Money laundering risk rises; bias charge at Goldman

Wall Street Journal
Money laundering worsens: Money laundering risk has increased in the past year, according to the Basel Institute on Governance’s annual ranking of countries. The global average of the 146 countries rose to 6.15 from 5.85 last year, according to the Basel AML Index. Iran was once again the highest risk country, followed by Afghanistan.

“Although a majority of countries legally comply with current [AML and counter-terrorism financing] standards, most continue to fall (sometimes severely short) in terms of effective implementation and enforcement of these laws,” the Basel Institute said.

That's what friends aren't for: A former Bank of America IT employee and several friends at other big Wall Street firms face criminal insider trading penalties for passing on tips about potential corporate mergers they acquired from their employers’ proprietary databases. The group earned over $5 million by trading on the information.

The B of A employee, Daniel Rivas, who was fired from B of A in April, subsequently joined RBC Capital Markets, which said it didn’t know about the investigations when it hired him in June and that its background check didn’t expose the allegations. It suspended him Wednesday after finding out about the charges.

Headed for an accident?: The Heard on the Street column is sounding the alarm about Credit Acceptance, saying the “auto lender’s luck may be about to run out. As auto loan defaults creep up, the company’s high valuation and opaque accounting make it an especially risky investment.”

The company’s “unique accounting practices make it difficult to see how its loans are really doing,” it says. Essentially, “Credit Acceptance doesn’t disclose what portion of loans are delinquent or have defaulted.”

Financial Times
Growing: Goldman Sachs is expanding its automated corporate bond trading program, more than tripling the number of securities it covers. It is considering including junk bonds later this year.

New York Times
A different viewpoint: Financial columnist William D. Cohan takes issue with a recent editorial in the Wall Street Journal that basically exonerates bankers from criminal prosecution for their behavior in the years leading up to the financial crisis “because they haven’t committed any crimes.”

“The Journal could not be more wrong,” says Cohan, a former banker himself. “For reasons that remain mysterious and confounding, the truth is that contrary to the writers’ convoluted logic, bankers and traders did not go to prison, as certainly some should have, because federal prosecutors failed to even try to bring cases against them.”

Discrimination charge: A black banker in Goldman Sachs’s personal wealth management unit is suing the bank for allegedly steering clients to white employees and denying her promotions because of her race, the paper reports. “Simply put, Goldman Sachs does virtually nothing to hire, promote or develop black talent, instead focusing its efforts on retaining and promoting white employees to positions of leadership,” Rebecca Allen said in her complaint, which was filed in federal court in Manhattan. In response, Goldman said, “Our success depends on our ability to maintain a diverse employee base and we are focused on recruiting, retaining and promoting diverse professionals at all levels.”

Quotable
“Racism, intolerance and violence are always wrong. There is no room for equivocation here. It is a leader’s role, in business or in government, to bring people together, not tear them apart.” — JPMorgan Chase CEO Jamie Dimon.

Simon Dawson/Bloomberg