Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: SEC

Swiss banks are now IRS agents

Bloomberg’s note on Monday that Swiss banks were having a hard time complying with the terms of an agreement between the Swiss government and the US Department of Justice hardly caused a ripple of media concern much less outrage. The time for such expressions is long past.

In accordance with the deal cut back in August 2009 the Department of Justice now has the power to force Swiss banks to

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The Feds are trying to regulate the Bitcoin – good luck

Senators attending this week’s hearing entitled “Beyond Silk Road: Potential Risks, Threats and Promises of Virtual Currencies” being held by the Senate Homeland Security and Governmental Affairs Committee already knew what they were going to hear: the Securities and Exchange Commission (SEC) was going to make the case that

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When the Free Market is allowed to Flourish, It Does

This article was first published at The McAlvany Intelligence Advisor on Friday, November 1st, 2013:

When the JOBS Act (Jumpstart Our Business Startups Act) was signed into law in April 2012, it was designed to create a “regulatory exemption” for crowd funded securities – a crack in the 6-inch thick slab of concrete the government regulatory agencies are determined to pave over every manner of entrepreneurial activity in the country – so that entrepreneurs could meet with capital largely free of regulations under Dodd-Frank, Sarbanes-Oxley, and other noxious restrictions on freedom.

It was highly controversial at the time, with the New York Times leading the way in an article entitled

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Kickstarter Marks Another Milestone

Just over a week ago Kickstarter, the crowd funding platform, revealed that it had successfully funded more than 50,000 projects since its inception in 2009. As of October 31st that number had jumped to 50,844 with another 4,130 currently being funded.

Kickstarter has helped entrepreneurs with ideas, songs, gadgets, video games, publishing concepts and fashion design ideas connect with low-budget capitalists interested in supporting them. And, thanks to provisions in the JOBS Act, signed into law in April 2012, they can do this without

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The Clock is Ticking on Illinois Pension Reform

Two competing bills for pension reform have just passed the Illinois legislature with hopes that one of them will be passed before it adjourns for the summer on May 31st. One of them has the blessing of the teachers’ union and Democrat John Cullerton, president of the state senate. The other passed the House, and neither

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Illinois Pension Plan Fraud on a Massive Scale

This is how the game is played: promise the rubes anything but reserve the right to break the promise. If you get caught, cover it up, admit nothing, and keep on with it. When the Securities and Exchange Commission discovered that the state of Illinois had been playing that game with its pension plan promises

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Chicago-style Politics

This style of corruption even has its own page in Wikipedia! Whoever put it together has done his/her homework, starting off by noting Richard Daley’s “machine” which “is believed to incarnate this style at its worst [with] several of Daley’s subordinates being jailed for corruption.” His machine goes back to 1928 and brings to mind Eliot Ness and The Untouchables.

Wiki names former governors George Ryan and Rod Blagojevich. Ryan was called representative of “quintessential Illinois politics: power-oriented, jobs-winning, control kind of politics.” And Rod? Well, he has his own corruption page at Wiki!

But I digress. Jesse Jackson, Jr. was a congressman from the 2nd District in Illinois until he resigned because of alcoholism and “ethics” problems (both the House Ethics Committee and the FBI are investigating him) . So a special election is taking place at the end of this month to replace him. Care to guess what kind of individual is running to take his place? Mel Reynolds is cut from the same bolt of moldy cloth. In fact, his Wiki page begins:

Melvin “Mel” Reynolds (born January 8, 1952) is a former Democratic member of the United States House of Representatives from Illinois. He resigned from Congress after a conviction for statutory rape.

In fact, his record is so bad that a number of groups are using his campaign to raise funds to oppose him. So in the interest of full disclosure, I thought I’d do a little digging about this miscreant. It wasn’t hard.

First, Reynolds is a very bright guy. He graduated from Harvard University with such high grades that he was awarded a Rhodes Scholarship to the University of Oxford. So someone higher up saw his potential and invited him into the inner circle.

