JPMorgan Hearings Coming, Fired Citadel Programmer Indicted, SEC Sues China Natural Gas Chairman: CompliancEX News Roundup 5/15/2012
by The Compliance Exchange on May 15, 2012
How Bank Handles Bad Bet Is Fraught With Peril [DealBook] “If I go there will be trouble, and if I stay it will be double.” That dilemma, grittily framed by the British rock band the Clash, could serve as a warning to JPMorgan Chase as it considers what to do with the soured bet that has already produced $2 billion of losses. When a trade goes bad on Wall Street, the advice is typically to sell the holdings and bear the short-term pain. After all, the situation may only get worse if the bank maintains the position.
JPMorgan Hearings Coming [Politico] Key senators will get a chance to air their grievances and concerns over JPMorgan’s recent $2 billion trading loss during upcoming congressional hearings on Wall Street reform. Senate Banking Committee Chairman Tim Johnson (D-S.D.) said Monday that his committee – which has oversight of the nation’s banking system – will hold those hearings in the next few weeks. In a statement, Johnson said he expects the issue of JPMorgan to surface during those sessions. Johnson didn’t provide specific dates for the hearings nor names of witnesses, but said key financial regulators will appear before the committee.
Fired Citadel Programmer Indicted For Stealing Hedge Fund’s Code [FINalternatives] A former Citadel Investment Group software engineer accused by the hedge fund of stealing its high-frequency trading code has been indicted. Yihao Pu was arrested in October, two months after he was fired by Citadel for the alleged crime. Pu, who said that Citadel had “overreacted” and who has denied the allegations, was indicted for theft of trade secrets and computer fraud on Friday. He’ll be arraigned this Friday in Chicago federal court. Pu has been free on bail since his arrest.
Senator Presses SEC Over Decision to Put Investigator on Leave [Bloomberg] U.S. Senator Charles Grassley is pressing the Securities and Exchange Commission to explain how the agency decided to place the chief investigator in its inspector general’s office on leave over concerns he posed a threat to other employees. In three letters sent today, including one to SEC Chairman Mary Schapiro, Grassley, of Iowa, asked for a copy of the “security threat evaluation” that was used to exclude the investigator, David Weber, from the SEC’s offices. Grassley, the senior Republican on the Senate Judiciary Committee, also requested details on any complaints that were filed about Weber.
SEC Sues China Natural Gas Chairman for Secret Loans to Son [Bloomberg] The U.S. Securities and Exchange Commission sued a China-based natural gas company over claims its chairman secretly used the firm’s money to make $14 million in loans to benefit his son’s real-estate business. Qinan Ji, the former chief executive and current chairman of China Natural Gas Inc. (CHNG), arranged the two short-term loans, one through a sham borrower, in January 2010, the SEC said in a lawsuit filed today at U.S. District Court in Manhattan. Ji lied about the loans to the company’s board, investors and auditors, as well as during an internal investigation into the matter, the SEC said.
Habib Bank Fined $844,000 Over Money-Laundering Control Failures [Bloomberg] Habib Bank AG Zurich was fined 525,000 pounds ($844,000) by the U.K. financial watchdog for failing to put in place effective money-laundering controls. The Financial Services Authority also fined a former bank official 17,500 pounds for failing “to take reasonable care to establish and maintain” systems to prevent money laundering, the agency said in an e-mailed statement. The problems at the bank lasted from 2007 to 2010, the FSA said. “Firms must take a dynamic approach to assessing money laundering risk so they can adapt to the ever-evolving risks of financial crime,” Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said in the statement today.
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