It’s the financial service web site FierceFinance.com who have put together the list of the biggest blunders in the industry during the past year. Personally, I might have put a few other issues on the list, but when it comes to the final top position I think we have a winner:
“Led by CEO Jon Corzine, formerly of Goldman Sachs, MF Global was a trading powerhouse back in 2010. That all came crashing down in late 2011, as the bank filed for Chapter 11 bankruptcy and lost track of $600 million in capital.”
FierceFinance
Yeah, losing $600 million is probably harder than earning them, and quite an achievement…
FireceFinance writes:
“The MF Global failure was a total unraveling involving poor management and risky investment. For what it’s worth, Corzine said he will not be seeking to collect his $12 million Golden Parachute severance package. But reports surfaced in The Telegraph speculating that MF Global employees in the U.K. may have received Q3 corporate bonuses, even with the firm on the brink of failure.”
Read more: MF Global coverage.
Here’e the rest of the list:
2. Bank of America imposes debit card fee.
“The backlash against the bank was severe. But CEO Brian Moynihan defended the bank’s right to make a profit, saying in a statement that he had “an inherent duty as a CEO of a publicly owned company to get a return for my shareholders.”
3. Frustration sparks Occupy Wall Street protests.
“What originated as peaceful has become violent, as reports surfaced of police using tear gas on protestors along with attempts to force them out of encampments.”
4. S&P downgrades US credit rating.
“Even though S&P went on to be criticized for its debt rating practices (the issue of credit rating agency credibility looms large), the move was significant at a time when budget showdowns in Washington and a stagnant economy were constantly in the headlines.”
5. Raj Rajaratnam slammed for insider trading.
“The convicted insider trader dominated the news in 2011 and in many ways is seen as the pinnacle of success for federal prosecutors, who have been cracking down on offenders.”
6. Citi stumbles after major data breach.
“Citi was reluctant to publicly announce the breach, finally doing so only after being pressed on the subject by the media. Citi offered a public explanation of the incident and tried reassuring customers that the stolen data was insufficient to commit fraud and that social security numbers, dates of birth and card security codes remained secure.”
7. Bank of America forecloses on couple.
“One of the more bizarre stories of 2011 was when Bank of America accidentally foreclosed on a Florida couple. Although the bank eventually backed down, the couple hired a lawyer to recoup attorney’s fees. Five months passed without payment–this coming after a judge ordered the bank to pay up. So the couple and its attorney showed up to foreclose on a local Bank of America branch, declaring their intent to remove furniture, cash and other property.”
8. RSA suffers cyber attack.
“RSA’s SecureID tokens are used by 30,000 organizations worldwide. RSA remained open about the attack, offering tips and posting details describing the anatomy of the breach. But even transparency didn’t reverse the fact that banks were forced to rethink security and look for new options.”
9. Typo costs Goldman Sachs $45 million.
“A tip for everyone who deals with contracts: Double check all calculations. Goldman Sachs learned that lesson the hard way back in June when it issued four warrants relating to Japan’s Nikkei index. Buried in the depths of financial jargon was a serious formulaic mistake: A multiplication sign was inserted where there should have been a divide by sign.”
10. John Paulson‘s Sino-Forest bust.
“In all likelihood, 2011 will not be a great year for hedge fund manager John Paulson. Among his failures was selling 35 million shares of the Chinese company Sino-Forest at an estimated loss of $500 million.”
Original post here.
Related:
- MF Global’s collapse looks like a scandal (blogs.ft.com)
- Missing MF Global Funds Could Top $1.2B, Trustee Says (foxnews.com)
- MF Global: The mess that keeps getting messier (finance.fortune.cnn.com)
- DealBook: British Regulators Bar Hedge Fund Executive From Industry (dealbook.nytimes.com)
- MF Global: Fraud, Incompetence, or a Bit of Both? (dailyfinance.com)
- House panel calls Corzine to testify (marketwatch.com)
- Analysis of the U.S. Savings and Loans Banking Market (prnewswire.com)
- Which? Sting Shows Banks ‘Give Bad Advice’ (news.sky.com)
US Hedge Funds Raising Bets On Recovery, Ditching Gold
US hedge fund managers are still keeping the champagne on the cooler as they’re now raising bets on the US economic recovery, the latest flow report by TrimTabs/BarclayHedge show. About 23% aim to increase leverage in the coming weeks, the largest share since May, while only 12% plan to lever down. The survey also reveal that the fund managers see precious metal as the most overbought asset class, and are turning to bonds and US dollar.