But he apparently had a little problem with his libido along with his ego. This is from Wiki:

In August 1994, Reynolds was indicted for sexual assault and criminal sexual abuse for engaging in a sexual relationship with a 16-year-old campaign volunteer that began during the 1992 campaign. Despite the charges, he continued his campaign and was re-elected that November; he had no opposition.

Reynolds initially denied the charges, which he claimed were racially motivated. On August 22, 1995, he was convicted on 12 counts of sexual assault, obstruction of justice and solicitation of child pornography.

This is classic: denial of all charges, claiming racial discrimination. A perfect snow job to distract attention from his libido. But his behavior was so outrageous that the snow job didn’t work:

Reynolds was sentenced to five years in prison, thus he expected to be released in 1998. However, in April 1997 he was convicted on 15 unrelated counts of bank fraud and lying to SEC investigators. These charges resulted in an additional sentence of 78 months in federal prison. Reynolds served all of his first sentence, and served 42 months in prison for the later charges.

But Reynolds had friends in high places, equally corrupt, who lent a hand:

At that point, President Bill Clinton commuted [his] sentence for bank fraud. As a result, Reynolds was released from prison and served the remaining time in a halfway house.

He then received a full pardon from the Corruptocrat-in-Chief, Mr. Clinton, and went to work for his father, Jesse Jackson, in his Rainbow Coalition. In 2004 he ran again for the House of Representatives, but lost to Jesse Jackson, Jr. by an astounding 88 percent!

Now that Jackson, Jr. is gone, Reynolds thinks he’ll try it again.

 

How Do Liberal Republicans Keep Their Pledges? They Don’t!

Honest Abe

Honest Abe (Photo credit: jeff_golden)

In a public display of candor that illustrates their moral incapacity, some well-known Republicans are now breaking their promise made to taxpayers when they signed Grover Norquist’s Taxpayer Protection Pledge.

First was Georgia Senator Saxby Chambliss. According to Wikipedia, Chambliss is a “conservative,” having been blessed by the Washington Post as one of the “gang of six” trying to craft some kind of way around the fiscal cliff impasse. When in doubt, I check the man’s Freedom Index rating (FI) to see how closely their actual voting record hews to the limits of the Constitution. With Chambliss, it appears to be: not very often, with a paltry rating of just 69. Translation, one-third of his votes are unconstitutional.

Next on the list of pledge-breakers is Lindsey Graham, senior Senator from South Carolina. His FI rating is scarcely better than Chambliss’, at 73. Then comes John McCain, senior Senator from Arizona, the ultimate establishment conservative, with a FI rating of 78. Finally, House member Peter King, from the 3rd Congressional District of New York, with a FI rating of a dismal 62. That’s awfully close to a

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SEC Exposes Largest Insider Trading Scheme Ever

Preet Bharara

Preet Bharara (Photo credit: Wikipedia)

Mathew Martoma, age 38, was arrested at his home in Boca Raton, Florida, early Tuesday morning by the FBI and charged with insider trading. U.S. Attorney Preet Bharara, whose face appeared on the cover of Time magazine last February as the “man who is busting Wall Street,” was positively joyful in announcing the bust:

The charges unsealed today describe cheating coming and going — specifically, insider trading first on the long side, and then on the short side, on a scale that has no historical precedent.

As a result of the blatant corruption of both the drug research and securities markets alleged, the hedge fund [for whom Martoma worked at the time] made profits and avoided losses of a staggering $276 million, and Martoma himself walked away with a $9 million bonus for his efforts.

At a press conference, Bharara continued:

Mathew Martoma and his hedge fund benefitted from what might be the most lucrative inside tip of all time. This is certainly the most lucrative insider-trading scheme ever charged.

It certainly exceeded the amounts involved in the cases of Raj Rajaratnam and Rajat Gupta, both of whom are serving serious jail time for their convictions in insider-trading schemes. Gupta was sentenced in October to two years in federal prison and ordered to pay a $5 million fine, while Rajaratnam was sentenced to

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Obama Unleashed

The Debt StarAs if he ever intended to pull his punches in his continuing drive to establish a totalitarian state in America, newly reelected Obama has wasted no time in extending and expanding his illegitimate powers. As Mike Adams (one of the more astute and insightful of writers I try to read daily) noted in his daily blog on Wednesday:

He’s the one who issued an executive order claiming  government ownership over all farms and farm equipment, in case you forgot  that little fact.

