wall Street History 1946: John Maynard Keynes dies

This day in 1946 marks the passing of economist John Maynard Keynes, whose theories on the fiscal benefits of full employment formed a key part of the groundwork for President Franklin Roosevelt's response to the American Depression of the early 1930s.

Born in Cambridge, England, in 1883, Keynes worked as a civil servant in India during the early 1900s before returning to England around the time of World War I to work as an agent in the government's treasury department. Keynes began writing about economics following the close of the war, publishing materials that criticized the decision to burden Germany with heavy reparations; he also began his investigation into the value of what was then the prevailing devotion to laissez-faire economic policies.

By the early '30s, Keynes had become quite critical of the notion that "natural" fiscal forces, rather than government intervention, could ably guide a nation's economy. He articulated these beliefs in "The General Theory of Employment, Interest and Money" (1935-'36), that informed "The New Deal," Roosevelt's package of policies designed to end the Depression by sending America back to work.

Before his death, Keynes partook in the landmark 1944 Bretton Woods Conference, which -- perhaps more at the urging of the U.S. government than Keynes -- helped reshape the global economic order.

Source: History.com

Merkin 'performed due diligence' on Madoff investments

The hedge fund chief facing fraud charges for funneling $2.4 billion to Bernard Madoff without his investors' prior knowledge has told lawyers that he performed due diligence on the broker and cooperated with authorities investigating his Ponzi scheme.

Reuters cites court papers made public yesterday (April 19th), which show that Ezra Merkin - who ran the Gabriel Capital fund manager - claims to have spent a "fair amount of time" discussing Mr Madoff's investment strategies.

The papers relate to a civil case brought by New York University, which invested with Mr Merkin. They were made public following a successful petition filed by the Fox Business Network.

According to the transcripts of Mr Merkin's deposition, he claimed to have performed "lots of due diligence on Mr Madoff's trading strategy - and on the returns and on the levels of volatility".

However, he said he cannot remember a "specific conversation and a specific test sequentially connected".

Mr Merkin was charged with fraud by Mr Cuomo's office on April 6th.

He is not accused of being aware of Mr Madoff's $65 billion Ponzi fraud and his lawyer claims his funds have been victims of the swindle.

This Day in Wall Street History 1818: Congress ushers in protectionism

On this day in 1818, Congress heeded President James Monroe's call to uphold the fiscal integrity of domestic industry and gave the green light to sharply protectionist tariff legislation.

Not only did the tariff hike duties on iron imports, but it also put the breaks on an anticipated decrease in the levy charged on textiles. Moreover, the tariff legislation marked another chapter in America's long romance with protectionist policies. Indeed, from the time of its birth as a nation, the United States routinely adopted legislation designed to steel its producers' power in the international marketplace.

In the years following the tariff of 1818, America's fondness for tariffs grew especially pronounced; by the 1820s, duties climbed to unprecedented levels. America's proclivity for protectionism faded by the early to mid-20th century, when the Depression and World War II prompted U.S. leaders, including President Franklin Roosevelt, to shift to a more-liberal fiscal course and open the doors to international trade.

Source: History.com

UK : Shocking increase in fraud levels

The Liberal Democrat's treasury spokesman Vince Cable has claimed that the recent increase in fraud "is truly shocking".

Speaking to the Times, the British politician said that there are a growing number of mortgage fraud cases being unveiled amid the economic downturn and warned regulators to be on their guard for people turning to financial crime as a result of the recession.

His comments were made following new research from the Times, which found that the UK's Financial Services Authority (FSA) had banned over 50 per cent more finance firms from practicing over the last year.

A total of 107 firms were prohibited from operating, 33 per cent of which were in the mortgages sector.

Mortgage brokers Peter and James Dean of Dorset became the latest firm to be banned by the FSA over regulatory failures last week.

Mr Cable claimed "it is essential that the authorities remain vigilant" to the potential fraud threat.

