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Well in all (sad) honesty, that's probably the only sort of violator they can go after. The banks and corporations have more than enough money to "avoid" (not v

Well in all (sad) honesty, that's probably the only sort of violator they can go after. The banks and corporations have more than enough money to "avoid" (not violate) the SECs rules and regulations, as well as defend themselves. An unfunded startup seems like a big win for a department which can't enforce anything helpful for the average citizen.

mhluongo 11y ago
Good point -_-
dragonwriter 11y ago
> Well in all (sad) honesty, that's probably the only sort of violator they can go after. Well, lets check that by looking at the SEC Enforcement Division webpage [0], and a couple of the news for the past week: * Merrill Lynch Admits Using Inaccurate Data for Short Sale Orders, Agrees to $11 Million Settlement [1] * SEC Charges Deutsche Bank With Misstating Financial Reports During Financial Crisis [2] [0] http://www.sec.gov/enforce http://www.sec.gov/enforce [1] http://www.sec.gov/news/pressrelease/2015-105.html http://www.sec.gov/news/pressrelease/2015-105.html [2] http://www.sec.gov/news/pressrelease/2015-99.html http://www.sec.gov/news/pressrelease/2015-99.html
- jboy55 11y ago
  I like this one, touting the benefits of microcap stocks got someone fined $4.6 million. I can only think the shit that would have come down if the founders had a stake (exercised options) in one of the companies on their exchange then created 'fake historical' data about it. http://www.sec.gov/news/pressrelease/2015-100.html http://www.sec.gov/news/pressrelease/2015-100.html
- Dylan16807 11y ago
  Add "in a meaningful way" to "go after". Here they are charging a fine-per-revenue ratio of infinity percent, while the fines for really big bad actions are proportionally so small that they're almost meaningless.
- deleted 11y ago
  [deleted]
- rubyn00bie 11y ago
  Merrill Lynch for example made $4.5 bn in revenue. So a fine of $11 million against that comes to a whopping... 0.2% essentially nothing for their bottom line. Not exactly supporting your case, also, FWIW-- I'm fairly well versed in this as my major was economics with an emphasis on finance. I spent many, many months (years) of my life doing this sort of analysis. Please next time don't rush for an anecdotal example and perhaps you'll learn something in the process, eh?
  - anigbrowl 11y ago
    If your major was economics then you know perfectly well how misleading it is to take ML's total revenue as the comparison point for an $11m fine for activity that was linked to a tiny fraction of that total that went to a particular trading unit.
    - rubyn00bie 11y ago
      I disagree with what I think you're alluding to: profit being a better way to calculate costs (fines)... Profits are misleading. Revenue is not; in the market they must meet epectations which are not monetarily equal to, or even representative of, their tax obligations (payments). Profits are dependent on tax laws, costs (factored in or not), and revenue. Revenue is a number. Revenue is objective. I.e. Profit is more malleable than revenue. I find it unfortunate that we live in such a world where stark "realness" is needed, but thems the breaks.
      - anigbrowl 11y ago
        Actually no. I'm saying you should look at the revenue that was brought in as a result of the unethical/illegal activity when setting the fine, and make it proportional to that, eg if there was $8m in illegal revenue then I'd be for a $12m fine. What I'm saying is that it's unrealistic to use the the total revenue of the firm, given that ML is a huge entity with lots of legitimate revenue. Imagine you arrested a millionaire for some petty theft like stealing a $100 watch (which is the sort of thing that happens sometimes). Well it'd be appropriate to give a short jail spell or fine the person a few hundred or even a few thousand dollars, depending on the circumstances. But not to fine the person $500,000 just because s/he happened to be a millionaire and could easily have afforded it. Proportionality is a two-way street. Of course, I am not saying that the system is necessarily fair, just that we should try to critique it using a meaningful context rather than an emotional one.
bcheung 11y ago
They also have enough money to write and influence the rules. It baffles my mind how fractional reserve banking is even legal. They just make up money out of thin air (ex nihilo) and then loan it to somebody who has to pay it back with actual earned dollars plus interest. Seems like a criminal activity to me but not according to the law. Yet if some other person wants to loan someone money they don't have it's call counterfeiting or writing a bad check.
- mpyne 11y ago
  > It baffles my mind how fractional reserve banking is even legal. Why? You couldn't let out loans as a bank at all if you had to maintain 100% reserves. Plus how would you possibly enforce that? I can't lend my brother $100 with the promise to pay it back now? Nor do they "make up" money. They have the money when they lend it out, it comes from the "fractional reserve" that they are required to have, or cash assets above and beyond that. Likewise I could personally loan out money up to the amount of money I have, even with fractional banking, but I couldn't loan out money up to my entire net worth, as it's not all liquid.

