Turtle Soup

CFTC Obtains Injunction Against InterForex

Tom Herod — Thu, 09 Feb 2012 17:01:00 -0700

The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent order that permanently bars defendant InterForex, Inc., of Tortola, British Virgin Islands, from soliciting or accepting orders to trade foreign currency (forex) from U.S. customers who are not Eligible Contract Participants (ECPs). The order also permanently bars InterForex from offering to be the counterparty to U.S. customers’ forex transactions, without registering with the CFTC.

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NFA Levies $700K Fine Against PFG

Tom Herod — Wed, 08 Feb 2012 22:38:00 -0700

February 8, Chicago - National Futures Association (NFA) has levied a fine of $700,000 against Peregrine Financial Group, Inc. (Peregrine), a Futures Commission Merchant and Forex Dealer Member of NFA with headquarters in Cedar Falls, Iowa and Chicago, Illinois. Peregrine maintains branch offices in California, Florida, Illinois, Michigan and New York. The Decision, issued by NFA's Business Conduct Committee, is based on a Complaint filed in February 2012 and a settlement offer submitted by Peregrine, Russell R. Wasendorf, Jr., Peregrine's president, Susan O'Meara, Peregrine's director of compliance, and Nolan J. Schiff, Peregrine's director of managed foreign exchange. Peregrine, Wasendorf, O'Meara and Schiff neither admitted nor denied the allegations of the Complaint in making their settlement offer.

The Complaint alleged that Peregrine, Wasendorf, and O'Meara failed to supervise four of Peregrine's Guaranteed Introducing Brokers (GIBs): Clash Financial LLC (Clash, see previous press release), Oxford Trading Group, Inc. (OTG, see previous press release), California Capital Trading Group LLC (CCTG), and Patriot Financial Markets LLC. Complaints issued during 2010 and 2011 alleged that Clash, OTG and CCTG made trade recommendations that maximized commissions without regard for the best interests of their customers and that all four GIBs made deceptive sales solicitations. The Complaint also alleged that Peregrine, Wasendorf, O'Meara and Schiff failed to diligently supervise activities related to the firm's forex customers' accounts by failing to ensure the implementation of effective anti-money laundering (AML) procedures related to some of those accounts.

In addition to the $700,000 fine, the Respondents must retain an independent consultant to review Peregrine's existing procedures for supervising its GIBs and retail customer accounts and Peregrine is prohibited from entering into guarantee agreements with any IBs for a period of two years. Peregrine must also designate a full-time AML officer.

The complete text of the Complaint and Decision can be found on NFA's website.

CFTC Charges Cornett in Forex Fraud

Tom Herod — Wed, 08 Feb 2012 18:52:00 -0700

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of an enforcement action against Christopher B. Cornett of Buda, Texas, charging him with solicitation fraud, issuing false account statements, misappropriating pool participants’ funds, and failing to register in connection with an off-exchange foreign currency (forex) fraud.

According to the CFTC complaint, filed on February 2, 2012, in the U.S. District Court for the Western District of Texas, from at least June 2008 through at least October 2011, Cornett solicited prospective pool participants to provide funds for a pooled investment in forex. Cornett acted as the manager and operator of the pool, which was referred to at various times as ITLDU, ICM, International Forex Management, LLC and/or IFM, LLC. In soliciting prospective pool participants for the forex pool, Cornett allegedly falsely told prospective pool participants that, while there were weeks when Cornett either lost money or broke even trading forex, Cornett had never experienced a losing month or a losing year trading forex.

During the period from June 18, 2008, through September 2010, Cornett allegedly solicited approximately $7.07 million from pool participants, pool participants redeemed approximately $1.64 million and Cornett lost approximately $4.17 million of the pool’s funds trading forex. During this period, Cornett allegedly had only one profitable month trading forex with pool funds. As a result, Cornett allegedly misappropriated approximately $1.26 million of the pool’s funds. Furthermore, most, if not all, of the profits, losses and account balances that Cornett reported to pool participants were false, according to the complaint.