BankUnited Has 20 Days to Merge or Raise Capital

The Office of Thrift Supervision issued a ''prompt corrective action directive" to Coral Gables-based BankUnited, the largest Florida-based financial institution this week. The regulatory order puts the ailing institution at imminent risk of a government takeover. However, federal regulators didn't specify in the directive what will happen if BankUnited, which has plagued by bad mortgage loans, doesn't beat the clock. The Office of Thrift Supervision is requiring BankUnited to raise at least $400 million, in large part because of a rise in mortgage delinquencies and defaults.

more at

http://www.miamiherald.com/business/story/1003734.html

Book : Devil Take the Hindmost: A History of Financial Speculation

"The longest bull market in history" is a term that gets used a lot these days. Since 1990, the Dow Jones Industrial Average has risen some 8,000 points, from around 2,700 in January 1990 to nearly 11,000 today--a boom by anyone's standards, including Edward Chancellor's. In Devil Take the Hindmost, Chancellor takes an entertaining, albeit sobering, look at the history of speculative manias and the mass delusion that surrounds them.

Beginning with the "tulipomania" that gripped Holland in the 1630s, Chancellor chronicles the formations and irrational euphoria that can inflate markets, from shares of South Sea stock in England in the 1720s to real estate in Japan in the late 1980s. He characterizes the speculative spirit as one that loves freedom, detests cant, and abhors restrictions. From the tulip Colleges of the seventeenth century to the Internet investment clubs of the late twentieth century, speculation has established itself as the most demotic of economic activities. Although profoundly secular, speculation is not simply about greed. The essence of speculation remains a Utopian yearning for freedom and equality which counterbalances the drab rationalistic materialism of the modern economic system with its inevitable inequalities of wealth.

But it's precisely such inevitability that always seems to win out, when "sharply rising prices followed by sudden panic without cause" bring speculative excess to an abrupt end.

CPI fell 0.1% in March

Year over year, consumer prices fell 0.4%, the first annual decline since August 1955.

Obama reportedly weighing disclosure of "stress test" results

In a move that would more clearly differentiate healthy banks from struggling banks, the Obama administration is reportedly considering disclosing to the public some of the results from the "stress tests" of the country's largest financial institutions. Along with first-quarter earnings from banks and attempts by financial institutions to repay rescue funds, the move could establish a new phase in the financial crisis.

more at

http://online.wsj.com/article/SB123975110468218627.html

Book : Manias, Panics, and Crashes: A History of Financial Crises

Manias, Panics, and Crashes, Fifth Edition is an engaging and entertaining account of the way that mismanagement of money and credit has led to financial explosions over the centuries. Covering such topics as the history and anatomy of crises, speculative manias, and the lender of last resort, this book puts the turbulence of the financial world in perspective. The updated fifth edition expands upon each chapter, and includes two new chapters focusing on significant financial crises of the last fifteen years.

Interactive Data Helps ETF.com Expand Its Services for Financial Planners and Investors

Interactive Data Corporation (NYSE: IDC), a leading provider of financial market data, analytics and related solutions, today announced that its Managed Solutions business has developed a series of enhancements for ETF.com, a leading Web site that offers sophisticated research for exchange-traded funds (ETFs) listed on U.S. exchanges.

ETF.com leverages Interactive Data’s capabilities for displaying and analyzing data on ETFs, including profiles, charts, screeners, and analytics — providing Web site visitors with a comprehensive set of free research tools. Detailed quote information such as fundamentals, performance and market cap, along with rankings of the top performing ETFs by multiple categories, are also now available on the Web site. ETF.com is now also able to deliver side-by-side fund comparison tables and performance charts that can be measured against a benchmark.

Shawn R Merriman charged with multi-million dollar fraud

A Denver-based investment fund manager has been charged by the Securities and Exchange Commission (SEC) with running a multi-million dollar Ponzi scheme.

Shawn R Merriman is accused of fraudulently obtaining between $17 million and $20 million from investors in three US states through his company Market Street Advisors. 

Clients were allegedly told that their money would be invested in stocks and options, and Mr Merriman reported "impressive and consistent" annual returns. 

However, the SEC contests that he did not trade stocks and options after his first year of operation, during which time Mr Merriman is said to have incurred trading losses. 

Instead, between 1994 and 2009, he is accused of starting new funds to bring in more money, which he then used to fund a lavish lifestyle and pay out withdrawals. 

Donald Hoerl of the SEC's Denver office said: "Our complaint alleges that Merriman repeatedly deceived investors, many of whom considered him a personal friend, by sending them fictitious account statements showing annual rates of return of seven to 20 percent."

The SEC is seeking an immediate freeze on Mr Merriman's assets.

Mini-Madoffs spreading via YouTube

A rash of Ponzi schemes are using the video sharing website YouTube to promote seemingly legal 'cash gifting' programs that are in fact just fraudulent pyramid schemes, according to reports.

