John Lothian Newsletter: CFTC Votes 4-1 to Approve Swap Definition Starting Overhaul; MF Global Redux As Iowa Broker Hid Missing Millions For Years; China Opens Door To Foreign Hedge Funds

Jul 11, 2012

The CFTC votes to approve swaps definitions, opening the door to the start of regulatory overhaul for derivatives products. Evidence suggests that the leader of failed brokerage PFGBest used complex and sophisticated schemes such as a post office box to confound and fool regulators for years. China announces that foreign hedge funds are now allowed to seek domestic funds.  In First Read, you’ll find more commentary from John Lothian and others on PFGBest; and an interview with Charlotte Crosswell of NASDAQ OMX NLX.  Inside, you’ll also find a special section with a roundup of the latest stories on PFGBest.

First Read

An Outdoor Voice is Not Enough

Sometimes you need to use your outdoor voice.  Sometimes inside.  When I heard yesterday that the NFA procedure for verifying the bank balances at U.S. bank for Peregrine Financial Group was to send a request for verification letter to a post office box, I used my outside voice again.  I then used my “I need to be careful not to bring down the building voice” when I heard that the post office box was registered in the name of Russell Wasendorf, Sr.

This is what I was told by regulatory sources yesterday and which Ann Saphir reported at Reuters.  And I still don’t believe it possible, but it is.  

If you hear a man yelling loudly, or crying softly in the CBOT Building, it might just be me.

Broker Me This

My former Price Group colleague-for-a-month Phil Flynn, who joined the firm at the end of May (I left officially at the end of June) was the subject of a lengthy interview on Fox Business yesterday about his  previous employment with PFGBEST.  Phil joined The Price Group from PFGBEST.

Fox host Melissa Francis badgered Flynn with some tough questions about why he would go to a firm, PFGBest, that had such a bad compliance record.  Flynn’s argument was that there were a lot of firms on the street with lots of compliance problems, so in some ways PFGBEST was not out of step or unusual.

Flynn had come to PFGBEST from Alaron when that firm was acquired by PFGBEST. He had run a division at Alaron.  

PFG’s Big Break

You can tell a lot about the future of a company by the foundation it was built on.

Peregrine Financial Group got its big break back in the middle 1990s when a firm named First Commercial Financial Group was forced by regulators to move its customer business due to financial irregularities. First Commercial business was moved to Peregrine and to RB&H, the firm headed by then CME Chairman Jack Sandner. Former CME Chairman Larry Rosenberg was CEO of First Commercial.

It is safe to say that Mr. Wasendorf did not get the pick of the litter when the customer business, which cleared at RB&H, was split up between RB&H and Peregrine. First Commercial was a party to 75 CFTC reparation cases and a respondent to 10 NFA arbitrations prior to their registration finally being revoked by the NFA in 1996.  

Mr. Wasendorf and his firm Wasendorf & Son was also involved with another CME-related firm that had its own unhappy ending, GNP Commodities, headed by one-time CME Chairman Brian Monieson. GNP was the party to 117 CFTC reparation cases and five NFA arbitration awards. GNP also had two NFA, three CFTC and six exchange regulatory actions against it before its registration was revoked.

Of course Alaron also had its problems.  It was a party to 55 CFTC reparation cases, was a respondent to 12 NFA arbitration cases and two NFA, two CFTC and 15 exchange regulatory actions. By contrast, Peregrine was party to 38 CFTC reparation cases and 31 NFA arbitration awards, as well as four NFA and one CFTC regulatory actions.  

The Price Group has been a party to one CFTC reparations case, three NFA arbitrations and one NFA regulatory action. Not all cases are losses for firms, so you have to read the details for each.

While that sounds like convenient tooting of The Price Group’s horn, it’s not. The Price Group is not the only quality firm in the brokerage space today. But it’s not luck that firms who do right by their customers, earn their upstanding reputations as a result.

Phil Flynn made a good decision to come to The Price Group. He made a better decision to leave PFGBEST.

~John J. Lothian

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Read more news about PFGBest both here in First Read, and in the special section below Lead Stories.