He’s also the guy who just  recently issued an executive order merging Homeland Security with local  corporate entities to grant the executive branch of government a power  monopoly over the nation, bypassing the courts and Congress. You probably  haven’t even heard about that one, because he secretly signed it during  Hurricane Sandy.

From there, Adams speculates on Obama’s second term and his continuing attack on our freedoms:

  1. He sees an expansion of the Transportation Security Administration (TSA) and the surveillance state by setting up arbitrary “check points” on roadways, at sporting events, at shopping malls, and other “surprise” locations. He expects to see even more belligerent and invasive  behaviors, conditioning us for the coming police state.
  2. He expects secret arrests of American citizens and even “kill orders” to be issued against his political opponents.
  3. He anticipates additional government spending without limit, the current debt ceiling notwithstanding.
  4. He thinks our foods will increasingly be modified genetically (GMO) while attempts to let consumers know about them will be overridden and rejected.
  5. He is sure that health care will look more and more like a government agency, with mandatory vaccinations and the war against raw milk continuing.
  6. His push to emasculate the Second Amendment will drive gun and ammunition sales much higher, along with prices for them. It’s interesting to note that Wednesday’s selloff in the stock market didn’t include shares of Ruger and Smith & Wesson, both of which rose substantially.
  7. He expects to see continued and accelerating disregard for the niceties contained in the Bill of Rights.
  8. Government expansion will include increases in food stamps and other entitlement programs.
  9. He expects more and more large employers to move their operations offshore to avoid the onerous demands and mandates under Obamacare which is now firmly cemented into place as a result of the election.
  10. Preppers and veterans will increasingly be targets for reprisals, with the government calling them “potential terrorists” for engaging in what he calls “fundamental preparedness strategies” such as storing water, food, medicines and ammunition.

There are millions of us who see clearly, some perhaps for the first time, exactly what’s coming. Adams just sees over the horizon a little farther than most.

Obama Set to Unleash Tsunami of Regulations after the Election

Obama Visits Silicon Valley

Obama Visits Silicon Valley (Photo credit: jurvetson)

After learning that the White House had failed to enforce the law in order to protect President Obama’s reelection chances from potential negative feedback, Senator James Inhofe (R-Okla.) wrote a letter dated October 25th asking the president to comply:

It has come to my attention…that the federal government is not adhering to [the legal requirement that agencies publish their regulatory agendas on a semiannual basis]. More specifically, your Administration has failed to publish its regulatory agenda since the fall of 2011…

My primary concern is with the [EPA’s] refusal to be open and transparent about its regulatory agenda. Magnifying this concern is that the EPA, in what appears to be a string of politically motivated decisions, has “punted” or put on hold until after the election a number of economically damaging regulations, including greenhouse gas regulations, strict mandates for ground-level ozone, as well as guidance which seeks to expand greatly the EPA’s authority to regulate waters of the U.S…

I request that you comply with the law and publish the federal government’s regulatory calendar this month.

Not surprisingly Inhofe didn’t hear back from the president by the October 31st statutory deadline, and published his outrage at the website of

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JOBS Act Is Starting to Work

Image representing SolarCity as depicted in Cr...

ClearSign Combustion in Seattle, Washington, is one of the first small “early-stage” companies to raise public capital under the JOBS Act enacted in early April. The company’s core expertise is in using computer technology to make boilers, furnaces, turbines, and other combustion systems more efficient. It sold three million shares at $4 each, raising $12 million in the process. After expenses and underwriters’ fees, the company expects to net about $9.5 million. But without the JOBS Act it might not even have bothered.

