Victory for Serious Fraud Office as trio convicted of conspiring to fraudulently manipulate global benchmark interest rates
A multimillionaire former star trader at Barclays is expected to receive a prison sentence, along with three former colleagues, after being convicted for his role as ringleader in a transatlantic plot to manipulate Libor interest rates a decade ago.
During a three-month trial at Southwark crown court, the ex-bankers gave various explanations for their behaviour: they did not believe it to be dishonest, their bosses condoned it and some had been subjected to intimidation. However, the jury found that Jay Merchant and his co-conspirators had knowingly tried to fix rates in an effort to help the bank make money on its own trades.
The convictions are a major victory for the Serious Fraud Office, which has been pursuing investigations into the Libor scandal for four years. Before this trial, the SFOs only successful prosecution was that of the former UBS and Citigroup trader Tom Hayes. He was sentenced to 14 years in prison, reduced on appeal to 11 years, but all six of his alleged co-conspirators were acquitted in January.
The verdicts will be closely watched by other former Barclays bankers, as the SFO is still pursuing investigations into two more alleged Libor-fixing conspiracies.
Merchant and nine other highly paid investment bankers, working at Barclays offices in London and New York, were accused in court of conspiring to fix the rate, though criminal charges were only brought against six men.
Merchant, Alex Pabon and Jonathan Mathew were found guilty of conspiracy to defraud at Southwark crown court last week. The judge did not permit reporting of their verdicts until Monday.
The jury failed to reach verdicts on two other defendants and prosecutors have two weeks to decide whether to seek a retrial. A sixth banker, Peter Johnson, had already pleaded guilty.
Merchant, 45, a graduate of Stern business school in New York, who has Indian and British nationality, worked for Barclays in London and later in New York, earning 2.2m in pay and bonuses for 2007. Before his career in banking, Merchant had been one of Indias top tennis players.
During the trial, he had claimed that many of his colleagues knew that banks acted in their commercial interest when making their daily submissions to the Libor-setting process.
Merchant said Eric Bommensath, a former co-head of Barclays investment bank, was one of those who knew about the practice. However, from the witness box, Bommensath told the court that he had known nothing of how the banks Libor submissions were arrived at.
Under cross-examination, Bommensath was shown emails copied to him and other Barclays chiefs about Libor. Libors are not reflecting the true cost of money. The true cost of money is anything from 5 to 15 basis points higher, one said.
Another email read: Fun and games in Libor land. Just for your guidance I do not think I am setting Libors high enough.
Bommensath explained that he was based in New York and was not running the part of the bank that dealt with Libor. He denied knowing about the practices and prosecutors have never accused him of involvement in, or knowledge of, the plot.
In a statement issued after the jury was discharged, the SFO director, David Green QC, said: The trial in this country of American nationals demonstrates the extent to which the response to Libor manipulation has been international and the subject of extensive cooperation between US and UK authorities.
Andrew Tyrie MP, who chairs the Treasury select committee, said: These convictions, which take place under the law that existed prior to the Libor scandal, should themselves act as a deterrent.
The regulators are now armed by parliament with far more stringent powers and penalties. Those who might be tempted into wrongdoing need to know that these new sanctions are available and parliament will expect the regulator to use them rigorously.
Merchant, Johnson, Pabon and Mathew will be sentenced later this week.Continue reading
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As politicians around the world brace for more revelations from thePanama Papersa gigantic trove of leaked documents from the detailing the widespread use of tax-evading shell corporations in the Central American nationone U.S. presidential hopeful might be thinking, “I told you so.” Bernie Sanders has been sounding the alarm about the issue for years.
The Vermont senator and 2016 presidential candidate railed againsta pending trade agreement between the United States and Panama in a fiery speech on the Senate floor in 2011. Sanders said he worried that the free-trade deal would make it even more difficult for law-enforcement officials to crack down on tax havens in set up in Panama by corporations and wealthy individuals.