“Hedge fund managers are bearish on Treasuries and worried about public deficits, while mom and pop poured a gargantuan $641 billion into bond funds between January 2009 and October 2010. These are just a few of the reasons why we believe bonds are in the beginning stage of a secular bear market.”
Vincent Deluard
The sophisticated investors are using all kinds of measures to pinpoint the next directions of the markets. Like the statistics for search word on Google. According to Executive Vice President Vincent Deluard at TrimTabs, has searches for “economic depression” plummeted in the past 18 months, while searches for “double-dip recession” have virtually disappeared since August 2010 and searches for “green shoots’” spiked in January.
Hedge fund managers are upbeat on US equities but less bullish than a month ago, according to the TrimTabs/BarclayHedge Survey of Hedge Fund Managers for January 2011, released yesterday.
About 37% of the 91 hedge fund managers the firms surveyed are bullish on the S&P 500, down from 46% in January, while 26% are bearish, up from 19%.
“Less upbeat forecasts are somewhat surprising in that hedge fund managers performed exceptionally well in the final four months of 2010,” says Sol Waksman, founder and President of BarclayHedge in a statement. “Nevertheless, the January bullish reading is the second-highest since the inception of our survey in May 2010, while the bearish reading is the second-lowest. Hedge fund managers still have plenty of skin in the game,” he adds.
Hedge fund managers remain downbeat on the 10-year Treasury note, although they are less bearish than a month ago, while they shifted to neutral from bullish on the US dollar index.
A net 8% of managers aim to increase leverage in the coming weeks, down from 11% last month.
Meanwhile, a host of other sentiment gauges reveals that investors of all stripes are especially bullish on domestic stocks.
“Even Google search trends underscore the expectation of higher stock prices and stronger economic growth,” Vincent Deluard, executive vice president at TrimTabs, notes.
“Searches for “economic depression” plummeted in the past 18 months. Also, searches for “double-dip recession” have virtually disappeared since August 2010, when the FED announced QE2, while searches for “green shoots” have spiked in January.”
The share of managers that cites large public deficits in the US as the biggest risk to global economic growth – 33% – is identical to the share that cites sovereign debt problems in Europe.
Also, 41% of managers do not know what to expect from the Fed in the wake of QE2, but 67% expect bond prices to fall after it ends in June.
“Policymakers have proven wildly successful at keeping market participants guessing about what they will do after QE2 ends,” Deluard says. “But we feel another round of QE is unlikely to alter the bond landscape. Yields across the curve stand between 30 and 100 basis points north of the 2010 lows despite heavy Fed Treasury purchases. Hedge fund managers are bearish on Treasuries and worried about public deficits, while mom and pop poured a gargantuan $641 billion into bond funds between January 2009 and October 2010. These are just a few of the reasons why we believe bonds are in the beginning stage of a secular bear market.”
This is the main findings in the first hedge fund survey of the year:
Signs of Complacency?
Multiple sentiment gauges show that investors of all stripes have turned extremely optimistic, the report says.
A net 16% of the 302 institutional investors surveyed by Bank of America Merrill Lynch in December are overweight U.S. equities.
In addition, 44% believe global growth will prove stronger in 2011, up from 35% in November and 15% in October. Investors Intelligence reports that 56.8% of advisors are bullish, the highest level since the market top in October 2007 and nearly triple the 20.5% who are bearish.
The American Association of Individual Investors reports that “mom and pop” are bullish to the tune of 50.2%, nearly double the bearish figure of 27.1%. Meanwhile, the VIX tumbled to 16.11 on December 17, the lowest level since April.
Let me just remind you of Bob Farrell’s famous 10 rules of investing, rule number nine; “when all analysts agree, the opposite is going to happen.”
Anyway – the hedge fund Managers reveal they plan to bet aggressively on the economic recovery.
About 23% aim to increase leverage in the coming weeks, the largest share since the inception of our survey in May, while only 12% plan to lever down.
(And here’s a copy of the report.)
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