Tag Archives: Goldman Sachs

Richard Branson’s Bank to List on London Stock Exchange to Tune of £20bn

Virgin Money is poised for floatation as early as October

Virgin Money, the banking arm of Sir Richard Branson’s Virgin Group, could be floated on the London Stock Exchange as early as October.

A report by Sky News revealed that the directors of Virgin Money are in talks with advisers about announcing an intention to float within two months, as they look to exploit strong current trading and investors’ appetite to buy shares in the company.

A stock market listing of the bank could value it at up to £20bn ($33bn, €25bn), say City insiders.

Continue reading Richard Branson’s Bank to List on London Stock Exchange to Tune of £20bn

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Goldman Sachs admits it bought Venezuelan bonds

Goldman Sachs admitted it bought Venezuelan bonds after getting accused by the country’s opposition of trying to “make a quick buck off the suffering of the Venezuelan people.”

The president of Venezuela’s opposition-led Congress blasted Goldman for financing “dictatorship” under President Nicholas Maduro after Goldman bought $2.8 billion in bonds issued by state oil company PDVSA at a steep discount.

Continue reading Goldman Sachs admits it bought Venezuelan bonds

Trump says he’s thinking about breaking up the big banks

President Donald Trump said Monday he was contemplating breaking up the big Wall Street banks.

“I’m looking into that right now,” he told Bloomberg about bringing back the “old system” that separated consumer lending and investment banking.

Continue reading Trump says he’s thinking about breaking up the big banks

Ecuador heralds digital currency to start before year end

Ecuador has announced it plans to start circulating what it calls the world’s first digital currency in December. It also claims it has options for developing its new oil refinery which do not depend on China.

Financial analysts have suggested the introduction of the new electronic currency in Ecuador could be used to increase the money supply and devalue US dollar holdings, a first step to abandoning the US dollar as its currency.

The new currency was approved, and stateless crypto-currencies such as Bitcoin simultaneously banned, by Ecuador’s National Assembly last month.

A young man texts at a market in Quito as government prepares to introduce electronic currency

The electronic currency is to exist in tandem with the US dollar and to be backed by “liquid assets,” according to Deputy Central Bank director Gustavo Solorzano. Officials said it would be geared towards the 2.8 million Ecuadoreans too poor to afford a traditional bank account.

Central Bank officials said on Friday the currency does not have a name and officials would not disclose technical details. The amount of the new currency created would depend on demand, they said. President Rafael Correa has denied there is any plan to replace the US dollar, which Ecuador set as its currency in 2000 after a crippling banking crisis.

Initially payments are to be sent and received on cellphones, Solorzano said. Similar schemes have already been set up by private companies in Paraguay and in Africa – including in Kenya and Tanzania.

Nathalie Reinelt, an emerging payments analyst with the US-based Aite Group, said she does not understand any other motivation for creating such a currency other than to allow Ecuador to increase its money supply and, essentially, devalue its US dollar holdings. But analyst Juan Lorenzo Maldonado of Credit Suisse said “It is far too early to know how they are thinking of making the electronic money work.”

Pacifico Refinery

Ecuador’s minister for strategic sectors (Sectores Estratégicos) Rafael Poveda said he hoped to finalize a $9 billion (6.85 billion-euro) deal with major partner China within the month for a refinery on the Pacific coast to process 200,000 barrels of crude oil a day.

Ecuador is also reported to be asking Beijing about borrowing $1.5 billion more. Including the credit line, total loans from China are equivalent to about 13.6 percent of Ecuador’s GDP as of 2013.

Criticised locally for becoming too dependent on China, Poveda said about the refinery deal, after a week-long visit to southern near-neighbor Chile which ended on Friday: “If for any extraordinary reason, which up to now does not exist, this does not happen, we have an option for this project.” However, he did not elaborate on the options.

A pile of US currency, topped with a mobile phone, reminds us that money talks and can be very persuasive!

China has become Ecuador’s second-largest foreign investor, after the United States, mostly in mining and quarrying sectors. Ecuador has already borrowed over $11 billion from China since 2008, when the Andean country defaulted on $3.2 billion of foreign debt.

Last year, Chinese money helped cover as much as 61 percent of the government’s financing needs. In exchange, China has claimed up to 90 percent of the country’s oil shipments over the next few years. Ecuador has South America’s third-largest oil reserves.

