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Friday, December 02, 2005
2005: The year in Wall Street crime. On Wall Street has created a
handy chronicle of big-money activities in 2005 through November. I helped out by editing and boldfacing the stories and amounts I saw as significant.

Jan. 12: The New York Stock Exchange fines Morgan Stanley $19 million for failing to supervise two rogue brokers and deliver stock prospectuses to 141,000 clients.

Jan. 25: Goldman Sachs and Morgan Stanley each agree to pay $40 million to settle Securities and Exchange Commission charges that they artificially stimulated demand for certain high-tech initial public offerings in the aftermarket.


Feb. 14: The NYSE fines JPMorgan Securities $2.1 million for failing to retain e-mails arising out of the research-analyst conflict case.

Feb. 14: AIG says the New York Attorney General and the SEC have served it with subpoenas pertaining to the accounting of certain reinsurance policies.


March 2: Citigroup reaches settlement in Global Crossing class action litigation. It settles the suit for $75 million.

March 3: Bank of America settles WorldCom suit and agrees to pay $460 million in restitution in the securities fraud class action.

March 4: Goldman Sachs, Lehman Bros., Credit Suisse First Boston and UBS agree to pay a combined $100 million to settle with former shareholders and bondholders of WorldCom. The four firms led a May 2000 bond offering by the telecom company.

March 7: AIG reveals that its chairman, Maurice "Hank" Greenberg, has received a subpoena from New York Attorney General Eliot Spitzer.

March 8: The NYSE fines Merrill Lynch $13.5 million for failing to supervise a group of brokers at its Fort Lee, N.J., branch. They allegedly engaged in improper market timing of mutual funds.

March 15: Former WorldCom CEO Bernard J. Ebbers is convicted of conspiracy and securities fraud that resulted in investor losses of $2 billion and the bankruptcy of the company.

March 21: Time Warner agrees to pay a $300 million penalty for overstating online advertising revenue and the number of its Internet subscribers, and for failing to consolidate the financial results of AOL Europe in its financial statements.


April 12: The SEC charges the NYSE with failing to police specialists who allegedly engaged in unlawful proprietary trading on the floor. In a related move, the NYSE also charges 17 former specialists with securities fraud for trading ahead of customer orders.

April 25: Cable operator Adelphia Communications will pay $715 million and set up a victim compensation fund for the accounting fraud. Founder John J. Rigas later gets 15 years in prison and his family agrees to forfeit 95% of its holdings in the company.

April 27: The NASD fines Raymond James $750,000 for fee-based account violations. The firm is also required to pay $138,000 in restitution to customers.


May 31: Citigroup agrees to pay about $208 million to settle the SEC's accusations about improper arrangements among certain Smith Barney mutual funds, an affiliated transfer agent and an unaffiliated sub-transfer agent.


June 2: President Bush nominates Christopher Cox to replace Donaldson as chairman. The nomination of Cox, a conservative former congressman, is seen as slowing the pace of regulatory moves.

June 10: Citigroup and JPMorgan agree to settle claims of Enron-related damages for a combined $4.2 billion.


July 13: Former WorldCom CEO Bernard J. Ebbers is sentenced by a federal judge in New York to a 25-year prison term for the $11 billion accounting fraud at WorldCom.


Aug. 2: The NASD orders Morgan Stanley to pay more than $6.1 million for fee-based account violations. Of that amount, $1.5 million is fines and $4.6 million is restitution for more than 3,500 customers.

Aug. 2: Toronto-based Canadian Imperial Bank of Commerce agrees to pay $2.4 billion to shareholders of Enron as part of a legal settlement. It becomes the third major bank to settle claims involving the former energy-trading company.

Aug. 15: The NYSE fines Merrill Lynch $10 million for failing to deliver customer prospectuses and other supervisory and operational failures.


Sept. 14: Northwest Airlines and Delta Air Lines both file for bankruptcy protection as the airline industry continues to suffer.