The Better Business Bureau claims to have identified 23,000 clips promoting these 'gifting' schemes that together have received almost 60 million views, the Los Angeles Times states.

While the videos do not usually ask for money directly, they send viewers to websites where they are asked to sign up for a legitimate-looking 'gifting program' for a fee of between $150 and $5,000.

They are also urged to recruit more people to the program with the promise of rewards for all, the newspaper said.
Alison Southwick of the Better Business Bureau said: "They make it seem like it's legal and an easy way to make money, but it's nothing more than a pyramid scheme."

The newspaper dubbed the scams "mini-Madoffs" because they work on the same model as the $65 billion fraud committed by disgraced Wall Street broker Bernard Madoff.

Mr Madoff pleaded guilty to orchestrating the largest Ponzi fraud in history last month.

This Day in Wall Street History 1852: F.W. Woolworth is born

A century before the emergence of retail giants like Wal-Mart and Target, today's birthday boy, Frank Winfield Woolworth, pioneered the notion of the discount variety store. Born in Rodman, N.Y., on this day in 1852, Woolworth had tried for a number of years to establish his own business. But, his various ventures met with failure. However, in the winter of 1879, Woolworth's fortunes changed, as he opened the Great 5 Cents Store in Utica, N.Y. Rather than specializing in one product or line, Woolworth stuffed his store with kitchen wares, beauty items and an array of other goods, none of which cost more than a nickel. Though the Utica branch of the store was eventually forced to shut its doors, Woolworth's concept soon proved to be a smashing success. Later in 1879, he opened another discount store in Lancaster, Pa.; though it was a tad pricier than its predecessor -- Woolworth sold items that cost up to 10 cents -- Pennsylvanians loved the store. Having finally hit pay dirt, Woolworth set about opening a small army of discount stores across the nation. In 1911, Woolworth solidified his kingdom by merging with four retail rivals. That same year, Woolworth incorporated his empire, which now numbered upward of 1,000 shops, and re-christened it under a more familiar name, Woolworth's. Frank Winfield Woolworth passed away in 1919.

Source: History.com

IBM Unveils Prototype Options Trading System

IBM-flavored event (stream) processing running on an IBM Blue Gene supercomputer said to handle data at 21 times the speed of OPRA.

IBM unveiled a prototype of an automated options trading system. During the project, scientists at IBM Research collaborated with TD Securities to achieve a 21 times performance improvement on the volume of data consumed by financial trading systems.

Through the combination of IBM's InfoSphere Streams — software technology from IBM Research — and IBM's Blue Gene/P supercomputer, the IBM Research team created a stream processing system suited to meet and surpass the demands of the financial services industry. By enabling rapid, intelligent analysis of live streaming data from a practically unlimited number of sources, IBM says it delivered low latency that surpasses the performance of traditional trading systems.

According to the Financial Information Forum, the combined options and equities traffic has exploded, doubling in size every year since 2003. The challenge to ingest, analyze and automatically act upon millions of messages every second is the difference between success and failure for automated trading systems. IBM says the use of its stream computing architecture and Blue Gene allowed for significant enhancements to real-time messaging and analytical capabilities while offering a simplified, energy-efficient underlying infrastructure.

The collaboration with TD Securities is part of IBM's First-Of-A-Kind program (FOAK), which engages IBM's scientists with the company's clients to explore how emerging technologies could solve real world business problems. In this collaboration, IBM Research scientists worked with TD Securities to create a tailored, unique system through applying advanced and emerging technologies and new approaches.

"TD Securities could potentially use the new system to analyze and act on information before their competitors can finish ingesting and analyzing, effectively blinding the competition to its actions," said Nagui Halim, chief scientist of the Stream Computing Project at IBM. "We're not talking about 20 percent faster here. We're talking about 20 times faster," he added.

In testing, the system was found to be capable of handling data at 21 times the speed of Options Price Reporting Authority (OPRA), the world's single largest market data feed, while maintaining ultra low end-to-end latencies.

Madoff middleman charged with fraud

A fund manager has been charged with fraud after he allegedly funnelled $2.4 billion to Bernard Madoff's firm without investors' knowledge.

New York attorney general Andrew Cuomo said Ezra Merkin was a self-styled "investment guru" who was in fact just a "master marketer". When investors entrusted their money to him, he passed it off to third-party fund managers like Mr Madoff.