Blast from the Past (1985):

Commodity Futures Trading Safeguards Proposed
July 30, 1985
By Laurie Cohen
The federal Commodity Futures Trading Commission proposed Monday to beef up financial requirements for futures brokers and take other steps to safeguard customer accounts better in the wake of the failure earlier this year of Volume Investors Corp. of New York.  The CFTC asked for public comment on a plan under which a brokerage firm`s required net capital would depend on its concentration of risk, defined by the size, number and type of customer positions it is holding.
http://jlne.ws/Nh8BIw

Editorial: Here we go again
FOW
Revelations that $200m of client money is missing at Peregrine Financial Group could not come at a worse time, regulators need to toughen up to protect not just the clients but the industry as a whole. Something is clearly wrong. Within the space of nine months, almost $200bn of client money has gone missing in what appear to be two separate frauds. Regulators have a duty not just to protect the end user but also to protect the firms in the industry who abide by the rules.
http://jlne.ws/M2u742

NFA Notice to Members: CPO Response Required
NFA is requiring all CPO Members with pool accounts held at PFG to provide NFA with a notice of the following information:
– The name of each pool account held at PFG and its NFA Pool ID number;
– The current dollar amount of pool assets held at PFG for each pool account and the corresponding date;
– The most recent net asset value for each pool with funds at PFG and the date of the valuation;
– Any withdrawal restrictions that the firm has implemented or plans to implement with respect to each pool.

CPO members must provide this information to NFA by sending an email to CPOInfo-PFG@nfa.futures.org within 48 hours of receiving this notice.
http://jlne.ws/M2u746

Lawmakers to Scrutinize Futures Oversight After PFGBest Blowup
By Jamila Trindle – WSJ
Lawmakers are scrutinizing oversight of the futures market after regulators charged the founder of futures broker PFGBest with fraud and misappropriation of customer funds Tuesday.
http://jlne.ws/M2u749

***JM: What, again already??? They just finished “scrutinizing around” after MF Global. Those are some busy scrutinizers.

[Video] Ex-PFGBest Employee: Several Red Flags Raised From January
Fox Business
http://jlne.ws/M2u887

PFGBEST: The Corporate History
http://blogs.wsj.com/deals/2012/07/10/pfgbest-the-corporate-history/

*** For the incomplete corporate history of PFGBEST, read this story.

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The Spreading Scourge of Corporate Corruption
By EDUARDO PORTER – NY Times
The misconduct of the financial industry no longer surprises most Americans, and trust in big business overall is declining. We should be alarmed.
http://jlne.ws/M2u7kt

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MGEX Announces Launch of Apple Juice Concentrate Contract
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), today announced the official launch date of August 13, 2012 for its new Apple Juice Concentrate (AJC) futures and options contract. MGEX developed the AJC contract after thorough preparation and collaboration with many segments representing the AJC industry.
http://jlne.ws/M2u7ku

**** The contract specs do not call for it to be delivered in small boxes that fit into cup holders in a minivan.

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MIT Economist: Big Banks Have ‘Hijacked’ The Political Process
Bonnie Kavoussi – Huffington Post
A prominent economist says big banks have “hijacked” the political process and now have “a leading driver’s seat” in determining financial regulation. “No politician in the United States can take financial decisions without getting the okay of the powerful financial firms,” said Daron Acemoglu, an economics professor at MIT and co-author of the book “Why Nations Fail,” in a video interview on Friday with Reuters TV.
http://jlne.ws/Le1QIh

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Unleash the power of equity finance
By Xavier Rolet – Financial Times
London has for hundreds of years been the world’s financial capital, welcoming businesses from all over the globe to its well-regulated and investor-friendly markets. It continues to offer companies access to an unparalleled pool of international capital. Equity financing has been a cornerstone of this sophisticated financial ecosystem, the mechanism through which entrepreneurs have fuelled their dreams, driven innovation and created jobs.
http://jlne.ws/M2u7kw

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The LIBOR scandal explained [infographic]
http://jlne.ws/NIfIZ0

MarketsWiki.tv

Charlotte Crosswell

Charlotte Crosswell Talks About The New NASDAQ OMX NLX

MarketsWiki.tv

The interest rate market will get some more competition at the end of the year with the launch of the NASDAQ OMX NLX futures exchange. JLN editor-in-chief Jim Kharouf spoke with exchange CEO Charlotte Crosswell, at IDX 2012 in London, about the new exchange’s move into euro and sterling-based short-term interest rate and long-term interest rate contracts, the trading and clearing platform and who will be participating in the new market.

Watch the video >

MarketsWiki

MarketsWiki Page of the Day
Yves Mersch
http://jlne.ws/NHwRly

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MarketsWiki Recent Updates

People

John J. Lothian; Stephen H. Hurst; Yves Mersch; Russell R. Wasendorf Sr.

Companies, Organizations and Groups

Aritas Securities; The Price Futures Group, Inc.; Citigroup Inc.; Integral Development Corp.; Tullett Prebon Ltd; PFGBEST.com; FX Alliance, Inc.

