Receiving Wide Coverage ...
A Golden Age for Whistleblowers?: The Internal Revenue Service has awarded Bradley Birkenfeld, a convicted former banker, $104 million for the role he played in exposing the aid Swiss bank UBS provided to wealthy clients in a decades-long effort to help them evade paying taxes. According to the Journal, details provided by Birkenfeld ultimately led UBS "to turn over the names of more than 4,000 account holders who were U.S. taxpayers and pay $780 million to resolve a criminal case involving secret offshore accounts." The agency has also collected more than $5 billion in taxes and penalties from over 33,000 U.S. taxpayers, who confessed to holding undeclared overseas accounts following news of the scandal. Birkenfeld himself was charged with conspiracy for failing to come clean about his role in the matter and is currently serving the remainder of a 40-month prison sentence in home confinement in New Hampshire.
The Times says the payout is "the largest ever paid by the IRS" It also did the math and determined Birkenfeld essentially made more than $4,600 for every hour he spent in prison. The former banker, who was actually hoping to collect much more for his efforts, was eligible for the funds through the IRS's whistleblower's program, which offers informants rewards of up to 30% of any fines and unpaid taxes recouped by the government. Both the Times and the Journal note the big payout could encourage others to come forward. Whistleblowers have already been given extra incentive to report wrongdoing to the federal government. Provisions in Dodd-Frank, among other things, may protect whistleblowers from retaliation by their company when wrongdoing is reported to the Securities and Exchange Commission.
What's Your Brokerage Firm Worth?: Morgan Stanley has reached an agreement with Citigroup that will allow the investment firm to ultimately take full control of the Smith Barney retail brokerage joint venture over the next three years. The deal follows much wrangling over Smith Barney's valuation. According to Dealbook, Morgan Stanley had estimated the brokerage operation's worth at a little over $9 billion, while Citigroup said it was worth closer to $23 billion. The two companies ultimately agreed to value Smith Barney at $13.5 billion, following an appraisal from a third-party firm that put 14% of the shares Morgan Stanley was looking to purchase right away at "less than" the final $13.5 billion sum. The Journal says the deal may be "the latest reminder" that what a bank says its assets are worth and what these assets actually fetch in the market can be two very different things.
German Court Backs Bailout Fund: Germany's highest court rejected a petition signed by more than 37,000 German citizens looking to block the country's ratification of the eurozone's European Stability Mechanism, "a continental version of the International Monetary Fund" that will provide large-scale financial assistance to struggling eurozone economies like Italy and Spain. The court, however, did, put some limitations on the German government's involvement in the mechanism, stating that Germany's liabilities through the €500 billion bailout fund must not be increased beyond the agreed €190 billion without the express consent of the German parliament. It also said "it would not accept any interpretation of the ESM Treaty that allowed the bailout fund to borrow directly from the ECB," the Journal reports.
Wall Street Journal
Incoming Barclays chairman David Walker told a U.K. commission on banking standards that bank sector pay should come down and that more transparency regarding "the top 100 to 150 highest paid staff" at financial institutions is needed.
The paper profiles consumers who are shunning banks and turning to prepaid debit cards following the financial crisis.
Deutsche Bank will be cutting its executive pay, slashing operational costs and revamping its investment bank culture, according to a plan outlined by co-chief executives Anshu Jain and Jürgen Fitschen meant to steer the German bank through "a period of lower profits and regulatory change" for global financial institutions.
New York Times
JPMorgan Chase chief executive Jamie Dimon reminded everyone how much he doesn't believe big banks should be broken up at a "fireside chat" during the Barclays 2012 Global Financial Services Conference. Dimon, after saying the U.S. had "best, widest, deepest and most transparent capital markets in the world," cautioned against unnecessary reform by adding, "Let's make sure we keep that before we do a bunch of stupid stuff that destroys that."