Russ Senior gets 50 years in prison

Russell Wasendorf Sr., who admitted looting more than $100 million from broker Peregrine Financial Group in a scheme that shook confidence in the U.S. futures industry, was sentenced to 50 years behind bars on Thursday.

Wasendorf was ordered to pay $215.5 million in restitution.

Supporters of the disgraced 64-year-old executive had asked Chief Judge Linda Reade of the U.S. District Court of the Northern District of Iowa for leniency, arguing that Wasendorf is in frail health and that he had helped others even in the midst of his 20-year fraud. Former Peregrine CEO Wasendorf gets 50 years in prison - chicagotribune.com

When the elite of the global futures industry gather in Boca Raton, Fla. next month for their annual parley, the man known to many as simply "Russ Senior" will be a noticeable absentee.

Russell R. Wasendorf Sr., who once funded lavish receptions at the event with celebrity speakers from business, sport and politics, has left the industry shaken and embarrassed by the fraud he perpetuated over almost 20 years. 'Russ Senior' Leaves Industry Shaken - WSJ.com

EES: PFG Best Fraud Case Continues To Unravel

The case involving the fraud perpetrated by Russ Wasendorf, Sr. continues to get worse as more information comes out.

The Iowa department of revenue announced that Russ Wasendorf, Sr. also duped them, out of approximately $14 Million in unpaid taxes:

Russ Wasendorf Sr. duped customers, regulators and his colleagues as he pulled off a 20-year, $100 million fraud at his Iowa-based brokerage. The state's tax collectors say he and his ex-wife also duped them, and that the former couple owes Iowa more than $14.1 million in unpaid taxes, interest and penalties.

The Iowa Department of Revenue filed an assessment in November against Russ and Connie Wasendorf, alleging they underreported their taxable income between 2001 and 2009 by about $75 million and dodged $6.6 million in taxes as a result, according to court records released this week.

This announcement comes at a bad time for the case, now seeing more bills associated with it adding up. PricewaterhouseCoopers, one of the world's largest accounting firms, submitted a bill for $1.6 million for about 4,239 hours of work between July 22 and October 31, according to a filing in Peregrine's bankruptcy case on Monday. On Friday, Shaw Fishman Glantz & Towbin, the law firm representing Trustee Ira Bodenstein, submitted a bill for $671,417 for 1,508 hours of work between July 10 and October 31, according to court documents.

The case now has a number of the total fraud, according to documents recently released. $215 Million.

"Defendant claims the loss is less than $200 million," Acting Iowa U.S. Attorney Sean Berry said in a sentencing memorandum filed yesterday in federal court in Cedar Rapids. "The actual loss in this case can be determined with remarkable precision."

The National Futures Association, an industry self- regulator, announced the same day as the suicide attempt that about $200 million in customer funds the firm reported was on deposit at its bank were unaccounted for.

According to his plea agreement, Wasendorf started stealing from Peregrine in the early 1990s, covering his theft by altering statements from the company's bank and passing them to his chief financial officer and accountants.

Institutional Decay

If we are suspicious of our own institutions then who can we really trust? Our global financial system is comprised of a network of insittutions who custody our assets; it isn't possible for individuals to custody their own assets. If a trusted NFA Member who sat on the board of the NFA was capable of stealing $215 Million from clients over a period of many years without getting caught, what other monsters lurk in places we haven't yet looked?

In our article Modern Insitutional Decay we had outlined some facts that seem to point to a trend; the institutions that built the modern world are dead or dying.

The insituttions that watch the institutions, such as the ratings agencies, and the regulators, have also in some cases found guilty of conflicts of interest.

Traders need to rely on their own analysis, and try to obtain as much objective information as possible.

Forex Risk Disclosure - Click here to read

The risk of loss in trading foreign exchange markets (FOREX), also known as cash foreign currencies, or the FOREX markets, can be substantial.

Libor Lies Revealed in Rigging of $300 Trillion Benchmark

Every morning, from his desk by the bathroom at the far end of Royal Bank of Scotland Group Plc’s trading floor overlooking London’s Liverpool Street station, Paul White punched a series of numbers into his computer.

White, who had joined RBS in 1984, was one of the employees responsible for the firm’s submissions for the London interbank offered rate, or Libor, the global benchmark for more than $300 trillion of contracts from mortgages and student loans to interest-rate swaps. Behind him sat Neil Danziger, a derivatives trader who had worked at the bank since 2002.