From October 2010 through October 2011, Cornett allegedly solicited an additional approximately $6.95 million from pool participants, and pool participants redeemed an additional approximately $2.22 million. During this period, Cornett transferred approximately $1.81 million of pool participant funds to accounts at three foreign firms and lost all but approximately $1,600 trading forex, according to the complaint. Cornett also is alleged to have transferred approximately $1.56 million of pool participant funds to three additional foreign firms during this period. Because Cornett was acting as a commodity pool operator (CPO) from October 18, 2010, through at least October 13, 2011, he was required to be registered as a CPO. As of October 13, 2011, Cornett allegedly had failed to register as a CPO.

CFTC.

Major Reversal: ECB May Help Ease Greek Debt

Tom Herod — Wed, 08 Feb 2012 14:31:00 -0700

Lucas Papademos, Prime Minister of the Hellenic Republic, and Mario Draghi, President of the ECB

BERLIN, Germany — With Greece on the cusp of a deal to secure a bailout, the European Central Bank is reportedly prepared to play a crucial role in reducing the country’s crippling debt burden. The ECB's move is a significant reversal, given that officials had rejected any such assistance in the past.

The news comes as the coalition parties in Athens finally prepare to discuss the draft plan for tough reforms, following days of delays.

The three parties were handed the 50-page text on Wednesday morning after Prime Minister Lucas Papademos and officials from the troika of international lenders, the ECB, the European Union and the International Monetary Fund, agreed on the final details late Tuesday night.

Papademos, the technocrat ushered in to help rescue Greece’s economy, needs to get the green light from the party leaders for the reform package before he can access the new 130 billion euro ($172 billion) rescue package to avoid bankruptcy.

Read full article at GlobalPost.

EU Considers Sanctions Against Syria Central Bank

Tom Herod — Tue, 07 Feb 2012 14:19:00 -0700

European Union member states are working on a new round of sanctions against Syria, which they hope to conclude by February 27, EU diplomats said on Tuesday.

The sanctions would include a freeze on the Syrian central bank's assets as well as on most transactions with it, they said. The sanctions would also ban the import and export of phosphates, diamonds, gold and other precious metals.

"A new round of financial sanctions is on the table," one diplomat said, adding that they had full backing from France and Germany.

"The sanctions would include freezing assets of the Syrian central bank and banning any transaction with it which is not deemed legitimate... Sanctions would also foresee a ban on imports and exports of phosphates, gold, precious metals and diamonds."

EU member states are also considering a ban on commercial flights to and from Syria, but agreement on this is less likely, the diplomats said.

"A realistic objective would be to get the sanctions agreed by February 27, when EU foreign ministers meet in Brussels, but it could also happen before," said one of the diplomats.

The sanctions talks came as Syrian forces renewed their bombardment of Homs as part of President Bashar al-Assad's crackdown on a popular revolt.

Reuters

Forex Trading Volume Drops for First Time Since 2009

Tom Herod — Mon, 06 Feb 2012 19:39:00 -0700

NEW YORK—Global foreign-exchange trading volume dropped for the first time since the financial crisis, according to data released Monday by four major central banks.

Average daily trading volume in October totaled $3.470 trillion in North America, the U.K., Singapore and Australia, which combined account for most of the world's foreign-exchange activity. That is down from $3.474 trillion in April, according to reports from central banks in the U.S., U.K., Australia and Singapore. It was the first sequential drop in the semiannual survey since April 2009, though volume was still up 15% from a year earlier.

Read the full story at WSJ.

US Levies New Sanctions on Iran's Central Bank

Tom Herod — Mon, 06 Feb 2012 12:12:00 -0700

By JULIE PACE, Associated Press

WASHINGTON (AP) — In a fresh swipe at Iran, President Barack Obama has ordered new sanctions on the Islamic republic, including its Central Bank, moving to enforce a law he signed in December.