Allowed to avoid temporarily some of the Sarbanes-Oxley Act‘s more draconian reporting requirements—e.g., providing two years’ worth of financials instead of five, and avoiding other reporting requirements that cost public companies more than $1 million a year to complete—ClearSign offered its shares through the “cloud,” making it easier for the small investor to climb aboard. The company plans to use $5 million of the IPO proceeds for research and development and related capital expenditures, another $1 million to secure patents on its unique computer technology, $1.25 million for marketing purposes, and the balance for working capital.

While far from ensuring the company’s success, the insertion of this capital into ClearSign at this time breathes new life into a company that was on the verge of disappearing altogether. At the end of 2010 the company had just $25.00 in its corporate checking account. It was able to raise $3 million through a private offering last year, but that wasn’t enough to push the company into profitability.

But when investors were informed about the company’s prospects through the offering memoranda that the new rules allowed, the initial offering was oversubscribed and the stock price soared to

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JPMorgan Chase’s $2 Billion Trading Loss Results in Calls for More Regulation

Jamie Dimon - Caricature

Last week’s revelation by JPMorgan Chase’s CEO Jamie Dimon that the bank’s trading desk has suffered a $2 billion loss was followed on Monday by the resignation of three key players involved in the trade that went bad. The Chief Investment Office (CIO), Ina Drew, along with two of her associates, announced their retirements from the bank.

It was just two months ago that questions about risky trades being undertaken at JPM were passed off by Dimon as a “tempest in a teapot,” but on Sunday, on NBC’s Meet the Press, Dimon admitted that he “was dead wrong” and added:

We made a terrible, egregious mistake. There’s almost no excuse for it. [We] hurt ourselves and our  credibility [and expect to] pay the price for that.

Dimon and JPM are used to paying the price for their past errors and misdeeds. In December 2002, the bank paid $80 million as part of a $1.4 billion settlement involving 10 banks that deceived investors with biased research.

In 2003, the bank paid more than $2 billion in fines and settlements to investors and the Securities and Exchange Commission (SEC) for their role in fraudulently financing Enron Corporation that collapsed in 2001.

In March 2005, the bank paid another $2 billion following its involvement in underwriting some $15 billion of WorldCom’s bonds.

There’s more: In November 2009, JPM agreed to a $722 million settlement with the SEC over their involvement in a “pay to play” scheme where Jefferson County, Alabama, was brought to the brink of bankruptcy through fraud and excessive fees to be charged on refinancing the county’s sewer bonds.

And more: In January 2011, JPM admitted that it deliberately overcharged some 6,000 active-duty military families for their mortgages and illegally foreclosed on 18 of those families. At the time Dimon apologized for the “error” and sent one of his associates, chief lending officer Dave Lowman, packing.

Dimon was deliberately opaque in discussing the trade that went sour, saying only that it came from trading in derivatives that were designed to

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The JOBS Bill: An Encouraging Sign of Intelligent Life in Washington

Senator Carl Levin announces at a press confer...

When President Obama signs the JOBS (Jumpstart Our Business Start-up Act) bill into law today it will reflect the first sign in a long time that some in Congress are waking up to reality: government regulations stifle business growth. The bill passed the House 390-23 in March and then passed the Senate 73-26 last week but not without much weeping and gnashing of teeth from regulationists decrying the bill’s alleged resurrection of “deregulation.”

Simply put, the JOBS Act will make it slightly less difficult for small successful private companies to “go public” and raise capital through a public offering of their stock. It expands slightly the number of companies who otherwise would decide that the costs of complying with the regulations under Sarbanes-Oxley and other laws passed after the Enron implosion were simply too great. It provides an “on-ramp” to these companies so that the full impact of those regulations isn’t felt until they reach a certain threshold of financial success, or five years, whichever occurs first.

One of those opposed to any sort of temporary lifting of the regulatory state from the backs of the job creators in the country is liberal Senator Carl Levin (D-Mich.) who said, prior to passage of the bill in the Senate, in a burst of excessive hyperbole, “We are about to embark upon the most sweeping deregulatory effort and assault on investor protection in decades.” Joining Levin was liberal Senator Dick Durban (D-Ill.) who said the ACTS bill would “allow companies to use billboards and cold calls to lure unsophisticated investors with the promise of making a quick buck investing in new companies.”