On the morning of March 27, 2008, Tan Chi Min, Danziger’s boss in Tokyo, told him to make sure the next day’s submission in yen would increase, Bloomberg Markets magazine will report in its March issue. “We need to bump it way up high, highest among all if possible,” Tan, who was known by colleagues as Jimmy, wrote in an instant message to Danziger, according to a transcript made public by a Singapore court and reported on by Bloomberg before being sealed by a judge at RBS’s request.

• More from the March 2013 issue of Bloomberg Markets
• How Libor Works

Danziger typically would have swiveled in his chair, tapped White on the shoulder and relayed the request to him, people who worked on the trading floor say. Instead, as White was away that day, Danziger input the rate himself. There were no rules at RBS and other banks prohibiting derivatives traders, who stood to benefit from where Libor was set, from submitting the rate -- a flaw exploited by some traders to boost their bonuses.

http://www.bloomberg.com/news/print/2013-01-28/libor-lies-revealed-in-rigging-of-300-trillion-benchmark.html

EES: Clear Direction On Yen Decline

The Japanese Yen (FXY) has been on a decline since the new government led by Shinzo Abe has been pursuing a policy of currency debasement to boost their economy.

http://seekingalpha.com/article/1138141-clear-direction-on-yen-decline 

Bitcoin’s Gains May Fuel Central Bank Concerns

An increase in the value of bitcoin, the world’s largest online currency, may fuel concerns that virtual money could undermine the role of central banks.

The CHART OF THE DAY shows that bitcoin has more than doubled in the past 12 months, strengthening to $16.37 from $5.88, according to data from Mt. Gox, the world’s largest bitcoin exchange. The money, issued by a decentralized network of computers, has recovered after falling to $2.14 in November 2011 from a high of $29.58 five months earlier.

Bitcoin’s Gains May Fuel Central Bank Concerns: Chart of the Day - Bloomberg

World's oldest bank gets bailout

Shareholders of the world's oldest bank have approved a plan needed to get a state bailout amid revelations that it concealed loss-making risky trades.

Italy's Banca Monte dei Paschi di Siena and regulators are investigating the trades.

The Bank of Italy defended its role in supervising Italian banks, denying knowledge of the trades.

Banca Monte needs 3.9bn euros (£3.3bn, $5.2bn) in government aid to meet European banking rules.

The Tuscan bank, founded in 1472, confirmed this week that the three trades - named Alexandria, Santorini and Nota Italia - would be investigated in full to "precisely assess the impact of the transactions and consequently adopt any measures needed, including a retrospective restatement of their accounting representation".

Reports have suggested the trades could lead to another 720m euros of losses.

This has raised the prospect of further losses, and the trades are being investigated by regulators. Banca Monte plans to report on its internal investigation into the trades by mid-February.

Italian Prime Minister Mario Monti has offered to recall parliament to discuss the growing scandal and President Giorgio Napolitano said that he had full faith in the country's central bank.

BBC News - Banca Monte dei Paschi trades probed in Italy

Velocity of Money: British Economy worse than during depression

Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face...   http://www.zerohedge.com/print/468830

Bad Policy Has Us Stuck

We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.

Instead of bringing in new legs, we keep on recycling the same old re-treads who caused the problem in the first place [61].

For example:

• An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”[62]

• Fraud was one of the main causes of the Depression, but nothing has been done to rein in fraud today [63]. Indeed, the only action the government is taking is to help cover up fraud [64]

• All leading independent economists have said that the economy cannot recover until the big, insolvent banks are broken up [65], but the government has just helped them to get bigger [66]

• Excessive leverage helped cause the Great Depression and the current crisis, but the government has encouraged more leverage [67]

• The Federal Reserve caused the Great Depression and the current crisis [68], and has done nothing but help the fatcats at the expense of the little guy. And yetthe government has given the Fed more power than ever [69].

• Government policies send manufacturing jobs and dollars abroad [70]

• Quantitative easing won't help ... it will only make things worse [71].

• The government is doing everything else wrong, as well. See this [72] and this. [73]

This isn’t an issue of left versus right … it’s corruption and bad policies which help the super-elite but are causing a depression for the vast majority of the people.

Olafur Ragnar Grimsson Iceland president 'Let banks go bankrupt'

Japan policy sparks Davos fears of ‘currency war'

• 

Bank of Japan Governor Masaaki Shirakawa (left) and Finance Minister Taro Aso in Tokyo. Photo: EPA

Japan’s controversial new economic policy emerged as one of the hot topics at this year’s Davos forum, with talk of currency wars and strong rebuttals from Japanese officials.

The new government in Tokyo, led by Shinzo Abe, has pushed the Bank of Japan (BOJ) to step up efforts to battle nearly two decades of deflation and sluggish growth in the world’s third-largest economy.