In a letter to Congress Monday, Obama said more sanctions are warranted "particularly in light of the deceptive practices of the Central Bank of Iran and other Iranian banks." He said the problems included the hiding transactions of sanctioned parties, the deficiencies of Iran's anti-money laundering regime and the unacceptably high risk posed to the entire international financial system posed by Iran's activities.

The Central Bank sanctions were included as an amendment in the wide-ranging defense bill Obama signed into law at the end of 2011. The White House said Obama signed the executive order approving the sanctions on Sunday.

The new measures come as the White House tries to both ratchet up pressure on Tehran to abandon its nuclear program and dissuade Israel from launching a unilateral strike on Iran, a move that could roil the Middle East and jolt the global economy.

Obama said Sunday that he does not believe Israel has yet decided whether to attack Iran. The president said he still believes a diplomatic solution is possible.

Iran insists its nuclear pursuit is for peaceful purposes, but the West accuses Iran of developing the know-how to build a nuclear bomb. Defense Secretary Leon Panetta last week would not dispute a report that he believes Israel may attack Iran this spring in an attempt to set back the Islamic republic's nuclear program.

In recent weeks, both the U.S. and European Union have imposed harsher sanctions on Iran's oil sector, the lifeblood of its economy.

In Washington, the Senate Banking Committee easily approved yet more penalties on Tehran last week. The sweeping measure, which is not yet law, would target Iran's Revolutionary Guard Corps, require companies that trade on the U.S. stock exchanges to disclose any Iran-related business to the Securities and Exchange Commission, and expand penalties for energy and uranium mining joint ventures with Tehran.

Currency Rankings vs US Dollar for January 2012

Tom Herod — Mon, 06 Feb 2012 08:27:00 -0700

We released our Currencies vs. US Dollar reports this morning. The "Percentage Change vs. US Dollar" displays the percentage of change for seven major currencies against the dollar in graphic format; and "Currency Rankings vs. US Dollar" ranks the world's top 17 currencies' performance against the dollar for the previous month.

The Indian rupee jumped from last to first in currency rankings vs US dollar last month. The rupee, which had lost about 12% of its value against the dollar for the last 6 months, suddenly gained 6.66% against the dollar.

Except for the euro and Thai baht, all of the remaining currencies gained against the dollar during the month.

See the full report at Forexturtle.

Brazil Hackers Attack Central Bank

Tom Herod — Sat, 04 Feb 2012 09:57:00 -0700

A computer hacker group on Friday continued a wave of attacks against Brazilian financial websites, hampering the sites of Citigroup Inc. and other prominent institutions.

The group, which dubbed itself Anonymous Brasil, took aim at a series of websites, launching "denial of service" attacks against the pages of the Brazilian banking federation, called Febraban, as well as Banco BMG, Banco Panamericano (BPNM4.BR) and the pages of Citigroup both in Brazil and in the U.S.

The websites of all those named were operating intermittently Friday, and the hackers said they had extended their attacks to other websites in the afternoon. The hackers say they use "denial of service" tactics to overwhelm websites with requests for access, but that they aren't trying to steal data or money.

A Citi spokesman in New York said, "On Friday morning, Citi's consumer website experienced a temporary interruption in service. Our online team worked immediately to address the issue, and operations were restored within one hour. We are continuing to monitor the system to ensure continuity of services. At no point were there data integrity issues or compromise of client account information. We apologize for any inconvenience."

A spokesman for Febraban said there was an unusually high number of accesses to the group's website. Banco BMG and Banco Panamericano confirmed that they received an overload of accesses that caused delays on their sites, but didn't confirm whether the problems were caused by hackers.

The hacker group also claimed on its Twitter account to have briefly targeted the central bank's website early Friday, though the institution didn't confirm the website problems were caused by hackers. During the morning there was an overload of accesses to the central bank's website bringing instability and delays, the central bank said, but "no bank systems or transactions were affected."

The central bank, which is responsible for banking regulation in Brazil, said it had no immediate action planned to respond to the latest attacks.

