PEREGRINE FINANCIAL NO LONGER A HAWK

NYT, WSJ - A Peregrine is a hawk that swoops after specific prey. One such human peregrine was shot down when a federal grand jury in Cedar Rapids, Iowa indicted Mr. Russell R. Wasendorf for 31 occasions when he made false reports to federal officials and can face up to 135 years in prison and fined as much as $7.75 million. Early in July, 2012, Mr. Wasendorf was found in his car in his company's parking lot attempting to commit suicide and leaving a note admitting to embezzling in excess of $100 million. The suicide note absolved his junior son, company president, from any involvement, but Mr. Wasendorf didn't hesitate illegally gathering funds for 20 years from friends and businesses for his own satisfaction and safety. Just one more case of a Greedster running wild.

SANDY CHANGES HIS MIND

NYT, WSJ - Anyone is free to change his or her mind, but for one of the WORLD'S foremost financiers, who was in favor of dumping the venerable Glass-Steagall Act, it was big news when he changed his mind on July 26, 2012 and announced to the trade he now believes the 1933 Glass-Steagall Act (struck down in 1999 by the adoption of the Gramm-Leach-Bliley Act) should be modified somewhat but reinstated by prohibiting a bank to be both an investment bank and a commercial under very specific rules. The Glass-Steagall Act in effect did just that- kept a Bank from being both a commercial and investment bank, denying an investment bank the right to use customer money (like CD's for instance) to gamble in financial markets.

The financial fiasco of 2007-2012 was fueled by the lack of controls as to whose money a bank could use for investments. Big Banks grew larger, balance sheets loaded up with risky paper like toxic assets and weird derivatives, loose mortgages and over-zealous investments with rewards handed out to executives and "hot" sales personnel for returns based upon faulty paper profits, watered-down intrinsic values of the very foundations under the financial institutions for whom they labored. Mr. Sanford Weill can take his share of the blame but it requires nerves of steel to step forward and announce to all he was wrong and The Glass-Steagall Act should be brought back albeit in a somewhat different form. Way to go, Sandy.

HEDGE-FUND MANAGER NEEDS NEW STRATEGY

WSJ - Mr. Chetan Kapur, founder and present lone manager of ThinkStrategy Capital Management, LLC, has been charged with securities fraud, investment-advisor fraud and wire fraud by a grand jury. Mr. Kapur started the company in November, 2002 and two of his executives have pleaded guilty and have been convicted of fraud. The year 2008 saw the peak of investor capital of $520 million poured into the company. One executive, Mr. Arthur Nadel, was imprisoned and died in April, 2012. The other executive pled guilty and is serving a 20-year sentence. 3 up and 3 down - wrong strategy. Certainly a new one is needed.

FEMININITY SCORES AT AUGUSTA

WSJ - The word "August" means "grandeur". The word "Augusta" has come to mean "Golf Club". 2012 is the year the first woman member was inducted into the Club - Dr. Condolezza Rice - former Secretary of State. Long a male business bastion, Augusta has hosted the prestigious Masters Golf Tournament for 79 years with most members guarding the male-only status. The gates have fallen. Congratulations!!

HEDGE-FUND FOUNDER FOUND GUILTY

Bloomberg - Doug Whitman, founder of hedge-fund Whitman Capital of Menlo Park, California, was found guilty by a jury in front of Judge Jed Rakoff in Manhattan of passing on inside information. Prosecuting attorney Pete Bharara led the charge. The duo of Judge Rakoff and Mr. Bharara have been most successful in bringing leakers of inside info to justice, proving that "The rules do apply". Up to 66 convictions to date have been racked up.

BUSINESS SCHOOL DEAN RETURNS $1.25 MILLION IN CONSULTANT FEES

Mpls Strib - Roger Jenkins, Dean of the Richard T. Farmer School of Business, Miami University, Oxford, Ohio returned cash of $1.25 million plus 22,000 shares of Enable Holdings, Inc.,(an Internet retailer worth less than a cent a share on today's market), to court receiver Doug Kelley as one settlement in the Tom Petters fiasco of a $3.65 Billion ponzi scheme. Mr. Petters is in prison under a 50 year conviction and sentence. In 2009, Miami University had returned to the receiver more than $5 million cash pledged by Petters to the U of Miami on behalf of his daughter and deceased son John, both students at the University. Dean Jenkins was paid stock and cash "for a variety of consulting services".