The civil complaint states that for two decades, he made millions in management and performance fees, despite pumping investors' cash into the biggest Ponzi scheme in history. Many of his clients - which included a number of prominent charities - lost hundreds of millions of dollars when the Madoff fraud was uncovered in December.

Mr Cuomo also alleges that Mr Merkin ignored "glaring red flags" relating to Mr Madoff's business. Indeed, two of the fund manager's closest lieutenants warned that Mr Madoff's returns were too good to be true, but Mr Merkin took no action, the court papers state.

Furthermore, Mr Merkin is said to have told concerned investors that little or no assets from his Ascot fund were invested with Mr Madoff, when in fact the entire fund was in the broker's hands.

Mr Madoff pleaded guilty last month to running a $65 billion Ponzi scheme.

Capitalism - video commentary

Mylène Farmer - Disenchanted Generation

(English translation)
To swim in troubled waters
for days,
To wait here for the end.
To float in air, too heavy
from almost nothing.
To whom to reach out a hand?
If I must fall from high,
May my fall be gentle.
I found rest only in indifference.
Still, I would like to find innocence again,
But nothing makes sense and nothing goes right.
Chorus: All is Chaos,
On all sides,
All my ideals; the words overwhelmed,
I look for a soul who is able to help me.
I am of a disenchanted generation. Disenchanted.
Who could prevent me from
understanding all?
When reason collapses,
To what womb should we turn to?
Who can pretend,
To rock us in her womb.
If death is a mystery,
Life offers nothing.
If the sky has a hell,
The heaven can well wait for me.
Tell me,
In these adverse winds how do you save yourself ?
Nothing else makes sense, nothing else goes right.

B of A pushes ceiling on fees

(Crain’s) — It’s about to get more expensive for Bank of America Corp. customers who bounce a check.

The North Carolina-based bank, which has a strong presence in the Chicago area, is bumping its overdraft fee to $39, up $4, on June 5. The new charge is among the highest in the nation.

In addition, the bank is increasing the number of times in a day it can hit customers with that $39-overdraft fee. Bank of America customers will be charged that fee for the first 10 times they overdraw their account in a single day. The previous limit was seven times a day. That means a customer could be hit with a total of $390 in fees if the overdraw their account 10 times in a day.

Another new fee – a $35 one-time charge – is assessed if the customer’s account has insufficient funds for five days.

“Overdraft fees are designed to modify customer behaviors and offset the risks that an overdrawn account poses to bank, so given the changing economic conditions, those risks have increased,” a Bank of America spokesman said.

Bank of America’s overdraft fees are well above the national average of $28.95, according to the latest data from bankrate.com, a Florida firm that aggregates financial rate information. Average overdraft fees increased 2.5% last year, up from $28.23 in 2007.

Citibank charges $34 for each overdraft, with a limit of four fees per day. JPMorgan Chase uses a tiered system to assess overdraft fees. The first occurrence in a year triggers a $25 fee, the second through fourth instances cost $32 each, and the bank charges $35 for each overdraft item thereafter, with a limit of six per day.

Both Citibank and JPMorgan Chase said they have no plans to increase or decrease their overdraft fee structures.

ETF assets down 13.5% in Q1, with 21 funds delisting

Assets in exchange-traded funds ended the first quarter at $430.15 billion, down 13.5%, according to Barclays Global Investors. During the first three months of the year, 15 ETFs were launched while 21 were delisted, resulting in a net loss of 1.1%.

more at

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090408/REG/904089965

Northern Trust axes London-based team

(Reuters) — Asset manager Northern Trust has made redundant the bulk of its active International Equities fund management team in London, sources and a company statement said on Thursday.

Some analysts will continue to operate out of London, but the fund management functions will be handled in Chicago as part of a broader consolidation around key centres, sources at the company said.

The company declined to comment on the number of staff leaving or whether any additions would be made to the team in the United States.

One source at the firm said less than 10 fund managers were losing their jobs in the cull.

The move is further evidence that fee-generating portfolio managers are firmly in the firing line now that fund management firms have started to run out of costs to cut in their back and middle offices.

Consultants have voiced fears that companies might damage their investment performance if they choose to cut back too heavily on fund manager talent.

Following the changes, Northern Trust said it would have over 150 people in its asset management business in London.

Among the team leaving Northern Trust is head of the unit Stephen Dowds. An accomplished classical guitarist, Dowds joined Northern Trust in 2004 after previously acting as chief investment officer at Dryden Capital Management.