I’m going to say a word about a Panama Free Trade Agreement, he began. Panamais a very small country. Its entire annual economic outputis only $26.7 billion a yearor two tenths of one percent of the American economy. No one is going to legitimately stand up here and say that trading with such a small country is going to significantly increase American jobs. Then why would we be considering a trade agreement with Panama? What’s going on there?
Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in offshore tax havens, Sanders continued. The Panama Free Trade Agreement would make this bad situation much worse. I’m a member of the Budget Committee … and we have heard testimony time and time again that our country is losing up to $100 billion every year as corporations stash their money in postal addresses in the Cayman Islands, Bermuda, and in Panama.
Sanders said that the deal would effectively bar the United States from cracking down on illegal and abusive offshore tax havens in Panama.
In fact, he said, combating tax haven abuse in Panama would be a violation of this free trade agreement, exposing the U.S. to fines from international authorities.
The George W. Bush administration began negotiating the United States-Panama Trade Promotion Agreement in Bush’s second term, but passage stalled until theObamaadministration revived it early in his first term. Obama signed it into law in 2011.
Despite the warnings of critics like Sanders, Obama’s entire Cabinet supported the dealincluding then-Secretary of StateHillary Clinton, now Sanders’s rival for the Democratic presidential nomination.
The Panama Papers reveal that the Clinton-led State Department actively pushed for the deal, despite being aware that it wouldmake tax avoidance in the country more difficult to rectify.
As part of the negotiations around the deal, the Treasury Department entered into aseparate agreement with Panama intended to facilitate the sharing of tax information between the two nations. But as IRS Commissioner Doug Shulman noted, such information-sharing agreement generally aren’t enough tostop bad behavior.
This is not to say that treaties and TIEAs are some sort of silver bullet; they have their shortcomings,Schulman saidduring a 2010 talk at the Organization for Economic Cooperation and Development. It often takes a long time to get the requested information from partners; and the information may also be incomplete. There are also very strict rules and you may have to jump through a lot of hoops to get the information you need.
When the Panama Papers leaked, watchdog groups quickly pounced on what they saw as a vindication of their concerns about free-trade deals.
Nearly five years after the U.S.-Panama Free Trade Agreement vote, the Panama Papers leak proves once again how entirely cynical and meaningless are the lavish promises made by American presidents and corporations about the economic benefits and policy reforms from trade agreements, Lori Wallach, global trade watch director for Public Citizen, told Alternet.
The top promise about the benefits of the U.S.-Panama FTA was that it would end Panama’s financial crime secrecy protections and tax havens and money laundering activities, Wallach said, but this leak shows that, if anything, Panama’s outrageous financial crime facilitation has intensified while the FTA’s investor protections and official U.S. stamp of approval has increased inflows of dirty money to Panama.
Clinton, meanwhile, has largely supported such deals, although she hasbecome more skepticalin recent years.
Clinton was one of the TPP’s strongest backers while she ran the State Department, calling it the gold standard for trade deals. But she came out against its approval last year while campaigning for president.
Whether the Panama Papers will affect the presidential election remains to be seen, but the massive leak has already shaken up politics in Iceland. The country’s prime minister, Sigmundur Dav Gunnlaugsson,stepped down from office on Tuesday following revelations that his family had stashed millions in secret Panamanian accounts.
The start of this news story reads like a typical vaguely futuristic plot from a movie that isn’t hard to imagine coming to a theater near you.
First, a hacker breaks into the fare system of the San Francisco Municipal Railway on Friday. Unable to immediately regain control of the system, railway officials allow free rides until further notice. Then the hacker demands a ransom to stop the attack, but officials release a statement on Sunday saying the situation is “contained,” and things are soon mostly back to normal.
The lasting effect on the transit system is likely minimal. Neither trains nor buses were affected by the hack, and the perpetrator wasn’t able to steal any customer information, according to the San Francisco Municipal Transportation Agency. But it’s not hard to see how this could be the beginning of a larger series of attacks on public infrastructure.
“With any of these attacks, the level of effectiveness will really dictate that we’ll see more of them,” Justin Fier, the director of cyber intelligence and analysis at Darktrace, a cybersecurity firm, told Mashable. “Thankfully it was minimal and it didn’t affect actual trains, but my hope is that it doesn’t continue to adapt and hit more sophisticated pieces of our infrastructure.”