The hackers group, which says its promoting a campaign against corruption, earlier in the week claimed responsibility for crippling the websites of Brazil's largest state-run and private-sector banks, including Banco do Brasil SA (BBAS3.BR, BDORY), Itau Unibanco Holding SA (ITUB4.BR, ITUB), Banco Bradesco SA (BBD, BBDC4.BR) and HSBC Holdings PLC (HBC, HSBA.LN).

Anonymous Brasil, which is a collaborative effort between hacker subgroups identified as Anti-Security Brazilian Team and iPiratesGroup, has said that its efforts are aimed at activism to bring more social and economic equality to Brazil, and that it isn't interested in theft.

The group, which announced its attacks via Twitter, has published an action list for further attacks this year, which will include airlines, telephone companies, credit-card companies and government websites. The groups said they also plan to hijack transmissions by radio stations.

Dow Jones Newswires

China May Offer Aid To EU

Tom Herod — Fri, 03 Feb 2012 06:11:00 -0700

HONG KONG — Prime Minister Wen Jiabao said Thursday that China would consider working with the International Monetary Fund to help shore up Europe’s finances. But he left unclear whether China was willing to drop conditions that so far have made its proposed help unappealing to European nations.

Mr. Wen’s comments came at a Beijing news conference after he met with Chancellor Angela Merkel of Germany on the first day of her three-day visit to China.

Mrs. Merkel is the first of several European leaders scheduled to visit China this month, as China’s huge holdings of foreign exchange reserves have begun to give it financial influence that could potentially rival Washington’s.

Mr. Wen said that Chinese officials were studying whether the country should be “involving itself more” in helping Europe solve its debt troubles by investing in the region’s two big rescue packages: the existing European Financial Stability Facility and the planned European Stability Mechanism. China’s contributions could be channeled through the I.M.F., he said.

Read the full story at NY Times.

Yamaguchi Says Yen In Danger Zone

Tom Herod — Thu, 02 Feb 2012 13:06:00 -0700

Japan's finance and economic ministers piled pressure on the Bank of Japan on Thursday to consider easing policy further, as the yen climbs back to levels that led to Tokyo to intervene heavily in currency markets last year to protect its export-reliant economy.

BOJ Deputy Governor Hirohide Yamaguchi said he saw no need to ease policy right away, but the central bank could face growing calls to offer more monetary stimulus to help exporters through any prolonged slump, even though it has limited options remaining to support the faltering economy.

"Yen buying has strengthened, led by short-term and speculative moves on the back of expectations for low interest rates in the U.S. until 2014," Finance Minister Jun Azumi told lawmakers.

"I would like the BOJ to take account of economic conditions and various factors in deciding policy, including quantitative easing."

Economics Minister Motohisa Furukawa also called on the central bank to ensure that real interest rates remain low, as the Federal Reserve's commitment to keep its nominal benchmark rate near zero for nearly three more years pushes the dollar lower against the yen.

Under the BOJ's initial round of quantitative easing, a technique it pioneered, it flooded the financial system with cash from 2001 to 2006 by targeting the size of current account deposits that commercial banks park at the central bank.

Read more at Reuters.

The Biggest Risk to the U.S. Economy in 2012

Tom Herod — Wed, 01 Feb 2012 13:15:00 -0700

Robert Reich

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as Secretary of Labor under President Bill Clinton. He has written thirteen books, including The Work of Nations, Locked in the Cabinet, Supercapitalism, and his most recent book, Aftershock.

I ran into him at National Airport a few years ago and told him I would vote for him for President if he ever thought about running. He laughed and told me that he had no desire for that office.

Our loss. Here's what Robert Reich, a man I greatly admire, has to say about the U.S. economy.

Treasury Secretary Tim Geithner, speaking at the World Economic Forum in Davos a few days ago, said the “critical risks” facing the American economy this year were a worsening of Europe’s chronic sovereign debt crisis and a rise in tensions with Iran that could stoke global oil prices.

What about jobs and wages here at home?