One departing member of the team, who spoke on condition of anonymity, said he was not thinking about finding a new job immediately in the current climate.

"I'll probably just go and lie on the beach for a while," he told Reuters.

According to data on Northern Trust's website, the firm's International Growth Equity fund is down 8.43 percent in the year to date. It is down 43.23 percent on a one year view and down 1.6 percent over five years.

London gang made £3.5m from card cloning scheme

A five-man gang based in south London stole £3.5 million ($5.1 million) in 11 days after turning a council flat into a card cloning factory, a court has heard.

Prosecutor Ben Fitzgerald told Southwark crown court that the defendants began the alleged fraud when Barclaycard took on the credit card division of Morgan Stanley in 2008, This is London reports.

Between September 28th and October 8th, he argued, they stole £3.5 million in a worldwide spree, including £645,000 worth of goods in Britain alone.

Police who raided the flat in question found fake cards and counterfeiting equipment, as well as a type of software linked to the manufacture of the clone payment cards.

Four of the alleged gang - Khi-San Voong, Qiu Yeu, Qiang Xue and Dauy Chung - all deny conspiracy to defraud. A fifth defendant, Cai Caixa, has pleaded guilty. The trial continues.

According to figures recently published by payments association Apacs, losses from card fraud totaled £609.9 million in the UK last year. 

Goldman reportedly eyeing share offering to repay government

As Goldman Sachs prepares to report solid earnings for the first quarter, the company is looking into making a large share offering to investors to help pay the government back for its $10 billion loan, sources said. The exact size of any offering has not been determined, but sources said it would likely be several billion dollars, at least.

more at

http://online.wsj.com/article/SB123932742279007541.html

Wells Fargo's profit expectation lifts bank stocks

Wells Fargo said it expects to report a $3 billion first-quarter profit. The outlook sparked a rally by bank stocks, but results from other financial institutions will test that budding optimism. Wells Fargo's surge in net income comes mostly from a recent increase in mortgage volume and its acquisition of Wachovia. "We have put a lot of their losses behind us when we closed the deal," Wells Fargo Chief Financial Officer Howard Atkins said. "We are now enjoying some of the benefits from their revenue."

more at

http://online.wsj.com/article/SB123927941187404855.html

India charges nine over $1bn Satyam fraud

India's Central Bureau of Investigation (CBI) has indicted nine people in connection with an alleged $1 billion accounting fraud at IT outsourcing specialist Satyam. 

The 300-page charge sheet names former Satyam chairman B Ramalinga Raju, as well as his brother and the company's ex-managing director, Rama Raju. 

In January, Satyam's then-chairman had reportedly admitted the accounting fraud, saying he had wildly inflated the company's profitability and assets until the scheme had reached "unmanageable proportions". 

Others charged in the CBI lawsuit include Satyam's chief financial officer at the time, Vadlamani Srinivas, as well as two former company auditors - S. Gopalakrishnan and Talluri Srinivas.

The defendants are accused of offences including criminal conspiracy, forgery for the purposes of cheating, falsification of accounts and causing the disappearance of evidence. 

In all, the charge sheet cited 433 witnesses and 1,532 documents. 

Earlier this month, the Business Standard reported that up to 300 Satyam staff employed on a project for Merrill Lynch when the alleged fraud was uncovered would be transferring to Bank of America. 

This Day in Wall Street History 1909: Congress passes Payne-Aldrich Act

William Howard Taft rode into the Oval Office on a platform that included an anti-protectionist pledge to slash tariff rates. On April 9, 1909, Congress seemingly helped the new president make good on his promise by passing the "Payne-Aldrich Tariff Act." In its initial form, the tariff called for a list of free goods, to go along with lower rates -- provisions that readily appealed to Progressives, importers and exporters. On paper, the tariff promised to help pry open foreign markets to American goods, as well as to provide U.S. industrialists with a steady flow of cheap raw materials. But the legislation was far less palatable to protectionist forces in the Senate, who did their best to reshape the tariff. When it finally hit the law books, the Payne-Aldrich bill lacked the free list of goods and only lowered rates on a select set of items. The modified tariff also hiked the duties on a number of goods. Taft, who was admittedly uncomfortable in the political arena, did little to mollify Progressives and the business community. Indeed, later that spring, the president raised the hackles of his putative allies by praising Payne-Aldrich as the finest tariff ever to be passed by Congress.

