Tag Archives: Control Fraud

Corporate CEOs Demand that they be Tipped Off When a Whistleblower Reports their Crimes

Posted on April 26, 2014 by William Black | 3 comments

I’m writing on the flight returning from the XII^th International CIFA Forum in Monaco. CIFA is an NGO. It is a confederation of independent financial advisor organizations that works with the UN in promoting the protection of investors. This means that their clients are often very wealthy and that many of the participants are speakers are very conservative or libertarians (or an admixture). One of the speakers, Dr. Hans Geiger, gave an impassioned denunciation of “bureaucrats” (which turned out to mean anyone who worked for the government) and the imposition of a duty on bankers to file criminal referrals when they had a “reasonable suspicion” that their clients had committed certain crimes. The official U.S. jargon for a criminal referral is “Suspicious Activity Reports” (SARS). Geiger was particularly distressed that the banker would not be allowed to inform his client that he was making the criminal referral (which FATF terms “Suspicious Transaction Reports” (STRs)) under the standard 21 proposed by the Financial Action Task Force in 2012.

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Posted in William K. Black

Tagged accounting control fraud, Control Fraud, dodd-frank, Financial Action Task Force, whistleblowers

CEO Pay is Perverse and Must be Fixed to Avoid Recurrent Crises

Posted on April 21, 2014 by William Black | 11 comments

By William K. Black

Slate has published a piece by Zachary Karabell entitled “Stop Obsessing Over exorbitant CEO Pay” in which the author appears unaware that he has reported, and then ignored, evidence that scholars he cites favorably are “resoundingly convinced” proves the opposite. Karabell’s author’s page shows that he has recently joined Slate and promotes theoclassical dogmas about economics. He is a Wall Streeter of the kind that thinks it is an honor to be a “regular” on CNBC. He also touts being a favorite of the Davos plutocrats. In roughly a month with Slate he has managed to be an apologist for high unemployment, inequality, and high frequency trading (HFT) scams.

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Posted in William K. Black

Tagged accounting control fraud, Control Fraud, criminogenic environment, executive compensation, Karabell, white collar crime

Zachary Karabell and our Flawed “Society of Apologists for Plutocrats (SAPs)”

Posted on April 21, 2014 by William Black | 5 comments

By William K. Black

Slate has replaced one minor member of the Society of Apologists for Plutocrats (SAPs), Matt Yglesias, with another, Zachary Karabell. The transition has been seamless. As I noted in my prior column, Karabell’s initial columns served up apologias for extraordinary executive compensation and extreme inequality, high youth unemployment, and high frequency trading (HFT) scams. Karabell is the type of Wall Streeter who thinks it reflects well on him that he has been a “regular” on CNBC, rather than an admission of grave defects of character and intellect. Similarly, he thinks it is an honor that he was dubbed a bright young thing (a decade ago) by the denizens of Davos, the club for selfless plutocrats eager to “take up the white man’s burden.”

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Posted in William K. Black

Tagged accounting control fraud, Control Fraud, Great Financial Crisis, insider trading, Karabell, plutocracy, plutocrats, Slate

What Banks Should Expect in the Future

Posted on April 19, 2014 by William Black | Comments Off

By William K. Black

Bill talks with CCTV America about the future expectations for Banks.

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Posted in William K. Black

Tagged accounting control fraud, banking, banks, Control Fraud, Great Financial Crisis, regulation, white collar crime

The 11th Lesson We Need to Learn from Charles Keating’s Frauds: Bring back Glass-Steagall

Posted on April 15, 2014 by William Black | 5 comments

By William K. Black

On April 2, 2014, as news broke of the death of Charles Keating, the most infamous savings and loan fraud, I posted an article entitled “Ten Lessons We Must Learn from Charles Keating.” (The April 2 date was ironic, because it was the 27th anniversary of the meeting at which the senators who would become known as the “Keating Five” began to seek to intimidate the savings and loan regulators on Keating’s behalf.)

