Fraud

Holding: Supreme Court due for a dose of activism

10 Dec 2018

Like a dozy board, the U.S. tribunal has left confusing financial-fraud laws largely untouched for years. Yet a case argued last week - and a new justice - offer the chance to set the rules and Wall Street watchdogs straight. Shaking up the status quo would add value in the law.

Fraud case reminds that bad M&A is a team effort

30 Nov 2018

U.S. prosecutors are trying to prove Autonomy CEO Mike Lynch deceived buyer HP in an $11 bln deal gone wrong. Such things tend to be a team effort. While fuzzy accounting rules that fostered this dispute are less of an issue now, the forces behind disastrous deals are evergreen.

Goldman has half a defense in 1MDB mess

14 Nov 2018

Two former executives accused in the Malaysian corruption scheme openly lied to the bank, U.S. authorities say. Rival firms have found leniency in similar cases. But an indictment also cites a culture that favored deals over compliance. That could warrant a deferred prosecution.

U.S. for once hits right note with Petrobras fine

27 Sep 2018

America’s foreign corruption laws often spark outrage about overreach. But penalizing the Brazilian state energy group $850 mln is a judicious result. It shows companies with ADSs will be held to account. And it mainly rewards Brazil’s authorities, which get 80 pct of the money.

Skilling could have earned stripes more usefully

31 Aug 2018

The former Enron CEO was released from prison into a halfway house. During his time behind bars, corporate malfeasance flourished but prosecutions dropped. Using high-profile arrests as a deterrent doesn’t work if prosecutors don’t catch criminals. Felons could help.

Holding: U.S. fraud prosecutors miss more than hit

9 Aug 2018

A likely skewering of Trump campaign chief Paul Manafort won’t erase flubs against ex-Jefferies and Cantor traders or sharp drops in white-collar cases. Watchdogs were rightly scolded for pursuing too few financial-crisis miscreants. They haven’t yet learned their lesson.

Danske tries to cauterize money-laundering wound

18 Jul 2018

Giving away gross profit from suspicious Estonian transactions could cost the Copenhagen-based lender up to $234 mln, or 8 pct of forecast earnings for 2018. The pledge may draw the sting of punishment from Danish authorities. But the bigger financial threat comes from the U.S.

1MDB trial is just start of Malaysian war on graft

4 Jul 2018

Former Premier Najib Razak has been charged in connection with the $6 bln scandal. The swift action is commendable. Deeper change is needed to reassure investors, though. That means measures like forcing politicians to declare assets, and regulating party funding.

Chinese tutor’s short answer will be instructive

15 Jun 2018

Muddy Waters invoked Enron in its fraud accusations against $24 bln Tal Education. Complicated attacks can be hard for outsiders to parse, but corporate responses to bearish investors are often telling. China Internet Financial Services and AMD provide useful case studies.

Malaysia’s 1MDB purges may hurt before they help

6 Jun 2018

The central bank is the latest institution caught in the backlash over the disgraced wealth fund, with the mooted departure of its governor. More heads will roll in the bureaucracy and beyond, creating extra uncertainty just as external pressures mount and fiscal plans shift.

1MDB scandal could yet bring some critical closure

4 Jun 2018

As Malaysia's new prime minister reexamines a case the top U.S. lawman called "kleptocracy at its worst", a Breakingviews e-book recounts the sovereign fund’s rise and fall. Lessons for banks, money managers and politicians will be even sharper if ringleaders are held to account.

E-book: 1MDB

4 Jun 2018

The Malaysian scandal once called “kleptocracy at its worst” is being freshly investigated following the country’s shock election outcome. Breakingviews chronicles the sovereign fund’s rise and fall, and the potential repercussions from Kuala Lumpur to Wall Street. Read online or download the book.  

Goldman VP insider rap is Goliath-beats-David tale

31 May 2018

A banker accused of using deal intel to make $140,000 was nabbed by U.S. investigators following a digital trail. Their sophistication is remarkable, but undercut by his lack of it. Either really big insider-trading fish have been successfully deterred, or they don’t get caught.

EMI deal calls out to 1MDB bounty hunters

24 May 2018

Sony is taking control of EMI Music Publishing. The sale could mean a $420 mln payout to financier Jho Low. U.S. prosecutors allege he used funds stolen from Malaysian fund 1MDB to make the purchase. That’s a temptingly huge sum for authorities in both countries to pursue.

Review: Silicon Valley gets a reality transfusion

18 May 2018

“Bad Blood” tells how Theranos, a company with a single flawed idea, attained a $9 bln valuation. A combination of need, greed, ignorance and hubris made it possible for a seductive fairy tale to outpunch scientific skepticism. Companies can’t live on stories forever, though.

Settling 1MDB scores will be easier than debts

18 May 2018

Malaysia’s new government can reopen investigations in the state fund but they are stuck with its debt. Reckless promises of support, and a previous desperate clean-up, put the state on the hook for about $8 bln. Trying to dodge these obligations would do more harm than good.

Citi’s Hong Kong slap has lesson for new IPO boom

18 May 2018

The securities watchdog fined the U.S. lender $7 mln over a troubled 2009 flotation. One failing was a lack of oversight from senior staff. As a wave of biotech outfits, many boasting complex and unproven products, prepares to list, banks in the city will have to stay vigilant.

Wells Fargo’s new cloud has bigger silver lining

17 May 2018

Some employees at its business-banking unit altered client documents. It’s another cultural black mark on the scandal-plagued $262 bln lender. But its handling of the incident suggests CEO Tim Sloan’s overhaul of risk management and procedures is starting to make a difference.

1MDB poses fresh threat to Najib – and Malaysia

10 May 2018

With a shock election defeat, the outgoing prime minister's top defence against the $4.5 bln fund scandal has gone. Old enquiries may reopen at home and overseas agencies have less reason to go easy on him. Najib could be tempted into the dangerous politics of mutual destruction.

Open-and-shut verdict leaves Anbang case unsolved

10 May 2018

Three months after authorities seized the insurer, a Chinese court has sentenced ex-Chairman Wu Xiaohui to 18 years in prison for fraud. The one-day trial provided only a glimpse into the opaque conglomerate. Swift justice means Anbang's rise and fall remains mostly a mystery.