As the Commerce Department reported Friday, the U.S. economy grew 2.8 percent between October and December – the fastest pace in 18 months and the first time growth exceeded 2 percent all year. Many bigger American companies have been reporting strong profits in recent months. GE and Lockheed Martin closed the year with record order backlogs.

Yet the percent of working-age Americans in jobs isn’t much different than what it was three years ago. Yes, America now produces more than it did when the recession began. But it does so with 6 million fewer workers.

Average after-tax incomes adjusted for inflation are moving up a bit. (They increased at an annual rate of .8 percent in the last three months of 2011 after falling 1.9 percent in prior three-month period. For all of 2011, incomes fell .1 percent.)

But beware averages. Shaquille O’Neal and I have an average height of six feet. Exclude Mitt Romney’s $20 million last year — along with everyone else securely in the top 1 percent — and the incomes of most Americans are continuing to slip.

Read Robert Reich's full post.

South Korea Central Bank To Buy $306 Billion Chinese Bonds

Tom Herod — Wed, 01 Feb 2012 09:58:00 -0700

South Korea’s central bank is considering buying several hundred million dollars worth of Chinese equities and a greater amount of the nation’s bonds to diversify its foreign-exchange reserves.

“The Chinese yuan has the potential to become a key reserve currency in the long term and thus we are building a channel to invest there,” Choo Heung Sik, 53, director general at the Bank of Korea’s Reserve Management Group, said in an interview in his office yesterday in Seoul. He said the bank may invest in Chinese shares in the second half of this year, after purchases of debt in the first six months.

The diversification plans for South Korea’s $306 billion of foreign-exchange holdings underscore increasing international interest in yuan assets as China’s global economic stature rises and its government promotes international use of its currency. A slide in yields on U.S. Treasuries has diminished interest income for the world’s largest reserve currency, the dollar.

Read full article at Bloomberg.

Emergency Meeting Called In Greece, Bailout May Be In Trouble

Tom Herod — Tue, 31 Jan 2012 18:15:00 -0700

Negotiations between Greece and its creditors about the terms of an orderly Greek restructuring appear to have stalled in Athens, amid troika adamance that the country accept even more dramatic austerity measures in return for the aid they are expected to receive as part of a second bailout, according to the Telegraph.

Prime Minister Lucas Papademos has called an emergency meeting of party officials in an attempt to convince them to vote through the spending reforms and bring the debt swap deal to resolution.

Meanwhile, International Business Times reports that dissatisfaction with the Greek government rose to 91% in a poll two weeks ago, although the majority of respondents still supported Papademos.

A government explained to the Telegraph that it has been difficult to reach any kind of agreement with the inflexible troika. "The troika doesn't appear to be willing to accept any concessions whatsoever on reducing the minimum wage and scrapping bonuses," the aide said. "No political party is willing to move either, saying wage cuts are a red line they are simply not going to cross. You tell me how this is going to be resolved. We have no idea and we're very worried."

This impasse follows positive reports that Greece and its creditors would likely reach a deal this week, as well as the fallout of a now relinquished German proposal for Greece to give up budget control in exchange for the next bailout.

Business Insider

EU Leaders Agree On Permanent Bailout Fund

Tom Herod — Tue, 31 Jan 2012 08:56:00 -0700

(Reuters) - EU leaders will sign off on a permanent rescue fund for the euro zone at a summit on Monday and are expected to agree on a balanced budget rule in national legislation, with unresolved problems in Greece casting a shadow on the discussions.

The summit - the 17th in two years as the EU battles to resolve its sovereign debt problems - is supposed to focus on creating jobs and growth, with leaders looking to shift the narrative away from politically unpopular budget austerity.

The summit is expected to announce that up to 20 billion euros ($26.4 billion) of unused funds from the EU's 2007-2013 budget will be redirected toward job creation, especially among the young, and will commit to freeing up bank lending to small- and medium-sized companies.

But discussions over the permanent rescue fund, a new 'fiscal treaty' and Greece will dominate the talks.

Read more about the rescue fund at Reuters.