Products

SFO Magazine

Miscellaneous

Rare earth metals

Statistics

25,945,282 pages viewed, 6,941 articles, 144,198 edits
MarketsWiki Statistics

Lead Stories

CFTC Votes 4-1 to Approve Swap Definition Starting Overhaul
By Silla Brush – Bloomberg
The U.S. Commodity Futures Trading Commission voted today to define when trades are considered swaps under the Dodd-Frank Act, a step that triggers more than a dozen rules under the 2010 financial-regulation overhaul.
http://jlne.ws/M2u88f

MF Global redux as Iowa broker hid missing millions for years
By Ann Saphir and Alexandra Alper – Reuters
The U.S. futures industry reeled on Tuesday as regulators accused Iowa-based broker PFGBest of misappropriating over $200 million in customer funds for more than two years, a new blow to trader trust just months after MF Global’s collapse. […] As more details of the scandal became clear, the circumstances began to look more like a Bernard Madoff-style fraud than MF Global CEO Jon Corzine’s desperate bid to stay afloat.
http://jlne.ws/M2u7kG

China opens door to foreign hedge funds
By Simon Rabinovitch in Beijing – Financial Times
China has given foreign hedge funds permission to tap its wealthy citizens inside the country for funds to invest overseas, according to people in the industry.
http://jlne.ws/M2u7kK

MCX-SX gets nod to start equity trading in India
Reuters via Yahoo! Finance
MCX-Stock Exchange won approval from Indian regulators to kick-start trading of stock products, as the bourse operator looks to challenge more established rivals the Bombay Stock Exchange and the National Stock Exchange.
http://jlne.ws/M2u7B1

Bailout Terms Eased, Spain Must Now Meet Them
By RAPHAEL MINDER – NY Times
Under European pressure to raise taxes and cut spending, the government risks deepening a recession.
http://jlne.ws/M2u7B5

Bank of Greece governor says deposits returning to Greek banks
AP
Greeks have been returning the savings they took out of the country’s banks during the political uncertainty in the past two months, the country’s central bank governor said Tuesday as he urged the country’s new government to work on boosting confidence in the banking system.
http://jlne.ws/M2u8oF

Greece Pressed to Resume Austerity Program
By PAUL GEITNER and NIKI KITSANTONIS – NY Times
European officials expressed confidence that the country’s new government would have the funds to meet a debt payment coming due in August.
http://jlne.ws/M2u7Ba

IMF praises Italy reforms, sees downside risks
By William L. Watts – MarketWatch
The International Monetary Fund on Tuesday praised Italy for pursuing a number of changes to labor rules and other regulations designed to improve competitiveness and productivity, but warned that risks to the nation’s economic outlook are weighted to the downside due largely to the intensification of the euro-zone debt crisis.
http://jlne.ws/M2u7Bc

We still have that sinking feeling
By Martin Wolf – Financial Times
It is nearly five years since financial turmoil broke upon an unsuspecting world, in August 2007. So how are crisis-stricken high income countries doing? Badly, is the only answer.
http://jlne.ws/M2u7Bh

PFGBest Collapse

Peregrine Files to Liquidate After CFTC Sues
By Andrew Harris and Matthew Leising – Bloomberg
Peregrine Financial Group Inc. filed to liquidate in bankruptcy after the U.S. Commodity Futures Trading Commission sued the brokerage alleging a $200 million “shortfall” in client funds. Peregrine listed assets of more than $500 million and debt of more than $100 million in a Chapter 7 petition filed yesterday in U.S. Bankruptcy Court in Chicago. Separately, U.S. District Judge Rebecca Pallmeyer issued an order freezing Peregrine’s assets at the CFTC’s request, saying it appeared there was “good cause” to believe the firm and its founder, Russell Wasendorf Sr., violated the federal Commodity Exchange Act.
http://jlne.ws/M2u8oM

Chief of troubled Cedar Falls brokerage left suicide note; 911 recording released
Cedar Valley Business
The founder of Peregrine Financial Group was breathing but incoherent when his employees found him near death on Monday morning.
http://jlne.ws/M1F9qk

PFGBest Insisted It Was Nothing Like MF Global, Months Before Collapsing Like MF Global
Mark Gongloff – Huffington Post
Are you getting collapsed brokerage firm PFGBest confused with collapsed brokerage firm MF Global? It’s understandable! They’re both commodity brokerage firms with a lot of consonants in their names. They both collapsed suddenly, making a bunch of customer money vanish.
http://jlne.ws/L7g0WQ

PFGBest Customers’ Trades Liquidated Tuesday – Sources
By JACOB BUNGE and BRETT PHILBIN – Dow Jones
Customers of embattled futures and currency brokerage PFGBest saw trades held with the firm liquidated Tuesday. All open trading positions held by clients of PFGBest were to be liquidated by Jefferies Group Inc. (JEF), which clears transactions for the struggling company, customers were told in a notice early Tuesday, a copy of which was reviewed by Dow Jones Newswires.
http://jlne.ws/M2u8F5