The level of effectiveness depends on how you look at the hack.
According to the hacker, the malware found a home in the MUNI transit fare system by something of an accident.
“Our software working completely automatically and we don’t have targeted attack to anywhere,” the hacker, who used the email account firstname.lastname@example.org, told The Verge via email over the weekend. “SFMTA network was Very Open and 2000 Server/PC infected by software.”
If we believe the person behind that email account (which also appeared on hacked fare machines in San Francisco), then the malware was likely self-reproducing, and was sent out to email account after email account until someone downloaded an infected attachment.
The person behind the email account said they were asking for 100 bitcoin, worth around $73,000, when they were contacted by The San Francisco Examiner. They claimed they hadn’t been contacted by any transit officials at the time of that article, and the person behind that email account has not responded to Mashable at the time of this writing.
Though the attacker’s conversations with journalists make the digital assault seem random, Fier believes it was fairly targeted. Fier believes institutions are more likely to pay a ransom rather than individuals. Other victims of “ransomware” attacks, including schools and hospitals, need to be open and operational in order to provide their services and make money. It seems reasonable to conclude that a hacker looking for money is aware of that, and will tailor his or her targets accordingly, rather than send a self-replicating malware in hopes that it finds a target with enough money to potentially provide a sizable ransom.
MUNI’s Sunday statement made no mention of paying any kind of ransom requested by the hacker, but the hacker may have gotten what he wanted regardless.
“Of course the money would have been nice, but I’m sure they will be just as happy with the level of exposure they got,” Fier said. “It will show them how media in particular will react to it, and they might attempt again based on those reactions.”Continue reading
Assuming your children don’t grow up in an apocalyptic wasteland, you’d fully expect some parts of their childhood to look just like yours. Pop culture fads come and go, but they’ll have a lot of the same sports (how often do we invent new ones?), and when they discover porn, it’ll still look like the porn of your youth (they’re not designing new genitalia either).
That’s what you’d think, anyway. But there are some staples of the culture which you didn’t know are on the brink of extinction.
To be clear, porn isn’t going anywhere. When aliens study the ruins of our civilization millions of years from now, they will say that mankind’s rich tapestry of pornography is its great enduring legacy. But for an individual star to become a huge name across the pornoverse is all but impossible these days. There will be no Jenna Jamesons or Ron Jeremys for the new generation.
“So take your 14 inches and get back in the classroom, Ron.”
Back when porn was only available in magazine or videotape form, it made sense to stick to the oeuvre of one performer who … well, worked for you. Thus, one erotic celebrity’s name could singlehandedly keep entire studios afloat. But thanks to the limitless pornographic bounty of the internet, “full-time porn star” may soon no longer be a viable career option at all.
“Oh well. Guess I’ll have to fall back on being a Mensa genius and piano prodigy.”
After years of the interwebs being flooded with millions of hours of both amateur and pirated porn, adult film studio profits have dropped hard. But, ever the resilient purveyors of smut, the industry immediately started thinking up ways to reinvent porn for the modern age. (It’s something they’ve always done.) Their best idea so far? Custom-made videos catered to the needs of individual customers. A vast array of niche products for tiny audiences, some of whom are actually willing to pay money.
As opposed to the rest of the world, which regards porn which costs anything more than “zero” as highway robbery.
So performers who once earned thousands of dollars per scene are now doing webcam shows where name recognition takes a backseat to whether or not they fulfill a specific request, such as laughing at the viewer’s small penis (which is apparently something people ask for). A few eager actors are still trying to cling to the old model, fighting fiercely for a shrinking market and continuous low pay, but when your competition is personalized videos and millions of 100-percent free streaming movies, you’re essentially trying to float on a sack of iron dicks in the middle of the ocean.