Source: History.com

SEC To Seek Comments On Short Sales

The U.S. Securities and Exchange Commission voted unanimously to seek public comments on all the proposed rules that seek to limit short selling.

There are two types of proposals the SEC will consider possibly enacting after a 60-day comment period. One type aims to impose market-wide sales restrictions and another instead targets particular stocks that are in rapid decline.

The two market-wide restrictions the SEC will consider include a rule similar to the old "uptick" rule and a modified uptick rule similar to Nasdaq's former bid test.

In addition, the SEC also will solicit comments on three different types of "circuit-breaker" models, which would impose various restrictions on short sales for the remainder of a trading session if a particular security declined by 10%.

If a circuit breaker is triggered, then traders could be subject to either an uptick restriction, a bid test restriction, or an outright short-selling ban on a particular security for the rest of the day.

More Investors Say Bye-Bye to Buy-and-Hold

The buy-and-hold investment strategy lost favor as the stock market lost value. "I just got tired of putting money away and losing it," said Kenneth Kimmons of Bedford, Texas. More individual investors are turning to opportunistic-trading strategies. 

more at

http://online.wsj.com/article/SB123915041409099017.html

Volatility index indicates potential shift in market's course

The CBOE Volatility Index and the S&P 500 generally move in opposite directions, but both moved lower Tuesday. One analyst said the move indicates a possible shift in the overall course of the stock market. "Typically, if the S&P moves 3%, VIX will move 10% in the opposite direction. And, when the VIX is stubborn and doesn't move as much you'd expect, it is often forecasting a change in direction," said Randy Frederick of Schwab Center for Financial Research. "Given today's movement ... it tells me the profit taking is done, and maybe we're ready to stabilize or go back into an up trend."

UBS imposes executive travel ban

UBS executives who deal with foreign clients have been banned from travelling abroad by the bank amid an ongoing US investigation into its role in suspected tax evasion and fraud. 

The bank said the restrictions have been imposed while it conducts a review of its international wealth management operations and would apply to all foreign client managers. 

According to Reuters, the Swiss newspaper Sonntags Blick said over 1,000 employees will be affected by the ban. 

UBS has denied introducing the measure to ensure that senior staff are not detained by US authorities investigating the tax fraud allegations, the BBC reports. 

The bank is accused of helping thousands of American clients hide their assets from the Internal Revenue Service (IRS). 

It had previously supplied US authorities with the names of 300 clients it had advised but subsequently refused to comply with a 'John Doe' order from the IRS demanding the details of 52,000 other customers. 

In February, the bank vowed to "vigorously contest" a civil case brought by the IRS seeking judicial enforcement of the order. 

Swiss banks report record number of suspicious transactions

Switzerland's Money Laundering Reporting Office (MLRO) received a record number of suspicious activity reports related to money laundering from the country's banking sector last year, according to reports. 

The federal department of justice and police (FDJP) said the combined value of assets covered by the reports also hit a record high, doubling from 2007 to hit $1.65 billion. 

In total, the MLRO received 851 suspicious activity reports during 2008, up from 795 the year before. 

The banking sector accounted for 67 per cent of the warnings, the FDJP noted. 

Fraud and in particular investment fraud accounted for the majority of reports, with 38.5 per cent of the total, while another 9.5 per cent of suspicious activity was linked to bribery. 

The FDJP said that in most of these cases, the corruption was taking place abroad, with money then deposited into Swiss accounts. 
Switzerland was recently included on the Organisation for Economic Cooperation and Development's 'grey list' of territories that do not comply with international standards on sharing tax information. 

The country denies being a tax haven. 

U.S. SEC to consider about 4 short sale proposals

The Securities and Exchange Commission is considering four proposals aimed at restricting short sales of stocks. The proposals include restoring the "uptick rule"; a "bid test" that would allow shorting at prices above the highest bid; and two "circuit breaker" rules, one of which would temporarily halt short sales when a stock has already fallen a certain percentage, and the other would trigger uptick or bid-test rules after a share price drops. The proposals will be discussed at a meeting Wednesday

more at

http://www.reuters.com/article/ousiv/idUSTRE53605A20090407

IMF predicts troubled assets could spiral to $4 trillion

The International Monetary Fund is forecasting that financial institutions have racked up $4 trillion in troubled debt. In its upcoming assessment of the global economy, the IMF is expected to raise its estimate of the deterioration of assets originated in the U.S. from $2.2 trillion to $3.1 trillion by the end of 2010. Meanwhile, troubled assets originated in Asia and Europe are expected to total $900 billion. 