Ecuador recently sold $2 billion in bonds with a 7.95 percent return, as well as obtaining another $400 million from Goldman Sachs in exchange for part of its gold reserves.

Greek debt crisis: Goldman Sachs could be sued for helping hide debts when it joined euro

Goldman Sachs faces the prospect of potential legal action from Greece over the complex financial deals in 2001 that many blame for its subsequent debt crisis.

A leading adviser to debt-riven countries has offered to help Athens recover some of the vast profits made by the investment bank.

The Independent has learnt that a former Goldman banker, who has advised indebted governments on recovering losses made from complex transactions with banks, has written to the Greek government to advise that it has a chance of clawing back some of the hundreds of millions of dollars it paid Goldman to secure its position in the single currency.

The development came as Greece edged towards a last-minute deal with its creditors which will keep it from crashing out of the single currency.

The deal is based on fresh economic reform proposals submitted by Athens which bear a striking similarity to the creditors’ offer rejected by the Greek people in a referendum last Sunday – sparking claims that Prime Minister Alexis Tsipras has effectively executed a huge U-turn in order to avoid a catastrophic “Grexit”.

Greece managed to keep within the strict Maastricht rules for eurozone membership largely because of complex financial deals created by the investment bank which critics say disguised the extent of the country’s outstanding debts.

Goldman Sachs Manhattan headquarters
Goldman Sachs Manhattan headquarters

Goldman Sachs is said to have made as much as $500m from the transactions known as “swaps”. It denies that figure but declines to say what the correct one is.

The banker who stitched it together, Oxford-educated Antigone Loudiadis, was reportedly paid up to $12m in the year of the deal.

Now Jaber George Jabbour, who formerly designed swaps at Goldman, has told the Greek government in a formal letter that it could “right historical wrongs as part of [its] plan to reduce Greece’s debt”.

Mr Jabbour successfully assisted Portugal in renegotiating complex trades naively done with London banks during the financial crisis.

His work helped trigger a parliamentary inquiry and cost many senior officials and politicians their jobs. It also triggered major compensation payments by banks to the Portuguese taxpayer.

Pensioners stand outside a closed branch of the Greek National bank in Thessaloniki on June 29, 2015
Pensioners stand outside a closed branch of the Greek National bank in Thessaloniki on June 29, 2015

Mr Jabbour, who now runs Ethos Capital Advisors, has also helped expose other cases including allegations against Goldman Sachs and Société Générale over their dealings with Libya relating to financial transactions that left the country’s taxpayers billions of dollars out of pocket. Both banks deny wrongdoing.

Antigone (Addy) Loudiadis
Antigone (Addy) Loudiadis

Based on publicly available information, he believes the size of the profit Goldman made on the transactions was unreasonable. Scrutiny and analysis of the documents and email exchanges could give Greece grounds to seek compensation and assess if the deals were executed for the sole purpose of concealing the country’s debts.

Greece’s membership of the euro gave it access to billions of easy credit which it was then incapable of paying back, leading to its current crisis. Lenders took its euro membership as a stamp of creditworthiness, but the true state of its economy was far less healthy.

Under Ms Loudiadis’s guidance, Goldman swapped debt issued by Greece in dollars and yen for euros which were priced at a historical exchange rate that made the debt look smaller than it actually was. The swaps reportedly made about 2 per cent of Greece’s debt disappear from its national accounts.

The size and structure of the deal enabled the bank to charge a far bigger fee than is usual in swap transactions, and Goldman persuaded Greece not to test the transaction with competitors to ensure it was getting good value for money.

Goldman Sachs’ 2nd-most-powerful executive pulled an audacious move to get his 1st job on Wall Street

Gary Cohn

Wall Street titan Gary Cohn, the president and chief operating officer of Goldman Sachs, last week celebrated his 25th anniversary at the bank.

Cohn, 54, actually has an incredibly inspirational backstory, which is detailed in Malcolm Gladwell’s best-seller “David And Goliath.” And because the summer interns have just arrived, we thought we’d share it again.

As a kid growing up in Cleveland, Cohn found out he had dyslexia, a reading disorder. He struggled in school. By the time he was in sixth grade, he had attended four different schools. Teachers and classmates had written him off as an “idiot.” Cohn has even said publicly that he was a “horrible” student.

