We need to find a fairer way of providing Goods and Services to the rest of the people on Earth.Cryptocurrencies and/or Gold Standard of money....maybe the answer to fight hyperinflation caused by too much printing of paper/fiat currencies by Governments and Central Banks all over the World. (https://nomorefiatmoneyplease.blogspot.com)
Goldman raises possible legal cost estimate to US$5.9b
Goldman Sachs Group Inc. increased its estimate for reasonably possible legal costs in excess of reserves by 55 per cent to US$5.9 billion.
PHOTO: BLOOMBERG
[NEW YORK] Goldman Sachs Group Inc. increased its estimate for reasonably possible legal costs in excess of reserves by 55 per cent to US$5.9 billion.
The second-quarter figure, which the New York-based firm disclosed in a regulatory filing Monday, was up from US$3.8 billion three months earlier. Unlike in previous quarters, the estimate included costs that could arise from a Department of Justice probe into sales of mortgage-backed securities.
Goldman Sachs has held talks with the Justice Department over a settlement of that probe and may pay as much as US$3 billion, a person familiar with the talks said in June. The bank added US$1.45 billion to reserves for litigation and regulatory proceedings in the second quarter, more than in the previous five quarters combined.
The estimate released Monday gives investors an idea of potential losses beyond those reserves. US firms began disclosing estimates for possible legal losses after the US Securities and Exchange Commission told finance chiefs in 2010 they should provide investor guidance "when there is at least a reasonable possibility" costs will be incurred, even if the risk is too low to require reserves.
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Goldman Sachs also said in the filing that it reached a settlement agreement in June on a separate suit over sales of mortgage securities in 2007. The firm will pay US$270 million in that case, two people familiar with the matter said last week.
China freezes US fund Citadel's account in war on stock speculation
China's markets regulator has frozen a trading account linked to Citadel Securities, a unit of the US group that also owns hedge fund Citadel LLC, as Beijing battles against speculators to prop up China's ailing stock markets.
PHOTO: EPA
[SHANGHAI] China's markets regulator has frozen a trading account linked to Citadel Securities, a unit of the US group that also owns hedge fund Citadel LLC, as Beijing battles against speculators to prop up China's ailing stock markets.
The regulator, which has declared war on "malicious" short selling, has been at the forefront of a government-orchestrated campaign to prevent a meltdown in the two main stock markets, which have tumbled some 30 per cent since mid-June.
The Shanghai and Shenzhen markets fell again on Monday, undermined by fresh concerns over the health of the world's second-largest economy.
Factory activity shrank more than initially estimated in July, contracting by the most in two years as new orders fell and dashing hopes that the world's second-largest economy may be steadying, a private survey showed on Monday.
On Saturday, a local newspaper carried some bearish comments from a central bank official who expected downward pressure would persist in the second half of the year.
The weak economic backdrop has magnified the challenge Beijing faces in trying to restore investor confidence in shares despite a massive, month-long, state-driven buying campaign.
Beijing last week also turned its attention to automated trading strategies, suspecting that some hedge funds were using them to distort the market and profit as a result.
The Citadel statement did not say why the Shenzhen-based trading account had been suspended, but a source familiar with the matter said the China Securities Regulatory Commission (CSRC) was investigating its role in causing market volatility.
The CSRC did not immediately respond to a request for comment.
"Citadel has been actively investing in the region for 15 years, and has always maintained a constructive dialogue with regulators, including during the recent market volatility," Citadel said in a statement.
It said an account owned by Citadel Shanghai Trading, an onshore unit of Citadel Securities, had been suspended and that Citadel was otherwise operating normally in China. "We continue to comply with all local laws and regulations," it added.
Citadel is not the only foreign institution that has been working in China, and some industry insiders think other foreign fund management companies, in particular hedge funds, could be in regulators' crosshairs.
"A lot of the quant shops overseas have been really aggressive in setting up short positions," said one fund management executive at a foreign investment advisory in Shanghai who spoke on condition of anonymity. "I think these are at risk, I definitely do," he added.
Beijing's unconvincing efforts to hold up markets have led foreign investors to air doubts about the leadership's ability to ensure financial stability at a time of slowing economic growth, high corporate debt and the threat of deflation.
They have also raised questions over the ruling Communist Party's commitment to free-market reforms, seen as essential for China to pull off its planned transition from an export-led economy to one based on consumption and services.
The crackdown on short-sellers and automated trading strategies is also extending into overseas jurisdictions.
The CSRC is pressing foreign and Chinese-owned brokerages in Hong Kong and Singapore to hand over trading records to identify those with net short positions, sources said. The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.4 per cent by late morning on Monday, while the Shanghai Composite Index lost 2.4 per cent.