Other ultra-liberal anti-capitalists in the Senate were unhappy over the JOBS bill too, including Senators Michael Bennet (D-Colo.), Jeff Merkley (D-Ore.) and Scott Brown (R-Mass.). Said Merkley, the bill is “simply a

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Allen Stanford’s Ponzi Scheme a Study on Regulatory Capture

Allen Stanford, former chairman of the Stanford Financial Group of Companies, was convicted on Tuesday on 13 counts of fraud, conspiracy, obstructing justice, violating U.S. securities laws—for operating a Ponzi scheme. Sentencing is scheduled for June, which could result in Stanford remaining behind bars for at least another 20 years.

The scheme, valued at $7 billion at its zenith, has only $300 million in various accounts. Another jury has just ruled these accounts may be seized for potential customer restitution.

The Ponzi scheme was elegantly simple. Stanford’s offshore bank in the British overseas territoryof Montserrat was closed down for “irregularities” in the mid-1980s so he moved it to Antig

English: Sailing in Antigua Deutsch: Segeln au...

ua where he ingratiated himself, using investors’ money, with the local government by lending it millions of dollars and building government administration offices and a hospital. Meanwhile his investors were fooled into thinking they were buying ultra-safe Certificates of Deposit paying above-market rates of interest. His influence went way beyond the local government, however, with regular, sometimes daily, flights of U.S. Senators and Congressmen coming to Antigua to partake of Stanford’s generosity and enjoy his lavish parties. As Mikeda Mikel, the owner of a private jet company in Antigua explained: “They were partying on yachts in an exclusive resort, and when you have US politicians supporting a man like Mr. Stanford on an island as small as Antigua…if you had any doubts before [about his honesty] they go out the window. America has sanctioned him [therefore] he’s good to go.”

By investing in regulatory “protection,” Stanford was able to live for years on his investors’ capital without being disturbed by annoying questions into how he could pay such generous dividends to his clients. As Gaston Browne, chairman of the Antigua Labour Party (ALP), which was in power during Sanford’s heyday, said: 

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Big Banks Oppose Volcker Rule, Urge Delay in Implementing It

President Barack Obamaa, flanked by Paul Volck...

The deadline for comments on the proposed Volcker Rule was Monday night and hundreds, if not thousands, of letters arrived at the last minute to rail against the rule, mostly from Wall Street. The Volcker Rule — which would prohibit banks from trading with their own money — was proposed last summer by former chairman of the Federal Reserve Paul Volcker, who said in a letter to President Obama that they shouldn’t be gambling with money guaranteed by the taxpayers. Big losses by government-backed banks that were trading in risky securities such as mortgage-backed assets precipitated the financial crisis in 2008 and set up the need for federal bailouts of those banks.

The idea behind the rule is simple: Prohibit banks from making “proprietary trades” that are unrelated to traditional banking practices such as making loans and clearing checks. Putting such rules down on paper however is proving to be daunting and giving the banks affected a chance to buy some time.

Volcker’s letter to President Obama was three pages long. The rule incorporated into the Dodd-Frank act was 10 pages long. By the time the four regulatory agencies empowered to oversee its implementation — the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, the Comptroller of the Currency, and the Securities and Exchange Commission (SEC) — got done with it, the Volcker Rule encompassed 298 pages.

The public comment period started when the FDIC signed onto the bill on October 11, and ended Monday, February 13 at midnight. The draft offered for comment contained 1,300 questions on 400 topics so that the agencies would be able to “discern” the right, proper, and appropriate course of action to take with the final draft. Implementation of the Volcker Rule is scheduled for July. This gave the banks a perfect opportunity to delay the whole process by complaining among other things that the bill is far too complicated for the banks to be able to comply by then.

As of Monday the SEC had already received over 14,000 letters, at least one of them 365 pages long. Some attempted to respond to all 1,300 questions with answers of their own while others posed new questions and offered significant revisions to the bill’s language.