What’s more is his teachers were unsure of his trajectory in life. One teacher even told his parents if they were really lucky, he might grow up to be a truck driver.

Cohn graduated from high school. He also graduated from American University in 1982.

After college, though, Cohn didn’t immediately have a job or any interviews lined up. He did have “passion for financial markets,” but that was pretty much it.

By July he took a job “to appease” his father selling window frames and aluminum siding for the home-products division of United States Steel in Cleveland.

Around Thanksgiving, he went on a work trip to the company’s offices in Long Island. Cohn persuaded his manager to give him Friday off to visit New York City for the first time.

There he headed for Wall Street and the commodities exchange at Four World Trade Center. From the observation gallery, he watched the action in the trading pits with other Wall Street hopefuls.

Gary Cohn

That’s when he came up with a clever plan to make an introduction to one of the brokers. He left the visitors’ gallery and waited by the security entrance to the trading floor for a few hours. Nothing happened. He was about to give up.

“And then literally right after the market’s (sic) closed, I see this pretty well-dressed guy running off the floor, yelling to his clerk, ‘I’ve got to go, I’m running to LaGuardia, I’m late, I’ll call you when I get to the airport,'” Cohn told Gladwell in the book. “I jump in the elevator, and say, ‘I hear you’re going to LaGuardia.’ He says, ‘Yeah,’ I say, ‘Can we share a cab?’ He says, ‘Sure.’ I think this is awesome. With Friday afternoon traffic, I can spend the next hour in the taxi getting a job.”

It was truly a brilliant move, one most people wouldn’t have the guts to make.

It turned out the man Cohn was sharing the cab with was also running the options business for one of the big brokerage firms. Cohn didn’t know what an option was, but he pretended as if he did.

“I lied to him all the way to the airport,” Cohn told Gladwell. “When he said, ‘Do you know what an option is?’ I said, ‘Of course I do, I know everything, I can do anything for you.’ Basically by the time we got out of the taxi, I had his number. He said, ‘Call me Monday.’ I called him Monday, flew back to New York Tuesday or Wednesday, had an interview, and started working the next Monday. In that period of time, I read McMillan’s “Options as a Strategic Investment” book. It’s like the Bible of options trading.”

(By the way, Gladwell notes, it still takes Cohn about six hours to read 22 pages.)

After a few years working on the floor of the commodities exchange, Cohn was contacted by Goldman Sachs. In 1990 he accepted a position in Goldman’s commodities trading unit, J. Aron. In 1994 he was made partner — one of the most coveted titles on Wall Street.

Now he holds one of the top spots at the Wall Street investment-banking giant. He has even said he wouldn’t be there without his dyslexia.

“The one trait in a lot of dyslexic people I know is that by the time we got out of college, our ability to deal with failure was very highly developed,” Cohn told Gladwell. “And so we look at most situations and see much more of the upside than the downside. It doesn’t faze us. I’ve thought about it many times, I really have, because it defined who I am. I wouldn’t be where I am today without my dyslexia. I never would have taken that first chance.”

Bottom line: You have to take risks.

Goldman’s New Cop Is FBI Agent Who Put Away Madoff, Rajaratnam

Patrick Carroll (left) and David Chaves head white collar crime and securities fraud units at the FBI’s New York office. Their team pursued insider trading with some of the same tactics used on organized crime and drug cartels.

The FBI agent who oversaw the Bernard Madoff investigation and helped pioneer the use of wiretaps that yielded dozens of insider-trading convictions is now working for Goldman Sachs Group Inc.

Patrick Carroll, 50, joined the bank after almost a quarter century with the Federal Bureau of Investigation, the latest in a line of former feds who’ve moved to Wall Street firms. He is a vice president in Goldman Sachs’s compliance, surveillance and strategy group, part of a division overseen by Alan Cohen, global head of compliance.

Raj Rajaratnam, center, billionaire co-founder of Galleon Group, is surrounded by photographers as leaves Manhattan federal court May 11 after being convicted of insider trading charges. (AP)

While Carroll’s FBI career spanned bank robberies and organized crime, he’s best known for being at the investigative center of securities-fraud cases ranging from Madoff and billionaire fund manager Raj Rajaratnam to a $550 million Ponzi scheme used to buy expensive teddy bears.