Sept. 15: An SEC judge hits Raymond James with a $6.9 million fine for failing to supervise broker Dennis Herula.

Sept. 19: Former Tyco International CEO and founder Dennis Kozlowski and ex-CFO Mark Swartz receive prison terms of eight to 25 years for looting more than $150 million from the company. Kozlowski is also ordered to pay $167 million in fines and Swartz $70 million.


Oct. 10: The NASD hits eight firms with directed brokerage violations and imposes fines of more than $7.75 million. Hit with the heaviest fines were INVEST Financial Corp. ($1.52 million), Commonwealth Financial Network ($1.4 million), National Planning Corp. ($1.3 million), Mutual Service Corp. ($1.3 million) and Lincoln Financial Advisors Corp. ($950,000).

Oct. 12: Phillip Bennett, CEO of commodities trading firm Refco, is arrested and charged with a $430 million accounting fraud approximately two months after the firm went public in August.

Oct. 17: In the largest bankruptcy so far for the year, Refco files for Chapter 11 protection to reorganize $48.6 billion in liabilities. Refco's filing, in the wake of Bennett's arrest, wipes out $924 million in market value. One day later, the company is delisted by the NYSE.
CSI: Wall Street is one of the most boring shows around but, man, is it expensive to produce. If I got fined for the way I park my car the way Wall Street gets fined for its indiscretions, my car would be booted pronto.

Why is there no Denver boot for Wall Street?

Via The Daily Caveat.

Greatest Hits · Alternatives to First Command Financial Planning · First Command, last resort, Part 3 · Part 2 · Part 1 · Stealing $50K from a widow: Wells Real Estate · Leo Wells, REITs and divine wealth · Sex-crazed Red State teenagers · What I hate: a manifesto · Spawn of Darleen Druyun · All-American high school sex party · Why is Ken Lay smiling? · Poppy's Enron birthday party · The Saudi money laundry and the president's uncle · The sentence of Enron's John Forney · The holiness of Neil Bush's marriage · The Silence of Cheney: a poem · South Park Christians · Capitalist against Bush: Warren Buffett · Fastow childen vs. Enron children · Give your prescription money to your old boss · Neil Bush, hard-working matchmaker · Republicans against fetuses and pregnant women · Emboldened Ken Lay · Faith-based jails · Please die for me so I can skip your funeral · A brief illustrated history of the Republican Party · Nancy Victory · Soldiers become accountants · Beware the Merrill Lynch mob · Darleen Druyun's $5.7 billion surprise · First responder funding · Hoovering the country · First Command fifty percent load · Ken Lay and the Atkins diet · Halliburton WMD · Leave no CEO behind · August in Crawford · Elaine Pagels · Profitable slave labor at Halliburton · Tom Hanks + Mujahideen · Sharon & Neilsie Bush · One weekend a month, or eternity · Is the US pumping Iraqi oil to Kuwait? · Cheney's war · Seth Glickenhaus: Capitalist against Bush · Martha's blow job · Mark Belnick: Tyco Catholic nut · Cheney's deferred Halliburton compensation · Jeb sucks sugar cane · Poindexter & LifeLog · American Family Association panic · Riley Bechtel and the crony economy · The Book of Sharon (Bush) · The Art of Enron · Plunder convention · Waiting in Kuwait: Jay Garner · What's an Army private worth? · Barbara Bodine, Queen of Baghdad · Sneaky bastards at Halliburton · Golf course and barbecue military strategy · Enron at large · Recent astroturf · Cracker Chic 2 · No business like war business · Big Brother · Martha Stewart vs. Thomas White · Roger Kimball, disappointed Republican poetry fan · Cheney, Lay, Afghanistan · Terry Lynn Barton, crimes of burning · Feasting at the Cheney trough · Who would Jesus indict? · Return of the Carlyle Group · Duct tape is for little people · GOP and bad medicine · Sears Tower vs Mt Rushmore · Scared Christians · Crooked playing field · John O'Neill: The man who knew · Back to the top

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