CFTC sues Peregrine for fraud
AP
Federal regulators have filed civil fraud charges against Peregrine Financial Group, accusing the firm and its owner of misusing customer funds and failing to keep them separate from the firm’s money as required by law.
http://jlne.ws/M2uawT

Peregrine Financial CEO Left Suicide Note, ‘Caused Alarm’
By DANIEL WAGNER and JIM SUHR – AP
Employees of an Iowa-based brokerage firm that has been unable to account for $220 million in customer money found their boss in his car at company headquarters, with a tube connecting the vehicle’s tailpipe to the interior, authorities said Tuesday.
http://jlne.ws/OZjlwp

PFGBest’s Wasendorf Was a Mouthpiece for Futures Industry
Wall Street Journal Blogs
PFGBest’s Russell Wasendorf Sr. was no wallflower in the futures industry. He was actively quoted as an expert, wrote letters and ran a trade publications.
http://jlne.ws/M2u883

Gensler: `Vigorous’ CFTC Enforcement on Peregrine
Bloomberg
July 10 — Gary Gensler, chairman of the Commodity Futures Trading Commission, talks with Bloomberg’s Peter Cook about accounting irregularities at Peregrine Financial Group and questions about the CFTC’s ability to regulate. He speaks on Bloomberg Television’s “Lunch Money.”
http://jlne.ws/M2u8Fd

[Video] CFTC Can’t Handle Peregrine `Mess,’ Brandt Says
Bloomberg
Peter Brandt, a commodities trader and chief executive officer of Factor LLC, discusses the U.S. Commodity Futures Trading Commission’s complaint filed against Peregrine Financial Group Inc. for an alleged customer fund shortfall.
http://jlne.ws/M2u8Fg

Is ‘Inept’ CFTC “The Get-Away Driver” For PFG?
Zero Hedge
I expect to lose money because of the complete incompetence of the Federal regulators is how Factor LLC’s Peter Brandt describes the farce that has rapidly become bankrutpcy for PFG Best to Bloomberg TV today. As we noted earlier , the recent and clearly total ineptitude of the CFTC in identifying falsehoods is incredible – and twice within one year on a massive scale.
http://jlne.ws/M2u8Fj

Attain: ‘We were let down by regulators’
By Becky Yerak – Chicago Tribune
About 2:30 p.m. Monday, Chicago-based Attain Capital started getting calls asking if it had heard about the suicide attempt of Russell Wasendorf Sr., the owner of Peregrine Financial in Cedar Falls, Iowa. Attain Capital had money with Wasendorf’s futures trading firm. So did its clients. At 3:09 p.m., Attain got an email stating that Wasendorf had indeed attempted to take his own life and that Peregrine’s PFGBest was being investigated for “accounting irregularities.” “As the story has unfolded, the details have been at turns nauseating and infuriating, as a web of deceit unravels before our eyes,” Attain said Tuesday in a blog post titled, “PFGBest: Broken Promises, Shattered Trust.”
http://jlne.ws/M2uaNe

Peregrine clients angry about alleged shortfall
By Lynne Marek – Crain’s
Chicago commodity trading firms with client accounts at Peregrine Financial Group Inc. reacted with frustration and anger this week on news of a possible shortfall in customer funds at the futures commission merchant and brokerage, which filed for bankruptcy Tuesday evening.
http://jlne.ws/M2uaNf

PFGBest: The Corporate History
By David Benoit – WSJ
PFGBest has become the latest trading name to blow up in allegedly spectacular fashion. On Monday, the National Futures Association, the futures industry’s self-regulatory body, took emergency action as the brokerage company froze accounts.
http://jlne.ws/Miximx

Regulatory

The Regulation Of The Banking Industry Appears A Farce
Robert Lenzner – Forbes
The regulation of the banking industry is a farce — a global farce. Take LIBOR, for example. It is not regulated by glinty-eyed Parliamentarians or even cool men of money from the Bank of England. The entire LIBOR mess was allowed to fester because the regulator of LIBOR is not some hard-nosed government agency but actually a trade group — the British Bankers Association.
http://jlne.ws/M2uaNk

Big Dealers Sweat as Swaps Face Reckoning
By SCOTT PATTERSON – WSJ
In a potential setback for large financial firms, regulators are expected to vote Tuesday on a rule requiring banks with more than $10 billion in assets to trade swaps through a central clearinghouse, according to a person familiar with the rule. The vote will be accompanied by a separate ruling on the precise definition of swaps, the financial contracts at the heart of the 2008 credit crisis. That definition will set in motion a series of other rules affecting trillions of dollars of financial contracts.
http://jlne.ws/M2uaNl

