“Goldman Sachs Group Inc. (GS) will pay $1.5 million to settle U.S. Commodity Futures Trading Commission claims the firm failed to supervise a trader who hid an $8.3 billion position. One CFTC commissioner dissented, saying the penalty is far too small.

Goldman Sachs inadequately policed trades made by Matthew Marshall Taylor on seven days in late 2007, ultimately suffering more than $118 million in losses as his bets were unwound, according to the CFTC. Later, Goldman Sachs didn’t send the regulator “important information” on the incident that was provided to another industry watchdog, the CFTC said…”

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Even as the state Treasury prepares to begin another financial review of Detroit’s books, a plan is being solidified in the governor’s office that would guide Michigan’s largest city through what is being called a managed bankruptcy.

The working concept, still evolving, assumes that the state’s financial review would find severe financial distress in Detroit, that Mayor Dave Bing and City Council would be unable to push through overdue restructuring, and that the process would culminate in appointment of an emergency financial manager under Public Act 72.

The case would be filed under Chapter 9 of the federal bankruptcy code, according to two ranking sources familiar with the situation, following efforts to reach prenegotiated settlements with as many key creditors — unions, vendors and pension funds among them — as possible before any filing.

“Clearly, we will always try to do that,” one source familiar with the situation said in an interview Thursday. “You can move on a much more expedited basis if you can demonstrate that your cash is running out” — as Detroit clearly is with each passing week.

The evolving bankruptcy scenario is a clear signal that Gov. Rick Snyder and Treasurer Andy Dillon have lost confidence in the ability of the mayor, his management team and council to honor their commitments under the eight-month-old consent agreement with the state, or to make any meaningful progress on restructuring.

Contingency planning in Lansing for a possible Chapter 9 bankruptcy filing is not likely to be popular inside council chambers or the Mayor’s Office. But it’s the responsible and necessary thing to do, whatever the protests from the elected officials whose denial and self-delusion are hastening the arrival of a reckoning they can no longer avoid.

From The Detroit News

Hey, even $100k would work.

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“Deutsche Bank failed to recognize up to $12 billion of paper losses during the financial crisis, helping the bank avoid a government bailout, three former bank employees have alleged in complaints to U.S. regulators.

The three complaints, made to regulators including the US Securities and Exchange Commission, claim that Deutsche misvalued a giant position in derivatives structures known as leveraged super senior trades, according to people familiar with the complaints.

All three allege that if Deutsche had accounted properly for its positions – worth $130 billion on a notional level – its capital would have fallen to dangerous levels during the financial crisis and it might have required a government bailout to survive.

Instead, they allege, the bank’s traders – with the knowledge of senior executives – avoided recording “mark-to-market”, or paper, losses during the unprecedented turmoil in credit markets in 2007-2009.

Two of the former employees allege that Deutsche mismarked the value of insurance provided in 2009 by Warren Buffett’s Berkshire Hathaway on some of the positions. The existence of these arrangements has not been previously disclosed.

Deutsche said in a statement that the allegations were more than two and a half years old and were publicly reported in June 2011. It added that they had been the subject of “a careful and thorough investigation”, and were “wholly unfounded”.

The bank said the investigation revealed that the allegations “stem from people without personal knowledge of, or responsibility for, key facts and information”. Deutsche promised “to continue to cooperate fully with the SEC’s investigation of this matter”.

The complaints were made at different times in 2010 and 2011 independently of each other. All of the men spent hours with SEC enforcement attorneys and provided internal bank documents during multiple meetings, people familiar with the matter say.

Robert Khuzami, head of enforcement at the SEC, has recused himself from all Deutsche Bank investigations because he was Deutsche’s general counsel for the Americas from 2004 to 2009. Dick Walker, Deutsche’s general counsel, is a former head of enforcement at the SEC. The SEC declined to comment on the investigation….”

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“HSBC Holdings might pay a fine of $1.8 billion as part of a settlement with U.S. law-enforcement agencies over money-laundering lapses, according to several people familiar with the matter.

The settlement with Europe’s biggest bank – which could be announced as soon as next week – will likely involve HSBC entering into a deferred prosecution agreement with federal prosecutors, said the sources, who spoke on condition of anonymity.

The potential settlement, which has been in the works for months, is emerging as a test case for just how big a signal U.S. prosecutors want to send to try to halt illicit flows of money moving through U.S. banks.

An HSBC spokesman said: “We are cooperating with authorities in ongoing investigations. The nature of discussions is confidential.”

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Fun times in a reckless company….

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Speaking of cartels who will lay fines against central banks ?

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“The Securities and Exchange Commission launched an inquiry into a $10 million sale of stock by Big Lots Inc. BIG +10.33% Chief Executive Steven Fishman before the company announced news that sank its stock, a person familiar with the inquiry said.

Big Lots said Tuesday that Mr. Fishman, 61 years old, intends to retire in order to spend time with his family. The discount retailer said it hadn’t been contacted by the SEC and that the timing of Mr. Fishman’s departure was coincidental to any regulatory interest.

The company said his trades were “properly made” at a time when they were allowed by the company. Mr. Fishman didn’t return calls seeking comment.”

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Fun times where DICK bove hangs his hat….

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“On paper, Glenn Hadden seemed to be the ideal person to run a large bond trading operation at Morgan Stanley when he was hired in early 2011. Mr. Hadden, a former Goldman partner, was one of the most profitable bond traders on Wall Street.

But there was more to his story than just stellar financial results. He had left his previous employer, Goldman Sachs, after questions about his trading activity. And now, Mr. Hadden is under investigation over his trading in Treasury futures while at Goldman, according to a regulatory filing.