We’d love for scientists to study the effects of this on human sexuality. Will it get to the point where everyone’s fetishes are so specific that no two people can enjoy the same erotica? Back in the olden days, everyone in your parents’ hometown could gather around the same Linda Lovelace video and become aroused in unison. Soon, your favorite porn star will be famous only to you, because she’s the best at using a vibrator while dressed as a Civil War general while seductively eating a bowl of pho while laughing at your small penis.
When we say “gay bars,” we don’t mean bars with a primarily homosexual clientele. We’re talking about very specific places — i.e. underground party-filled establishments where gay people would go to meet other gay people and be themselves in a safe environment. They’ve been influencing mainstream culture for decades, whether you knew it or not. Disco and techno both got their starts in gay clubs, and the gay scene shaped Madonna’s act before she became the biggest female pop star in history. We can also thank them for making club drugs like Ecstasy popular. And of course, the gay rights movement started with a series of riots at a gay bar called the Stonewall Inn.
But gay bars are going away. This would seem to be a huge loss to the culture as a whole, but the good news is that they’re disappearing for mostly uplifting reasons.
Well, technically they’re disappearing from bankruptcy, but empowering bankruptcies.
As gay culture continues to be accepted in the mainstream, the traditional safe meeting spots for dating and hooking up are being replaced by online communities and apps, just like they are for heterosexual people. As for going someplace with your friends to have a good time without catching a hate-crimey vibe, it’s fortunately way easier to find spots to do that now. Intolerance / country western bars are of course still a thing, but we actually made enough progress for gay people to no longer need bars that are exclusively for them.
We finally have a bar scene where we can all come together to focus on what truly matters: getting drunk cheaply.
It’s like during Prohibition, when people had to go to speakeasies to drink safely without getting arrested. Well, gay bars were basically the speakeasies of homosexuality. But ever since homosexuality was finally decriminalized in the U.S. (in 2003; homosexuality has only officially been legal since Finding Nemo came out), those kinds of places lost their “rebel” feel, costing them a lot of patrons and eventually leading to them being bought out by Home Depot. That is not a joke.
Another reason gay-oriented businesses are seeing fewer attendees is that many of the unique neighborhoods that once housed regular customers are being gentrified out of existence. And that’s the mark of true progress: Gay business are no longer singled out for being gay, but for being in the way of the wealthy.
When was the last time you saw a crystal meth addict shouting at a half-scared, half-pissed-off animal? Sorry, let us try that again: When was the last time you went to a circus that still used animals in their shows? It must have been a while, and there is a reason for that. The truth is that the time-honored tradition of animal spectacles is winding down, making it harder and harder each year to scare children with clowns.
Harder, but not impossible.
If you’re shrugging this off as no big loss, keep in mind that circuses were popular for 250 straight goddamned years, using pretty much the same format that whole time. You could use a time machine to kidnap a kid from 1821 and bring him to a circus in 2016, and he’d know exactly what he was looking at — trained elephants, lion tamers, tents, the whole bit. It would even smell the same.
But the famous Ringling Bros. and Barnum & Bailey’s have promised to remove all elephants from their circuses by 2018. Why the change of heart? Money, of course. The circuses opted to quit throwing away cash battling local legislation prohibiting use of rare wild animals like elephants and Sumatran tigers, and fending off lawsuits invoking the Endangered Species Act, proving once and for all that the only way people will stop being terrible is if they can no longer make money doing so. It looks like a ban on lions won’t be far behind.
Soon, the only downtrodden lions you’ll be able to see will be from Detroit.
This is similar to what is happening at SeaWorld, which recently caved to the growing backlash driven by the documentary Blackfish and vowed to eventually free all of their Willies. Dolphins will be next, if the world follows India’s example and bans the capturing and exhibition of our favorite seagoing assholes.
Once again, this is all being done for financial reasons. As a whole, people aren’t buying tickets to animal circuses anymore, preferring to spend all that money on something that won’t result in very uncomfortable questions from their children on the way back home. But because it’s all about the money, it also means that wild animal shows will always be a thing somewhere in the world. They’ll just go from “a common childhood memory” to “something you pay cash to watch in a dark basement in Thailand.”Continue reading
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