Receiving Wide Coverage ...
Hackers Charged: Charges were announced against three hackers accused of stealing data from more than 100 million people in one of the biggest cybercrimes of all time. The three men reportedly were responsible for the big breach last year at J.P. Morgan Chase and other crimes involving computer networks in South Africa and Brazil, money laundering through Cyprus and illegal card payments processed in Azerbaijan, the Wall Street Journal reports. Two of the men were Israeli and one was American. Gery Shalon and Ziv Orenstein were both arrested in Israel, while the American, Joshua Samuel Aaron, remains at large, according to the Financial Times. The three men also reportedly led a large criminal enterprise with hundreds of employees in more than a dozen countries. Other companies the men hacked include Scottrade and Dow Jones. The New York Times also reports charges were filed against Anthony Murgio of Florida for running an unlicensed bitcoin exchange at the center of this criminal enterprise.
The men allegedly used the information from the JPMorgan hacking to carry out a "pump-and-dump" scheme that inflated the prices of penny stocks and allowed them to reap big profits, the Washington Post writes. Further charges may come from the Securities and Exchange Commission, which is conducting its own investigation.
New Minneapolis Fed President: Neel Kashkari>, a former banker and government official, was named president and chief executive of the Federal Reserve Bank of Minneapolis. Kashkari is set to succeed Narayana Kocherlakota, who will leave his post at the end of 2015, according to the Wall Street Journal. Interestingly, Kashkari is not an economist – he first worked as an aerospace engineer and then got an M.B.A. from Wharton. He has also worked at Goldman Sachs and Pimco, and staged an unsuccessful bid to become governor of California. Kashkari is known for helping design Tarp during the Bush administration.
And while his take on economics remains somewhat unclear, he is a fairly avid user of Twitter, where he has opined on Fed policy, according to the New York Times. The paper notes he once criticized the Fed's decision to do a second round of bond-buying, telling CNBC, "At the end of the day, this is not going to lead to real economic growth." Kashkari will not vote on monetary policy until 2017.
'Spoofer' Spurned: The Commodity Futures Trading Commission filed a motion in federal court to prohibit Igor Oystacher, founder of 3Red Trading, from trading futures contracts while a civil case against him continues. He stands accused of illegally bluffing, or "spoofing," the market between December 2011 and January 2014, the Wall Street Journal writes. Oystacher, also known as "Snuggle Bear" or "Snuggs," allegedly traded in numerous markets and would quickly cancel orders in the futures market then enter opposite ones. A document in the filing suggests he targeted high-frequency trading firms in particular.
"Spoofing" is illegal under the Dodd-Frank Act, which prohibited making bids or offers when there's an intent to cancel them prior to execution, according to the New York Times. The paper notes cases involving spoofing, including one that ended in a conviction for a man named Michael Coscia, are beginning to provide clarity as to how high-frequency trading firms are allowed to operate. In some instances, it seems the difference between illegal and legal in this realm remains a matter of debate.
Wall Street Journal
As Ben Bernanke continues to promote his memoir, which details the financial crisis and his role in the recovery, he sat down with the paper and discussed his childhood and his relationship with his wife, Anna. The man who would lead the Federal Reserve spent his formative years in a small South Carolina town, and as a Jew in a predominately Christian area, was often left out of social goings on. Other things he describes include his love of the baseball strategy game Strat-O-Matic and his life today with wife Anna that involves crossword puzzles and viewings of "The Big Bang Theory."
Speaking of the Fed, the paper writes the central bank may find itself with a limited window to hike rates as prices continue to slide due to overseas struggles and a strong dollar. Nonpetroleum import prices fell month-to-month in October by 0.4%, and producer prices in China were down 5.9% year-over-year that month. Imported goods will continue to fetch lower prices as the dollar strengthens in the lead up to a rate hike.
A former Deutsche Bank trader who was reportedly involved in the Libor scandal will get to testify in a U.K. court. Christian Bittar won a case before a London tribunal, where he argued he was identified by the U.K. Financial Conduct Authority during its announcement of the $2.5 billion Libor-rigging scheme settlement back in April. His lawyers claim the regulator flouted due process by "shaming but not naming" people in the settlement, including Bittar who was reportedly referred to in the settlement as "Manager B." By using specific examples of misbehavior by traders and managers that made him identifiable, the FCA must give that person an opportunity to respond to allegations before publication.
Want to make the big bucks? Then, you're better off running a U.S. bank. The paper reports European bank chiefs are paid less than half of what their U.S. colleagues make. Additionally, their salaries fell 6% between 2010 and 2014, while wages rose 15% in the States. The salaries could be a reflection of the relative struggles that European banks have faced following the crisis. Still, there's an argument to be made that such a vast disparity in pay may exacerbate the situation and keep strong talent at bay.
New York Times
The paper contends that as regional lenders build their business in repo lending they may be barking up the wrong tree. Repo lending is a form of short-term collateralized lending that is "low-margin and balance-sheet-intensive," according to the paper. With more stringent regulation on liquidity and leverage, investment banks have had to scale back their activities here. But for Wells Fargo and other regional lenders, it's a big opportunity – the San Francisco bank has swelled its repo holdings by 84%. The paper notes such increases aren't risky yet, but the business helped to spread the financial crisis, meaning it could spell major trouble if not handled properly.
New York's Department of Financial Services solicited advice from other regulators regarding cybersecurity. The state agency sent a memo to numerous regulators, including the Fed, the OCC and the FDIC, outlining how technological changes thwart efforts to improve security, the paper reports. DFS specifically wants these regulators to weigh in on some proposed rules that would require financial services companies, among other things, to appoint chief information security officers and to have written policies on security procedures.