The BOJ on Tuesday unveiled a new inflation target of 2 per cent and a massive programme of asset purchases to pump money into the economy, sparking accusations it had bowed to political pressure and compromised central bank independence.

Japan policy sparks Davos fears of ‘currency war’ | South China Morning Post

Fed Pushes Into ‘Uncharted Territory’ With Record Assets

Federal Reserve Chairman Ben S. Bernanke’s unprecedented bond buying pushed the Fed’s balance sheet to a record $3 trillion as he shows no sign of softening his effort to bring down 7.8 percent unemployment.

The Fed is purchasing $85 billion of securities every month, using the full force of its balance sheet to stoke the economic recovery. The central bank began $40 billion in monthly purchases of mortgage-backed securities in September and added $45 billion in Treasury securities to that pace this month.

Fed Pushes Into ‘Uncharted Territory’ With Record Assets - Bloomberg

Forex volume slows even more based on FXCM, IG data

From the table, we can clearly see that forex trading volume for both retail and institutional clients slipped in December. Compared to the November, retail trading volume declined by around 16% while institutional trading volume fell 11%. Year-on-year, retail and institutional trading volume dropped 11% and 23%, respectively.

Data on retail and institutional average trading volume per day were mixed. For retail, it decreased month-on-month but increased year-on-year. For institutional accounts, average trading volume fell both month-on-month and year-on-year.

IG Group, another major online broker, also reported a drop in trading revenue across all regions. Take a look at the table below:

Woah, that's a lot of red marks! Not a single region reported an increase in first-half revenue as global forex trading revenue slipped by 14% compared to the same period the previous year. The number of active clients also dropped, with a 29% decrease in Japan and a 14% decline in the U.K.

Read more: http://www.babypips.com/blogs/espipionage/trading-activity-in-fxcm-and-ig-group-continue-to-fall.html?utm_medium=email&utm_campaign=Daily+Newsletter+-+January+24+2013&utm_content=Daily+Newsletter+-+January+24+2013+CID_e1b84e02bee6cb23c16e017340245fbb&utm_source=Campaign%20Monitor&utm_term=trading%20metrics#ixzz2Iu5yZQs9

U.S. Bank Deposits Drop Most Since 9/11 Terror Attacks

Clients of the largest U.S. banks withdrew funds this month at the fastest weekly pace since the Sept. 11 attacks as a deposit-insurance program ended and customers tapped into their year-end cash hoards.

Net withdrawals at the 25 largest U.S. lenders totaled $114.1 billion in the week ended Jan. 9, pushing deposits down to $5.37 trillion, according to Federal Reserve data released last week. The magnitude of the drop was second only to the decline after the Sept. 11, 2001 terrorist attacks, according to Jason Goldberg, a New York-based analyst at Barclays Plc.

U.S. Bank Deposits Drop Most Since 9/11 Terror Attacks - Bloomberg

EES: Pot Stocks Higher, But Is There Room To Grow?

Since the legalization of Marijuana for recreational and medicinal purposes in several states, the jury has been out if this is really a viable industry. In several articles we've posed that the possibility exists thatMarijuana may be the next big growth sector. We built a pot portfolio and narrowed it down to 2 issues, Medical Marijuana (MJNA.PK) and Medbox (MDBX.PK), the latter being the larger in terms of market cap.

Pot Stocks Higher, But Is There Room To Grow? - Seeking Alpha

Financial transactions tax in Europe given go-ahead

EU ministers have given the go ahead for 11 eurozone members, including France and Germany, to prepare a new financial transactions tax.

The approval under "enhanced co-operation" rules allows the smaller group to pioneer the tax.

Governments previously failed to agree to impose the tax across the entire 27-member EU or 17-member eurozone.

The UK and 15 other EU members will not introduce the tax, which is intended to discourage speculative trading.

Some European governments have blamed speculators and excessive trading for exaggerating the swings in financial markets during the 2008 crash and the recent eurozone crisis.

"It is a milestone for EU tax policy, as it paves the way for more ambitious member states to progress on a tax file, even when unanimity could not be achieved," said Algirdas Semeta, the European Commissioner for tax.

"Those who want to move ahead, and who appreciate the merits of working more closely on taxation at EU level, can do so."

BBC News - Financial transactions tax in Europe given go-ahead

EES: Currency Markets Continue To Baffle Traders, Except The Yen

Keynes said markets can remain irrational longer than you can remain solvent. This is especially true for currency traders. For the last 3 months, data indicates the majority of traders have been on the wrong side of the market.

http://seekingalpha.com/article/1123431-currency-markets-continue-to-baffle-traders-except-the-yen