His appointment comes as regulators and prosecutors are tightening scrutiny of financial institutions, sometimes charging banks as corporate defendants and imposing billions of dollars in fines following guilty pleas.

“It’s really about how Goldman is reacting to the tidal wave of litigation that now seems to be part of the ongoing government toolkit for regulating banks,” said Roy Smith, a professor of finance at New York University’s Stern School of Business and a former Goldman Sachs partner.

“It can help to have some people who know how government prosecutors and investigators think, some guy who has the mindset of an alligator.”

Michael DuVally, a spokesman for Goldman Sachs, declined to comment on the scope of Carroll’s work.

Joe Friday

A native New Yorker with a Joe Friday “just the facts” style, Carroll became an agent in 1991, after stints at Lehman Brothers and Merrill Lynch, in a bureau push to hire people with financial backgrounds following the savings-and-loan crisis. He got Series 7 and Series 63 licenses soon after graduating from Fordham University.

He rose to become supervisor of one of the New York FBI’s two squads investigating white-collar crimes, eventually overseeing as many as 25 agents.

In 2003 the FBI unveiled Carroll’s 18-month undercover securities-fraud case called “Operation Wooden Nickel.” It borrowed law enforcement techniques commonly used against drug cartels and mobsters.

To unearth fraud in the foreign currency markets, he sent an undercover agent posing as a corrupt trader to work in an exchange and used cooperating witnesses to record brokers in boiler rooms, banks and interbank forex brokerages. Almost 50 traders were arrested for cheating thousands of investors in rigged trades. At least 40 were convicted.

Hedge Funds

“Here you have professional criminals operating at major, well-respected financial institutions,” Carroll said in an interview. “That was kind of an ‘aha’ moment, that we could do it, that these allegations are correct and that we were also capable of getting to it.”

The strategy would later be applied to hedge funds, which proved tough to infiltrate as rogue traders committed crimes with friends or business school classmates, he said.

Small-time traders “would always complain to us, ‘Why aren’t you doing anything about the bigger guys?’” said Carroll.

The prosecution of Galleon Group LLC co-founder Rajaratnam was the first significant use of wiretaps in a securities-fraud case. The evidence was essential, said Richard Holwell, the former judge who presided over the trial and upheld the legality of the intercepts.

Controversial Wiretaps

“They provide a chance for the jury to hear it as it happens,” said Holwell, of Holwell Shuster & Goldberg LLP. “And there is something else — maybe if there is someone out there intent on breaking the law, they will now be more careful in light of the fact that their phone may be tapped.”

To date, more than 80 people have been convicted as part of the insider-trading initiative carried out by the Manhattan U.S. Attorney, the FBI and regulators. Wiretaps played a role in many, and helped persuade at least a dozen people to plead guilty and cooperate after they were confronted with their recorded conversations.

The wiretaps have been controversial. While a federal appeals court rejected Rajaratnam’s argument that the intercepts weren’t properly authorized, two federal judges criticized their use.

One said he was troubled by the FBI’s failure to stop listening to unrelated calls between a trader and his wife. The couple’s suit against 16 agents was dismissed May 15 by an appeals court.

Madoff Scheme

Carroll’s squad also had to deal with Ponzi schemes exposed in the wake of the 2008 financial crisis, including Madoff’s.

When prosecutors needed to question and arrest Madoff, they called Carroll, said former prosecutor Bill Johnson. Madoff, who ran the biggest Ponzi scheme in history, is serving a 150-year prison term and 14 others were convicted.

Carroll, who started in April, isn’t the first FBI agent from New York to join Goldman Sachs, said Peter Grupe, his former FBI supervisor.

Joseph Demarest, currently the FBI’s assistant director of cyber-investigations and a former head of the New York office’s international terrorism branch, also did a stint at Goldman Sachs in its Global Security unit before returning to the bureau, Grupe said.

Demarest didn’t respond to e-mail or voice-mail messages sent through an intermediary.

Carroll says he already knew many people at Goldman Sachs, having worked with “their compliance for many years.” His leaving was motivated by a desire for a new challenge after 25 years at the FBI, he said.

Given the fate of former employers Lehman Brothers and Merrill Lynch, he added with a wry smile,

“I haven’t told the FBI this, but every place I’ve left has crumbled.”

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