LEGAL SCHOLAR SEARCHES MINDS OF PONZI ARTISTS

NYT - Professor Tamar Frankel, on the faculty of Boston University Law School for 44 years, has written a book on ponzi schemers. A friend had urged her to write the book about "those mimics of trustworthiness: con artists". Among these artists were two I had not included in my book "The Greedsters" - the Caritas scandal in Roumania in the early '90s and a currency crime in San Diego in the mid-80s. She does include Madoff and his $64.8 Billion cheat. She has been asked what might be a final conclusion to her examinations. She states, "Victims failed to do their homework". I agree.

TAUNTING THE GOVERNMENT LEADS TO ANALYST'S DOWNFALL

NYT - Mr. John Kinnucan, founder of Oregon's Broadband Research, pled guilty of sharing insider information with customers evidenced by wiretaps, witnesses and instant messages. He could face many years in prison but is likely to settle on up to 5 years when sentenced. Mr. Kinnucan has been a long-time critic of government programs and actions relating to Wall Street regulations and controls. In one instance, he sent a voice mail to a United States attorney proclaiming "Too bad Hitler's not here. He'd know what to do with you". It's a good idea to be at least civil to someone who might be holding your fate in his hands.

IS THE RAINBOW OVER?

NYT - For more than 3 years, the famous Rainbow Room on the 65th floor of the Rockefeller Plaza just a short distance from Wall Street has been empty - as in nobody there. Disagreements between the landlord and restaurant owner have stalled a solution. It's too bad this one of a kind institution can't be preserved. However, the stakes are high.

The Ciprianai family who operated the Rainbow Room and the Tishman Speyer Properties who control the real estate are at loggerheads. The 65th floor was originally to be named the Stratosphere Room in the mid-30's, but the name was changed when a special organ was installed and bathed in colored lights while being played. Rainbow Room was fitting as the name. Every big band played the Rainbow Room and it was a thrill to be on top of the world dancing with a favored one as the Rainbow opened for business and happiness in 1934. I can attest to that during my college days. Come on, owner and operators, let's get together and preserve a sky-full of memories.

BRITISH BANK SETTLES $340 MILLION CLAIM

NYT - Legal responsibility for money laundering has long tentacles. The agency New York Department of Financial Services had charged a British bank, Standard Chartered, with $340 Million for money laundering for nearly a decade in a scheme between the Bank and Iran. The Bank has agreed to pay the charge. Involved in the charge were 60,000 transactions with Iran that hid tainted money with values as high as $250 Billion. The settlement money will go into the coffers of the New York Financial Services and then to New York State's General fund.

KNIGHT IN THE DARK FOR 30 MINUTES

NYT - Wednesday, August 4, 2012 should have been an average day for the electronic stock trading Knight Capital Group on Wall Street, but it became a nightmare. After the opening bell, a computer trading program at Knight suddenly burst forth with a huge volume of "erratic trades", and for 30 minutes no one knew how to shut the trading down. A former high-speed trader was quoted as saying "Trading being erratic even for just a minute or two would have been surprising to me, but to have something going on for 30 minutes is a shocking eternity". Knight barely survived the crisis after scrambling for 48 hours to secure temporary financing to save the ship. Regulators are investigating the possible cause of the malfunction.

G-e-e-e, GE Exec Retires on $89,000/mo.

     WSJ - GE  is splitting its energy division into 3 parts and a 50-year old energy executive has split with a retirement package estimated at $28.3 million.  The deal includes a non-compete for 3 years.  A monthly allowance of $ 89,000 also has been given Mr. John Krenicki for 10 years.  He is also maintaining eligibility in a further pension plan when he turns 60.  The generosity is part of a GE Plan labeled "retirement for the good of the company".  It goes without saying it's a  good one for Mr. Krenicki also.

Johnson & Johnson fined $2.2 Billion

WSJ-7/20/12 - Federal prosecutors reached a settlement with drug company Johnson and Johnson of $2.2 billion that includes a $400 million criminal fine for illegal marketing of the drug Risperdal.. Under
federal law, drug companies can only market drugs approved by the U. S. Food and Drug Administration. The Journal article stated many companies settle investigations into illegal marketing of drugs to avoid losing the ability to sell drugs to government health programs and Medicare.
    *    *    *    *

COUNTY COMMISSIONER GETS 28 YEARS

WSJ - 8/1/12 - A federal judge tossed Jimmy Dimora,  an Ohio, Cuyhoga County former county commissioner, into prison for 28 years. He had accepted bribes and asked potential County contractors for cash, business trips and prostitutes but 60,000 hours of wire-tap information led to his downfall.  There were more than 60 convictions of contractors and public officials, including an assessor and two judges. The judge gave Mr. Dimora 6 years more in prison than asked for by the prosecutors because
"the destruction left in its wake is incalculable"
    *     *     *     *