[Video] Gensler Says CFTC Needs to Do More for Consumers
Bloomberg
Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, talks about the CFTC’s vote today to define when trades are considered swaps under the Dodd-Frank Act, which will trigger more than a dozen rules under the 2010 financial-regulation overhaul.
http://jlne.ws/M2u8VC

Open Commission Meeting For Consideration Of Rules Implementing The Dodd-Frank Act – CFTC Chairman Gary Gensler
http://jlne.ws/M2u8VD

Statement Of Support – CFTC Chairman Gary Gensler – Further Definition Of The Term
http://jlne.ws/M2u8VG

Statement Of Support – CFTC Chairman Gary Gensler – Final Rule On End-User Exception To The Clearing Requirement For Swaps
http://jlne.ws/M2u8VJ

Statement Of Support – CFTC Chairman Gary Gensler – Proposed Exemption From The Clearing Requirement For Certain Swaps Executed By Cooperatives
http://jlne.ws/M2ub3M

Twenty-Eighth Commission Meeting To Consider: (1) Two Final Rules Providing An Exemption From The Clearing Requirement For End-Users And Further Defining Certain Product Definitions Under Title VII Of The Dodd-Frank Act – And (2) One Proposed Rule Providing Relief For Certain Cooperatives From The Clearing Requirement – Opening Statement Of CFTC Commissioner Scott D. O’Malia
http://jlne.ws/M2u8VM

Opening Statement On CFTC Open Meeting – Commissioner Mark P. Wetjen – Product Definitions
http://jlne.ws/M2ub3P

ISDA Commentary On EU Presidency Compromise Texts Of June 20 On MiFID2/MiFIR
http://jlne.ws/M2ub3Q

FINRA Issues New Investor Alert: Exchange-Traded Notes – Avoid Unpleasant Surprises
http://jlne.ws/M2u8VP

SIFMA Testifies On Impact Of Dodd-Frank Act On Credit
http://jlne.ws/M2u8VQ

Exchanges & Trading Facilities

NYSE Euronext Announces Trading Volumes for June 2012 and Other Metrics
Business Wire via Yahoo! Finance
NYSE Euronext today announced trading volumes for its global derivatives and cash equities exchanges for June 20121. Trading volumes in June 2012 were mostly down year-over-year and month-over-month with the exception of European cash trading, which increased 9.9% compared to the prior year and increased 3.5% compared to May 2012.
http://jlne.ws/M2ub3V

MCX-SX gets nod to start equity trading in India
(Reuters) – MCX-Stock Exchange won approval from Indian regulators to kick-start trading of stock products, as the bourse operator looks to challenge more established rivals the Bombay Stock Exchange and the National Stock Exchange.
http://jlne.ws/OxpBHZ

JGB Futures To Celebrate 25 years On NYSE Liffe
http://jlne.ws/M2u9c5

Direct Edge Trading Notice #12-27: Direct Edge Announces New, Low-Cost Market Close Order Type
http://jlne.ws/O1gdv6

NYSE to Suspend Trading in Patriot Coal Corporation
http://jlne.ws/M2ubkh

[CBOE] Restrictions on Transactions in Patriot Coal Corporation
http://jlne.ws/M2u9cc

[CBOE] Restrictions on Transactions in Telecom Corporation of New Zealand Limited ADS (“NZT”)
http://jlne.ws/M2u9ce

TOM Insight June 2012
http://jlne.ws/M2ubkp

Hedge Funds & Managed Futures

Hedge fund withdrawals jump to highest since ’09: data
Laurence Fletcher – Reuters
Hedge fund outflows surged to their highest level in almost three years this month, data from hedge fund administrator GlobeOp shows, in a sign investors may be losing faith in the sector after mixed performance amid choppy markets.
http://jlne.ws/M2ubkq

Passport to Wind Down Materials Hedge Fund After 31% Loss
Bloomberg
Passport Capital LLC, the $3.4 billion hedge fund founded by John Burbank, plans to wind down its materials fund after a 31 percent loss this year, according to a letter to investors obtained by Bloomberg News.
http://jlne.ws/M2ubkv

Hedge Funds Trail Vanguard as Elliott Returns Atypical
Bloomberg
Before they discovered hedge funds, pension funds and endowments typically held portfolios with 60 percent in equities and 40 percent in bonds. Many would be better off if they had stuck with the old formula.
http://jlne.ws/M2ubAK

