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Reuters | U.S. regulators still have not found evidence that erroneous activity or system malfunctions triggered the recent unprecedented market crash, a Commodity Futures Trading Commission official said on Monday.
More than two weeks after the Dow Jones industrial average lost nearly 700 points in minutes before recovering, regulators and exchange operators are still searching for answers.
By Jim Puzzanghera | In
an attempt to prevent a repeat of this month’s rapid market plunge, the
Securities and Exchange Commission on Tuesday proposed a new
circuit-breaker mechanism that would briefly halt trading in individual
stocks that experience a 10 percent price change over a five-minute period.
The move came as the SEC and the Commodity Futures Trading Commission
said they still had not determined exactly what caused the Dow Jones
industrial average to plummet 700 points in just 15 minutes on May 6.
In a 151-page report released Tuesday, the agencies said they were
focused on six areas as they continued to collect and analyze huge
amounts of information.
Associated Press | Morgan Stanley shares dropped in premarket
trading Wednesday following a report that the investment bank is facing
an investigation into mortgage derivative deals.
Federal prosecutors are investigating whether Morgan Stanley misled
investors about its role in a pair of $200 million derivatives whose
performance was tied to mortgage-backed securities, according to a
report in The Wall Street Journal. The newspaper said Morgan Stanley
sometimes bet against the success of the derivatives, which were
underwritten and marketed to investors by Citigroup Inc. and UBS AG.
Shares of Morgan Stanley fell $1.29, or 4.5 percent, to $27.09 in pre-opening trading.
A trader signals near the S&P 500 futures pit at the CME Group in Chicago near the close of trading, Thursday, May 6, 2010. CME’s equity index futures markets figured heavily into early theories as to the cause of that day’s stock market panic. (AP Photo/Kiichiro Sato)
Dow Jones Newswires | CME Group Inc. will join other market operators appearing before
Congress Tuesday as lawmakers seek answers as to what sparked a massive
rout in stock and futures markets last Thursday.
Representatives from the world’s largest futures exchange operator will
head to Capitol Hill to appear alongside NYSE Euronext and Nasdaq
OMX Group Inc. after a summons last Friday by House Financial
Services Capital Markets Subcommittee Chairman Paul Kanjorski (D, Pa.).
Former executives James Cayne and Alan Schwartz testify before Congress Wednesday on the reasons Bear Stearns failed. (AP)
By Jim Puzzanghera
| Former executives of Bear Stearns Cos. on Wednesday defended the
investment bank’s practices and said the firm’s collapse was caused by
an unstoppable run fed by rumors as the financial markets began
spiraling downward in 2008.
But under questioning by the federal commission investigating the causes
of the financial crisis, former Chief Executive James Cayne admitted
that the company had taken on too much risk to handle a severe market
disruption it did not see coming.
From The Wall Street Journal | A Congressional committee faulted the Food and Drug Administration for not pursuing “specific and credible leads” to identify culprits in China during the 2008 crisis involving contaminated imported heparin.
Get the full story: wsj.com.
Dow Jones Newswires | The U.S. Justice Department on Tuesday
confirmed a settlement under which AstraZeneca PLC will pay about $520
million to resolve allegations the company improperly promoted the
antipsychotic Seroquel.
A settlement has been expected since October, when
AstraZeneca booked a $520 million reserve to cover an agreement in
principle to resolve government probes of Seroquel sales and marketing
practices.
From The Swamp: After reading from a Goldman Sachs memo on the quality of certain products, Sen. Carl Levin asked salesman Daniel Sparks how many of the crumby securities he had sold. Only neither the Goldman memo nor Levin used the word crumby. Senate hearings into misconduct at the investment firm continue.
Get the full story: Goldman Sachs: One ’s—-y‘ deal.
Tribune staff report | The U.S. safety agency OSHA has proposed $60,000 in penalties against Chicago-based National Wrecking Co. for safety violations.
Read the full story: OSHA wants $60,000 fine for National wrecking
Associated Press | A group of House Republicans is asking the Securities and Exchange Commission’s inspector general to investigate whether agency officials engaged in unauthorized disclosure of charges against Goldman Sachs.
A letter Friday from the eight lawmakers suggests SEC employees might have leaked information to influence debate in Congress on financial regulation. The lawmakers question the timing of disclosures about the agency’s actions and cite a news article that described the Goldman suit before the agency’s official announcement. Republican Rep. Darrell Issa of California says any violation of the SEC’s disclosure rules “would be deeply troubling.”
The Republicans also asked the inspector general to investigate whether the SEC’s charges themselves were timed to influence debate on the legislation. The SEC has denied that.
Dow Jones Newswires | The U.S. Trustee-appointed examiner of the
Lehman Brothers Holdings Inc. bankruptcy said the firm exceeded its own
risk limits and that the U.S. Securities and Exchange Commission “simply
acquiesced.”
By 2007, several regulators including the SEC “were concerned about
Lehman’s future and the effect of Lehman’s possible demise on the U.S.
economy,” Anton Valukas, who was U.S. attorney for the Northern District
of Illinois in the late 1980s, in testimony prepared for a Tuesday
hearing before the House Financial Services Committee.
Lloyd C. Blankfein, chairman and CEO of Goldman Sachs, testifies before the Financial Crisis Inquiry Commission on January 13, 2010 in Washington, DC. (Olivier Douliery /Abaca Press/MCT)
Associated Press | The government has accused Goldman Sachs & Co. of defrauding
investors by failing to disclose conflicts of interest in subprime
investments it sold as the housing market was collapsing.
The Securities and Exchange Commission said in a civil complaint Friday
that Goldman failed to disclose that one of its clients helped create
– and then bet against — subprime mortgage securities that Goldman
sold to other investors.
Two European banks that bought the mortgage securities lost nearly $1
billion, the SEC said. The agency is seeking to recoup profits reaped
on the deal
The government has accused Goldman Sachs & Co. of defrauding
investors by failing to disclose conflicts of interest in mortgage
investments it sold as the housing market was faltering.
Associated Press | Toyota is testing all its sport-utility
vehicles to reassure buyers of their safety after Consumer Reports
warned a large Lexus SUV is susceptible to rolling over.
The expanded testing covers the entire lineup of Toyota and Lexus SUVs,
including popular models such as the RAV4, 4Runner and Highlander, said
Toyota spokesman Brian Lyons. The automaker will be testing the
vehicles’ stability control to replicate the Consumer Reports’ test that
uncovered the problem, he said.
(William DeShazer/Chicago Tribune)
The Associated Press | Campaigners to save British jobs at Cadbury have made a complaint to regulators that Kraft Inc. misled employees during its takeover of the chocolate maker after it backtracked on plans to keep a factory open.
Amoree Radford, who led a campaign to preserve the Keynsham factory in Somerdale, western England, said she had lodged an official protest with the Takeover Panel.
Dow Jones Newswires-Wall Street Journal | U.K. regulators are
investigating whether Kraft Foods Inc. misled employees and investors
during its battle to acquire Cadbury PLC, people familiar with the
matter said, as ill feeling generated by the deal continues to
reverberate in Britain.
The Panel on Takeovers and Mergers is looking into comments Kraft
executives made during the contentious takeover battle about Cadbury’s
Somerdale candy factory in Keynshaw. Beginning with its initial
takeover letter, Kraft officials repeatedly said they believed the
factory could be kept open. That was a contrast to Cadbury, which had
said it would close the plant and move Somerdale’s 500 jobs to Poland.