more at 

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6047929.ece

This Day in Wall Street History 1808: John Jacob Astor incorporates

Thanks to Lewis and Clark's famous expedition, the area west of the Mississippi became terra firma for the fur trade during the early nineteenth century. Looking to seize his piece of this potentially rich pie, budding fur maven John Jacob Astor incorporated the American Fur Company on this day in 1808. Astor installed himself as the lone stockholder of his New York City-based company and proceeded to make inroads into the fur business. Indeed, in a few short years, he was able to mount a serious challenge to industry leaders like the North West Company. Astor soon started expanding his fur concern: in 1810, he created the Pacific Fur Company; the following year, he established the South West Fur Company. Astor's new companies boosted his ability to capitalize on America's burgeoning regional markets and cemented his rise to the top of the fur trade. By 1828, Astor and his mighty fur empire stood as unrivaled kings of the fur industry. 

-Source: www.history.com

US banks line up for biometrics initiative

Over 20 US banks have expressed an interest in signing up to a new project investigating the use of biometrics in verifying customer identities, it has been reported. 

The Credit Union Security and Technology News blog said the scheme is being run by the Financial Services Technology Consortium (FSTC), an industry-led body that lets banks work together to solve common problems. 

According to the blog, the American Bankers Association has already signed on as a sponsor for the project. 

The program developed from a panel discussion held at a joint conference organized by the FTSC and Bits, the operations and technology division of the Financial Services Roundtable, held in March. 

FTSC executive director Dan Schutzer said the program will try to develop a common strategy for financial institutions to help them specify, evaluate, select and deploy biometrics applications with greater levels of customer acceptance. 

"We also hope to identify and validate at least one or two of them that will make an immediate impact in the fight against identity theft and insider fraud," he commented.

A follow-up meeting on the project is set to take place later this month in San Francisco. 

Citi and Visa team up for m-payments pilot

Citibank and Visa have launched a pilot contactless mobile payments scheme in Singapore with local carrier M1. 

The three-month initiative will allow holders of a Citi M1 Platinum Visa card to pay for goods and services using their handset at more than 750 locations in the city-state.

Around 300 cardholders will be invited to join the scheme, which covers music and book retailers, cafes and restaurants.
Users will pay for items by waving their phone handset over a contactless reader at the point of sale. 

John Denhof, business director of credit payment products for Citibank Singapore, said the scheme will provide "enhanced convenience, accessibility and mobility for our customers". 

"Mobile payment technology, when paired with a credit card account, has the great potential to change the future of consumer behavior in how we make payments and transact daily," he added. 

Mobile operator M1, which is supporting the project, has around 1.6 million subscribers in Singapore. 

Last month, Barclaycard and Orange announced a partnership to develop a range of mobile payment technologies for the UK market. 

Austrian banker detained over suspected fraud

The owner of Austria's Meinl Bank has been arrested over alleged breach of trust and fraud, the office of Vienna's public prosecutor has announced. 

Spokesman Gerhard Jarosch told the Associated Press that Julius Meinl V - a member of the Austria's prominent Meinl dynasty - was arrested in the capital after authorities became concerned that he may try to flee the country. 

Mr Meinl, who is a British national, is accused of defrauding investors through a series of transactions involving Atrium European Real Estate, then known as Meinl European Land. 

The company develops and operates shopping centres in central and eastern Europe. 
"It's a very complicated matter," Mr Jarosch said. 

A judge ruled yesterday that Mr Meinl could be held for at least another fortnight while investigators continue their probe, but Mr Jarosch told the AP that he could soon be released on €100 million ($134 million) bail. 

The arrest comes after Austrian authorities raided several properties in connection with the case in February. 
Meinl Bank, part of the 150-year-old Meinl Group, was established in 1923. 

Madoff feeder fund charged with fraud

A hedge fund manager that funneled investors' cash to Bernard Madoff is facing civil fraud charges after being accused of lying to investors about the due diligence it performed on his business.

Connecticut-based Fairfield Greenwich was charged by authorities in Massachusetts, who alleged that the firm's employees were "blinded" by the performance fees they were earning thanks to Mr Madoff's gravity-defying returns, the Times reports.
Massachusetts secretary of state William Galvin said the firm "did not engage in meaningful due diligence and turned a blind eye to any fact that would have burst their lucrative bubble".