Money markets at risk from SEC shake-up
By Dan McCrum in New York – Financial Times
Almost all corporate treasurers will cut their use of money market funds if expected regulatory changes are introduced, according to a survey by US financial professionals. In a further sign of the challenges to a money market industry struggling with short-term interest rates close to zero, the survey also indicates that treasurers continue to commit more funds to non-interest bearing bank accounts.
http://jlne.ws/M2u9sA

Paulson loses more money in Advantage funds
Reuters via Yahoo! News
An already very bad year is now looking even worse for hedge fund industry titan John Paulson. During the first six months of 2012, Paulson’s Advantage Plus fund lost 18 percent, pushed lower by an 8 percent tumble in June.
http://jlne.ws/M2ubAN

Paulson Ex-Lieutenant Caught in Fund’s Slide
By GREGORY ZUCKERMAN – WSJ
John Paulson has lost a lot of money for investors recently—one of his largest hedge funds lost more than half of its value last year and continued its decline this year. One surprising victim of the fund manager’s recent bad run: Paolo Pellegrini, a former lieutenant who helped make Mr. Paulson a multibillionaire.
http://jlne.ws/M2ubAO

Hatteras Funds Launches Alpha Hedged Strategies Variable Fund
Hatteras Funds, a boutique alternative investment specialist providing unique alternative investment solutions for financial advisors and their clients, has launched a new variable trust fund, the Hatteras Alpha Hedged Strategies Variable Fund.
http://jlne.ws/M2u9sI

Thomson Reuters Launches First Commercial Credit Risk Model to Measure Corporate Financial Health by Quantitatively
Thomson Reuters (TRI), the world’s leading source of intelligent information for businesses and professionals, today announced that it has introduced the first commercial credit risk model to measure corporate financial health by quantitatively analyzing text.
http://jlne.ws/M2ubB0

The Fabulous Life And Career Of Legendary Trader Boaz Weinstein
Business Insider
Hedge fund manager Boaz Weinstein, the founder of Saba Capital, has garnered a lot of attention in the last couple of months. That’s because Weinstein has been identified as one of the people that got on the other side of JP Morgan’s disastrous $2 billion trading loss earlier this year.
http://jlne.ws/M2u9sM

Einhorn says Fed stimulus counterproductive
Reuters via Yahoo! Finance
David Einhorn, founder and president of hedge fund Greenlight Capital, told CNBC on Tuesday that the U.S. Federal Reserve’s economic stimulus program was counterproductive.
http://jlne.ws/M2ubRg

Banks & Brokers

ICAP plc Interim Management Statement
ICAP plc, the world’s leading interdealer broker and provider of post trade risk and information services, is making this Interim Management Statement in relation to the period from 1 April 2012 to 11 July 2012 and the outlook for ICAP’s financial year ending 31 March 2013. It will be delivered to shareholders attending ICAP’s Annual General Meeting today.
http://jlne.ws/M2ubRh

EBS announces new dealing rules
EBS, ICAP’s market leading electronic FX platform, today announces that it has published new Dealing Rules for its customers and is relaunching the EBS brand. The new EBS Dealing Rules, part of a wide-ranging review of the business, have been developed following extensive consultation with the entire EBS community.
http://jlne.ws/M2ubRj

Tullett Prebon and Integral Partner to Launch Spot FX Platform
Tullett Prebon, one of the world’s leading inter-dealer brokers, announces the beta launch of tpSPOTDEAL, a spot FX platform, with Integral Development Corp., a leading provider of FX trading solutions and services, as its chosen technology provider.
http://jlne.ws/M2ubRk

More Officials Called to Testify on Libor Scandal
NY Times
Top executives from the Financial Services Authority and Jerry del Missier, a senior Barclays’ official who resigned because of the rate manipulation scandal, will testify on Monday to a British parliamentary committee.
http://jlne.ws/M2u9sQ

Barclays’ Diamond accused of misleading inquiry
Reuters via Yahoo! News
LONDON – British lawmakers on Tuesday accused Barclays former chief executive Bob Diamond of misleading a parliamentary inquiry into an interest rate-fixing scandal that has forced him to resign and give up bonuses worth up to 20 million pounds. Diamond hit back, calling the comments made by a parliamentary committee “unfair and unfounded”.
http://jlne.ws/M2u9J7

Calls for outsiders to take Barclays helm
By Patrick Jenkins, Sharlene Goff and David Oakley – Financial Times
Top Barclays shareholders are demanding that the bank appoint an external chairman to repair its reputation following the damage done by the Libor price-rigging scandal.
http://jlne.ws/M2ubRs