mhluongo 11y ago

Good point -_-

dragonwriter 11y ago

> Well in all (sad) honesty, that's probably the only sort of violator they can go after. Well, lets check that by looking at the SEC Enforcement Division webpage [0], and a couple of the news for the past week: * Merrill Lynch Admits Using Inaccurate Data for Short Sale Orders, Agrees to $11 Million Settlement [1] * SEC Charges Deutsche Bank With Misstating Financial Reports During Financial Crisis [2] [0] http://www.sec.gov/enforce http://www.sec.gov/enforce [1] http://www.sec.gov/news/pressrelease/2015-105.html http://www.sec.gov/news/pressrelease/2015-105.html [2] http://www.sec.gov/news/pressrelease/2015-99.html http://www.sec.gov/news/pressrelease/2015-99.html

jboy55 11y ago
I like this one, touting the benefits of microcap stocks got someone fined $4.6 million. I can only think the shit that would have come down if the founders had a stake (exercised options) in one of the companies on their exchange then created 'fake historical' data about it. http://www.sec.gov/news/pressrelease/2015-100.html http://www.sec.gov/news/pressrelease/2015-100.html
Dylan16807 11y ago
Add "in a meaningful way" to "go after". Here they are charging a fine-per-revenue ratio of infinity percent, while the fines for really big bad actions are proportionally so small that they're almost meaningless.
deleted 11y ago
[deleted]
rubyn00bie 11y ago
Merrill Lynch for example made $4.5 bn in revenue. So a fine of $11 million against that comes to a whopping... 0.2% essentially nothing for their bottom line. Not exactly supporting your case, also, FWIW-- I'm fairly well versed in this as my major was economics with an emphasis on finance. I spent many, many months (years) of my life doing this sort of analysis. Please next time don't rush for an anecdotal example and perhaps you'll learn something in the process, eh?
- anigbrowl 11y ago
  If your major was economics then you know perfectly well how misleading it is to take ML's total revenue as the comparison point for an $11m fine for activity that was linked to a tiny fraction of that total that went to a particular trading unit.
  - rubyn00bie 11y ago
    I disagree with what I think you're alluding to: profit being a better way to calculate costs (fines)... Profits are misleading. Revenue is not; in the market they must meet epectations which are not monetarily equal to, or even representative of, their tax obligations (payments). Profits are dependent on tax laws, costs (factored in or not), and revenue. Revenue is a number. Revenue is objective. I.e. Profit is more malleable than revenue. I find it unfortunate that we live in such a world where stark "realness" is needed, but thems the breaks.
    - anigbrowl 11y ago
      Actually no. I'm saying you should look at the revenue that was brought in as a result of the unethical/illegal activity when setting the fine, and make it proportional to that, eg if there was $8m in illegal revenue then I'd be for a $12m fine. What I'm saying is that it's unrealistic to use the the total revenue of the firm, given that ML is a huge entity with lots of legitimate revenue. Imagine you arrested a millionaire for some petty theft like stealing a $100 watch (which is the sort of thing that happens sometimes). Well it'd be appropriate to give a short jail spell or fine the person a few hundred or even a few thousand dollars, depending on the circumstances. But not to fine the person $500,000 just because s/he happened to be a millionaire and could easily have afforded it. Proportionality is a two-way street. Of course, I am not saying that the system is necessarily fair, just that we should try to critique it using a meaningful context rather than an emotional one.

bcheung 11y ago

They also have enough money to write and influence the rules. It baffles my mind how fractional reserve banking is even legal. They just make up money out of thin air (ex nihilo) and then loan it to somebody who has to pay it back with actual earned dollars plus interest. Seems like a criminal activity to me but not according to the law. Yet if some other person wants to loan someone money they don't have it's call counterfeiting or writing a bad check.

mpyne 11y ago
> It baffles my mind how fractional reserve banking is even legal. Why? You couldn't let out loans as a bank at all if you had to maintain 100% reserves. Plus how would you possibly enforce that? I can't lend my brother $100 with the promise to pay it back now? Nor do they "make up" money. They have the money when they lend it out, it comes from the "fractional reserve" that they are required to have, or cash assets above and beyond that. Likewise I could personally loan out money up to the amount of money I have, even with fractional banking, but I couldn't loan out money up to my entire net worth, as it's not all liquid.