The fund manager, which was founded by US socialite Walter Noel, worked with Mr Madoff's firm for 18 years, the newspaper added.
According to Mr Galvin, the firm pumped $7.2 billion - or around 95 per cent of the assets managed by its three funds - into Mr Madoff's company.

He said it had funneled around $14.8 million to the brokerage days before Mr Madoff's arrest in December.
The Massachusetts lawsuit seeks repayment of investors' losses, plus the return of related performance fees.
According to the BBC, Fairfield Greenwich intends to "vigorously" contest the charges.

This Day in Wall Street History 1792: Minting the Mint

In drafting the United States Constitution, the Founding Fathers explicitly handed legislators in the House of Representatives the "(P)ower...To Coin Money." This mandate was borne of an understanding that the new nation would require a stable and respected currency. Treasury Secretary Alexander Hamilton took up the cause of creating a fiscal system, and set about developing plans for a national mint. Congress eventually followed Hamilton's lead and, on this day in 1792, passed the Coinage Act, which founded the Mint, as well as a decimal-based currency system. The passage of the Coinage Act touched off a flurry of activity: construction soon began on the Mint building, which was located in the nation's first capital, Philadelphia. And, President George Washington installed top astronomer and mathematician David Rittenhouse as the Mint's inaugural Director. During his tenure, Rittenhouse helped usher 11,178 copper coins into circulation; he also oversaw the initial issues of gold and silver currency.
-Source: www.history.com

CBOT traders indicted for fraud

(Crain’s) — Two veteran Chicago Board of Trade floor traders were indicted for allegedly cheating customers out of $2 million.

Edward Sarvey of Lemont and David Sklena of Skokie, both longtime traders in the CBOT’s five-year Treasury note futures pit, allegedly carried out the fraud on the morning of March 1, 2004, just as the U.S. Labor Department released its monthly employment report. The release of such data typically sets off a flurry of trading in Chicago, as investors use futures contracts to place bets on, or try to protect themselves from, swings in the debt markets.

According to an 11-count indictment issued late Tuesday, Mr. Sarvey took orders from customers that obligated him to sell contracts on their behalf at the best price possible. Instead, Mr. Sarvey sold the contracts to Mr. Sklena at below-market prices, the indictment said. Mr. Sklena then allegedly sold some of those contracts back to Mr. Sarvey, again at below-market prices. Both men are accused of later selling the contracts on the open market for considerably more than they paid for them.

Together, the two made more than $2 million on the trades, according to the indictment.

Mr. Sarvey and Mr. Sklena were each charged with six counts of wire fraud, one count of commodities fraud and two counts of non-competitive futures trading in violation of the Commodity Exchange Act. Mr. Sarvey also was charged with two additional counts of non-competitive trading.

The indictment seeks forfeiture of $2.1 million from the two traders, who will be charged at a future date, the U.S. attorney’s office said Wednesday.

U.S. spending against crisis almost as much as GDP

The government and the Federal Reserve have guaranteed, spent or lent $12.8 trillion to curb the economic downturn and stabilize the banking system. In comparison, the country's GDP was $14.2 trillion last year. President Barack Obama and Treasury Secretary Timothy Geithner met Friday with leaders of the nation's largest banks as well as industry representatives to garner their support. "The president and Treasury Secretary Geithner have said they will do what it takes," Goldman Sachs CEO Lloyd Blankfein said after the meeting. "If it is enough, that will be great. If it is not enough, they will have to do more."

4 banks become first to repay government aid

Signature Bank of New York, Indiana's Old National Bancorp, Louisiana's IberiaBank and California's Bank of Marin were the first to repay the Treasury for the government's emergency assistance. Signature Bank of New York, which returned $120 million, said it wants to avoid restrictions that might prevent it from retaining top employees. "The return of these funds allows us to continue to execute our business model," CEO Joseph J. DePaolo said.

more at
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/31/AR2009033102187.html

Google Forms $100 Million Venture Capital Fund

Google has formed Google Ventures, a $100 million venture capital fund that will invest in new technology companies in a broad range of industries, according to Google. Unlike some venture capital funds that specialize in a certain type of technology or a specific sector, Google Ventures will target many technologies, including clean technologies and healthcare, according to Rich Miner, co-manager of Google Ventures. Miner will manage Google Venture with Bill Maris.