Barclays: Agreement On Matters Arising Subsequent To Bob Diamond Resignation
http://jlne.ws/M2ubRt

Bob Diamond’s Letter To Andrew Tyrie MP Chairman UK Treasury Select Committee
http://jlne.ws/M2ubRu

Dimon Risk Reputation on Line as JPMorgan Faces Analysts
Bloomberg
Jamie Dimon will seek to restore investor confidence this week after a trading loss wiped out $39 billion of JPMorgan Chase & Co. ’s market value and marred his reputation as one of the industry’s best risk managers.
http://jlne.ws/M2uc7N

JPMorgan To Clawback Bonuses, Will Announce CIO Loss Just Over $5 Billion
Zero Hedge
Many were stunned when Ina Drew left JPM with millions in bonuses a few short days after Jamie Dimon told Senate and Congress those responsible for the multi-billions CIO loss would see compensation clawbacks. They can be unstunned now, following a report from the WSJ that in a few days JPM will announces millions in clawbacks from disgraced CIO executives.
http://jlne.ws/M2uc7S

Is The Investment Game Rigged?
Jake Zamansky – Forbes
Retail investors who look to their “financial advisors” at firms such as JP Morgan Chase for advice on managing their retirement funds have now learned that JP Morgan advisors were nothing more than “salesmen” peddling the firm’s own “house” products rather than those which were in the best interests of their clients. Those products provided a bigger “vig” for the house.
http://jlne.ws/M2uc7T

Citi hires 4 tech bankers from BofA, Credit Suisse
Reuters via Yahoo! News
Citigroup Inc said on Tuesday it hired four managing directors from Bank of America Corp’s Bank of America Merrill Lynch and Credit Suisse to strengthen its technology corporate and investment banking practice.
http://jlne.ws/M2uc7Y

Cantor Fitzgerald & Co. Strengthens its Equity Research Group with the Appointment of Youssef Squali
Cantor Fitzgerald & Co., a leading global financial services firm, announced that Youssef H. Squali, formerly of Jefferies & Co., has joined its U.S. Equity Research Group as Managing Director and Global Head of Internet & Media Research.
http://jlne.ws/M2uc81

HSBC to apologize at U.S. Senate money laundering hearing: memo
Reuters via Yahoo! News
HONG KONG – HSBC plans to “acknowledge and apologize” for failing to spot and deal with money laundering within the bank during a U.S. Senate panel hearing next week, according to an internal memo sent by its chief executive.
http://jlne.ws/M2u9Jm

Goldman Sachs Fixed Income Investor Conference Call
The Goldman Sachs Group, Inc. plans to host a Fixed Income Investor conference call on Tuesday, July 24th at 12:00pm (ET) with David Viniar, Chief Financial Officer and Liz Beshel Robinson, Treasurer. A presentation will be available on the firm’s web site, http://www.gs.com.
http://jlne.ws/M2u9Jp

Fifth Third Bank brings a pair of veteran executives back to West Michigan affiliate
The Grand Rapids Press
Tim Tierney had been senior vice president of Fifth Third Bank Corp. and head of its central operations in Cincinnati, where he was responsible for managing more than 2,200 employees who handle the holding company’s back office functions and call services.
http://jlne.ws/M2ucoj

Clearing & Settlement

Swaps Clearing Lags As Regulators Finalize Key Rules
By Katy Burne – Dow Jones
Large financial firms using privately negotiated derivatives called “swaps” will have to push those trades into independent clearinghouses under new rules designed to overhaul the $300 trillion U.S. swaps market. But most of the firms that aren’t banks and are targeted by the rules aren’t ready for clearing, according to people in the back-office plumbing on Wall Street. That’s despite brokers warning they should be better prepared or risk being behind the eight ball when the rules start to be enforced as early as six months from now.

CME Group Clearing Advisory
NYMEX Options Expiration Operational Procedures for the Trading Floor and Clearing Members (OS) Effective Wednesday, July 11, 2012
CME Group Clearing Advisory
Change in End of Day Cutoff Timelines for CDS
http://jlne.ws/M2u9ZO

INDEXES & PRODUCTS

db Commodity Momentum Euro Hedged ETC launched on Xetra
http://jlne.ws/M2u9ZS

[SIX] Index adjustments on the occasion of the ordinary index review
http://jlne.ws/M2u9ZT

Changes To The FTSE/ATHEX Index Series
http://jlne.ws/M2uage

Technology

DnB Nord Selects SunGard’s Valdi for Connectivity to the Warsaw Stock Exchange
DnB NORD Polska, the Polish brokerage arm of DnB NORD, one of Norway’s largest financial groups and a member of the Warsaw Stock Exchange (WSE), has selected SunGard’s Valdi trading solution to support its trading floor and provide connectivity to the WSE.
http://jlne.ws/M2ucoq