But that was Monday. By midnight another 200 letters from the primary target of the bill—Wall Street banks and investment houses—were expected. Lawyers representing Goldman Sachs, Morgan Stanley, and Citigroup as well as the trade group itself, the Securities Industry and Financial Markets Association (SIFMA), spent the weekend holed up in hotels in downtown Manhattan cranking out long and detailed responses to the proposed bill.

The strategy is clear: Delay the matter until after the elections when the entire game could change, including the need to reintroduce the legislation for congressional and presidential review, probably with many new faces perhaps more favorable to tabling the matter altogether. Dennis Kelleher, president of Better Markets, a nonprofit pro-regulation group, said, “It’s part of their ongoing strategy—if you can’t kill the

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New York Times’ Free Fall Continues

The New York Times

With the latest announcement of its sale of 16 newspapers, the New York Times continues to sell off assets to stay alive. The sale of its papers in Florida, South Carolina, and California is expected to generate a much-needed capital insertion of about $150 million, less than was expected. Those newspapers’ revenues had been steadily declining, falling another 7 percent for the first nine months of the year.

Just days before the sale was announced the Times‘ chief executive officer, Janet Robinson, also announced her retirement. She had been in the difficult position of trying to put a positive spin on bad news to the point where even comedian Jon Stewart took advantage of her woes in a short video clip.

The visible decline of the Times has been tracked for years. Eric Englund, publisher of the Hyperinflation Survival Guidenoted back in February 2009 that the Times‘ financial position was teetering on the edge of insolvency despite having been profitable for seven of the previous nine years. After declaring dividends and buying back its shares to support the company’s stock (which traded as high as 55 in the summer of 2002 and now trades at less than 8), Englund concluded that the company had a negative net worth of $171 million and stayed alive only by selling assets and borrowing. At the time he predicted that the Times would either be sold or would be forced into bankruptcy.

That didn’t happen, and in May of this year Englund took another look at the Times‘ balance sheets and discovered that it had found ways to borrow even more. In 2009, the Times borrowed

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County’s Bankruptcy Foreshadows National Crisis

 

Alabama State Capitol - Montgomery, Alabama

After three years of trying to solve their self-imposed debt crisis, the Jefferson County, Alabama, commissioners threw in the towel on Wednesday and declared bankruptcy. The bankruptcy, involving over $4 billion in debts owed by the county, will be costly to the banks who loaned the money, the private investors who participated in the bond offerings, the guarantors of the debt, and most especially, the taxpayers of Montgomery.

It’s already proven costly to Charles LeCroy, the JP Morgan broker who persuaded the county to refinance its debt in 2004, who was indicted by the SEC in 2009 for fraud in a separate case. And for Larry Langford, a county commissioner at the time, who was sentenced to 15 years in jail for fraud in the present case.

The seeds for the bankruptcy were planted back in 1994 when the Environmental Protection Agency demanded that

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Jon Corzine Proves Regulation is Rigged

Our Governor

After spending the entire weekend trying to sell his company, MF Global, Chairman Jon Corzine finally capitulated, and his board declared bankruptcy on Monday morning, October 31. It was during negotiations with a potential suitor for the business, Interactive Brokers (IB), that word leaked out that customers’ monies were missing, and IB left Corzine to fend for himself. A board meeting was hastily called and ended Corzine’s dream of building another Goldman Sachs with other peoples’ money.

It isn’t as if the regulators were asleep. According to the New York Times, alarm bells went off last June when regulators from the Financial Industry Regulatory Agency (FINRA) first discovered that

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Legal Fallout From Housing Collapse Continues

gavel

Image by s_falkow via Flickr

The announcement by the Federal Reserve of an “enforcement action” against Goldman Sachs for engaging in “a pattern of misconduct and negligence” in its handling of home mortgage loans was entirely predictable. Charges of such misconduct go back for months when it was first discovered that mortgages and other mortgage-related documents had been “robo-signed” and foreclosure documents hadn’t been properly reviewed and that Goldman’s Litton Loan Servicing unit took actions “without always confirming that documentation of ownership was in order.”

The ruling requires Goldman to

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.

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