I failed to explain perhaps the most important lesson we should have learned from Keating and Lincoln Savings. One of the subtle aspects of the savings and loan debacle that is often overlooked is that we ran a real world test of the importance of the provisions of the 1933 Banking Act known as the Glass-Steagall Act. Glass-Steagall prohibited “commercial” banks that received federal deposit insurance (created by the same 1933 banking act) from owning equity positions in nearly all financial assets (“investment banking”). With very limited exceptions, a commercial bank could not own real estate, companies, or stock in companies. (Banking regulators, hostile to Glass-Steagall despite its immense success, would later add many exceptions.) The ideas behind Glass-Steagall’s separation of “banking” from “commerce” always made eminent sense from conservative and progressive perspectives. Commercial banks received a federal subsidy through deposit insurance, so it made no sense for them to be allowed to compete against regular businesses that lacked that subsidy. It would distort markets to allow such a subsidy.

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Posted in William K. Black

Tagged accounting control fraud, Control Fraud, glass-steagall, Keating

Nobel Schizophrenia over the Georges: Stigler and Akerlof

Posted on April 7, 2014 by William Black | 1 comment

By William K. Black

In a recent column I focused on three brief passages from George Akerlof and Paul Romer’s 1993 article (“Looting: The Economic Underworld of Bankruptcy for Profit”) that had they been listened to would have prevented the fraud epidemics that drove our recent financial crises.

Here is one of those three passages. Notice how unequivocal they were in their statements about causality.

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Posted in William K. Black

Tagged accounting control fraud, Control Fraud, criminogenic environment

Three Passages From Akerlof & Romer’s 1993 Article That Should Have Prevented The Crisis

Posted on April 4, 2014 by William Black | 3 comments

By William K. Black

This is the first installment of a series of articles about the media, finance industry, political, and Department of Justice (DOJ) reaction to Michael Lewis’ new book about high frequency trading (HFT). The media ballyhooed the book as if it were an amazing revelation of a fact of surpassing importance. The industry demonized the book and Lewis. DOJ immediately announced it had begun a criminal investigation and the SEC it had multiple investigations pending. Whether the industry or Lewis is correct about HFT practices (which he asserts are lawful) is unimportant for some purposes. My series will focus on the difference between the frenzied DOJ, political, and media reaction to Lewis’ criticism of allegedly lawful HFT practices and the “yawn” reaction of these same groups to the vastly more damaging criminal frauds runs by our elite financial leaders that caused the financial crisis is astronomical, ludicrous, and disastrous. Similarly, the reaction of these three groups to the finding by multiple investigations that 16 of the largest banks in the world committed crimes by setting LIBOR rates through frauds and cartels (the largest cartel, by several orders of magnitude, in history) was less than a yawn, as I described in prior articles.

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Posted in William K. Black

Tagged accounting control fraud, Control Fraud, Financial crisis, Great Financial Crisis, HFT, high frequency trading, Michael Lewis

The Black Fraud and Finance Report

Posted on April 3, 2014 by William Black | 2 comments

The Black Fraud and Finance Report on the Real News Network. Bill is discussing Charles Keating.

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Posted in William K. Black

Tagged accounting control fraud, Control Fraud

Ten Lessons We Must Learn from Charles Keating

Posted on April 2, 2014 by Devin Smith | 8 comments

By William K. Black

I knew Charles Keating, the head of Lincoln Savings, in my capacity as a financial regulator and as the subject of his wrath. His fraud schemes and the manner in which they targeted our system’s vulnerabilities in an era before Citizens United made the corruption of politicians by fraudulent CEOs child’s play remain the play book for the world’s most destructive financial frauds. Our failure to learn the ten lessons has caused immense suffering. Keating’s life, and the great harm he caused, will not have been in vain if we step back and use the occasion of his death to reflect on the changes we need to make.

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Posted in William K. Black

Tagged accounting control fraud, Control Fraud, Financial crisis

Trying to Hold a Serious Discussion about Ethics and Control Fraud with Deal Book via Twitter

Posted on March 11, 2014 by William Black | 3 comments

By William K. Black

Twitter allows one to spread certain concise statements exceptionally quickly, but it is a vain effort to hold a serious and nuanced discussion via Twitter. I offer my twitter exchanges with two of Deal Book’s financial reporters on the subject of the New York Times story discussing the Manhattan DA’s indictment of the former leaders of the failed Wall Street law firm Dewey & LeBoeuf as an example.

The indictment alleges facts that if true would demonstrate that they were running the firm as an accounting control fraud for several years before it collapsed.

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