Thomson Reuters Launches Eikon For Compliance Management To Put Compliance Front And Centre Of The Trading Floor
Launch Comes On Back Of Poll That Reveals Only One In Three Traders Are Aware Of All Regulatory Rules Associated With Their Activity
http://jlne.ws/M2ucow

Abacus Group Launches StorageBurst – Scalable Service Offers Immediate High-Capacity Storage For Data-Intensive Hedge Funds
http://jlne.ws/M2uago

Betfair Selects StreamBase For Real-Time Analytics – Leading Betting Exchange Selects StreamBase To Process Distributed Real-Time Event Flows
http://jlne.ws/M2ucoz

Carnival Corporation & Plc Selects SunGard’s SaaS-Based Kiodex Solution For Fuel Risk Management
http://jlne.ws/M2ucEM

Bank Sarasin Selects Corporate Actions Scrubbing Solution From AIM Software To Reduce Manual Operations And To Deliver Higher Data Quality To Avaloq
http://jlne.ws/M2udbV

Enforcement

SEC Charges Orthofix International With FCPA Violations
The Securities and Exchange Commission today charged Texas-based medical device company Orthofix International N.V. with violating the Foreign Corrupt Practices Act (FCPA) when a subsidiary paid routine bribes referred to as “chocolates” to Mexican officials in order to obtain lucrative sales contracts with government hospitals.
http://jlne.ws/M2ucER

SEC Charges Five Physicians With Insider Trading In Stock Of Medical Professional Liability Insurer
http://jlne.ws/M2ucES

SIX Swiss Exchange fines Sonova Holding Ltd.
http://jlne.ws/M2udc0

ASIC permanently bans insurance representative
http://jlne.ws/M2ucET

ASIC permanently bans Sydney financial adviser
http://jlne.ws/M2udc6

Tuteur Modulaire J.C. Inc. – AMF files 19 charges against Jocelyn and Claude Lapierre
http://jlne.ws/M2udsl

Environmental & Energy

Bourses seek volume boost from EU CO2 auction deal
Reuters
The European Union’s upcoming selection of an exchange to host government auctions of billions of carbon permits offers the winner a likely boost in trading volume and membership.
http://jlne.ws/LNqBbd
**RKB – BlueNext, ICE Futures Europe and EEX have all confirmed they are in the running, article notes.. No date set for decision announcement.

EU’s Hedegaard still plans ETS review before summer
Reuters
EU Climate Commissioner Connie Hedegaard said her team was working “very, very hard” to publish a review on the emissions trading scheme before the Brussels August break, a step towards bolstering carbon prices impatiently awaited by the market.
http://jlne.ws/MhiF6D

New regulations lay groundwork for Chinese carbon market
Business Green
The Chinese government has released a new set of regulations for the country’s emerging carbon market, potentially laying the foundations for the development of a national carbon market.
http://jlne.ws/LGBlgi

Asia-Pacific

HKMEx Adds CIFCO As Broking Member – Completes Onboarding Of All Authorised Mainland Futures Firms In Hong Kong
The Hong Kong Mercantile Exchange (HKMEx), China’s global marketplace, today announces the addition of China International Futures (Hong Kong) Co., Ltd (CIFCO HK) as a broking member, making it the first international exchange to have signed up all six mainland Chinese futures firms which are authorised to conduct business in Hong Kong.
http://jlne.ws/M2udsr

Asians Are World’s Biggest Risk Takers
CNBC via Yahoo! Finance
A survey by Nielsen shows Asian consumers are more likely to stay invested during this period of volatile markets. What’s more – they are also more likely to put their cash in high-risk assets than their peers in Europe and the U.S.
http://jlne.ws/M2ucF5

Tokyo Stock Exchange ETF/ETN Monthly Report For Jun 2012
http://jlne.ws/M2ucVi

HKFE Announces Revised Margins For ICBC Futures
http://jlne.ws/M2udsu

Frontier Markets

Frontier market ETFs get more specific
Nasdaq
It is putting it mildly to say the ETF space is getting more robust every day. The most recent iShares Exchange Traded Funds Performance Report is 20 pages long and contains I don’t know how many
http://jlne.ws/M2udsx

Palestine Exchange (PEX) – Distributed Dividends Around USD 140 Million For The Year 2011 – PEX CEO Aweidah: The Return On Investment Is 6.97% In 2011
http://jlne.ws/M2ucVp

Tehran Stock Exchange Monthly Bulletin – June 2012
http://jlne.ws/M2ucVs

John Lothian Newsletter

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