Specifically, regulators at the CME Group, which runs commodity and futures exchanges, are investigating whether Mr. Hadden’s purchases or sales of Treasury futures late in the trading day manipulated closing prices in the market and, in turn, made other of his trades more profitable, according to people briefed on the matter who were not authorized to speak publicly.”

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“At 11:30 am on Thursday, the start of the lunch hour rush, 100-some raucous protesters swarmed a Burger King near New York City’s Penn Station, chanting and holding up signs decrying low wages at the restaurant and other New York fast food purveyors.

Standing behind a metal barricade outside the store, the crowd included clergy, union organizers and workers from Burger King and other fast food restaurants who had gone on strike earlier in the day.

Customers were avoiding the chaos. Inside, the usually bustling restaurant was empty save for its cashiers, a security guard and two customers.

“If there’s no workers inside, there’s no money for [Burger King],” said Saavedra Jantuah, a cashier who was scheduled to be working behind the counter. “I make $7.25 an hour and that’s barely enough to live on.”

At McDonald’s, Domino’s, Wendy’s and other fast food restaurants across the city, more workers went on strike Thursday, protesting what they say are wages that keep them in poverty. Strikers hope the walkouts will represent a turning point in the low-wage fast-food industry, where workers typically drift from job to job and the franchise-operated structure creates a hurdle for union organizing. The strikes come on the heels of nationwide strikes at Walmart, the world’s largest retailer, which is widely criticized for its low-paying jobs.”

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Got to grab the paper when times get tough!

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“We have seen some supposed ‘fat-finger’ trades in the last few days but Stockholm’s stock exchange was brought to its knees yesterday as a record-breaking order hit the book and halted trading for four hours. A 4.3 billion contract buy order in the OMX30 futures (the Swedish equivalent of the Dow futures) caused the fiasco. This is equivalent to a SEK460 trillion notional exposure – or 131 times the Swedish GDP (around USD70 trillion).”

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“NEW YORK (Reuters) – A group of some of bankrupt American Airlines’ most significantbondholders said it will not support a standalone restructuring unless a new board is brought in, a move that may increase hurdles for Chief Executive Tom Horton and his team.

The 12-member bondholder group, which includes JPMorgan Chase & Co , Pentwater Capital Management and York Capital Management, is the primary well-organized group to have expressed an interest in funding an independent exit for the airline’s parent company AMR Corp.

AMR filed for bankruptcy in November 2011, seeking to reduce labor costs.

Entities that gain a controlling equity stake in a company through bankruptcy routinely appoint new boards, and those boards do not necessarily oust the company’s incumbent managers.”

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Apple fires their map software manger. What will he use to find his way home?

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“During his civil lawsuit against the People’s Republic of China, Brian Milburn says he never once saw one of the country’s lawyers. He read no court documents from China’s attorneys because they filed none. The voluminous case record at the U.S. District courthouse in Santa Ana contains a single communication from China: a curt letter to the U.S. State Department, urging that the suit be dismissed.

That doesn’t mean Milburn’s adversary had no contact with him.

For three years, a group of hackers from China waged a relentless campaign of cyber harassment against Solid Oak Software Inc., Milburn’s family-owned, eight-person firm in Santa Barbara, California. The attack began less than two weeks after Milburn publicly accused China of appropriating his company’s parental filtering software, CYBERsitter, for a national Internet censoring project. And it ended shortly after he settled a $2.2 billion lawsuit against the Chinese government and a string of computer companies last April.”

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I’ll bet on no transparency as it will show clearly the shenanigans used by the top five banks to churn commissions while further exacerbating debt destruction.

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“The European financial crisis is creating a tug-of-war between the pharmaceutical industry and governments as austerity measures from the U.K. to Germany clamp down on reimbursements, especially for new drugs.

GlaxoSmithKline Plc (GSK) and Boehringer Ingelheim GmbH are among drugmakers delaying introductions or partially withdrawing their products in some European markets as governments raise the bar on what they’re willing to cover.”

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“Senate Majority Leader Harry Reid said Tuesday that “fiscal cliff” talks have made “little progress,” sending stock prices down, while Senate Republican Leader Mitch McConnell ripped into President Barack Obama for planning to hit the road to promote his tax agenda.

Reid said he was disappointed that little progress had been made in the debt talks.

“They talked some happy talk about doing revenues, but we only have a couple weeks to get something done,” Reid said about Democrats’ negotiations with Republicans. “So we have to get away from the happy talk and start talking about specific things.”

Despite his tone of frustration, Reid also said he is optimistic that lawmakers ultimately will reach a deal to head off the Jan. 1 convergence of $600 billion in tax increases and spending cuts that threatens to trigger another recession.

“I’m extremely hopeful, and I do not believe that the Republicans are going to allow us to go over the cliff,” Reid said.

He said he hoped Republicans can agree to tax rate increases and that Democrats were happy to deal with entitlements.”

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“UBS AG (UBSN) was fined 29.7 million pounds ($47.6 million) by the U.K. and told by the Swiss that it may have to increase capital levels for operational risks as regulators levied penalties after Kweku Adoboli’s $2.3 billion trading loss.

The Financial Services Authority in the U.K. issued the fine today, saying the loss revealed serious weaknesses in management systems and internal controls. Finma, the Swiss regulator, said it instructed UBS to appoint an independent third party to report on the progress and completion of a program to fix these failings. The effectiveness of controls against unauthorized trading will also be checked by an auditor once the program is finished, Finma said.”

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