FRADULENT WAYS TO MAKE MONEY...

Fugitive Hedge Fund Manager Homm Arrested at Gallery

By Edvard Pettersson - Mar 9, 2013 10:31 AM GMT+0530

Florian Wilhelm Jurgen Homm, the German hedge-fund manager who has been a fugitive for more than five years, was arrested at the Uffizi Gallery in Florence on U.S. fraud charges. Homm, 53, allegedly caused at least $200 million in losses to investors in hedge funds operated by Absolute Capital Management Holdings Ltd., according to a statement by the U.S. attorney’s office in Los Angeles. Homm was arrested yesterday by Italian authorities following a U.S. request, according to the statement.

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Florian Homm, the German hedge-fund manager who has been a fugitive for more than five years, was arrested at the Uffizi Gallery in Florence on U.S. fraud charges. Photographer: Volker Hartmann/dapd

Federal prosecutors in Los Angeles filed a criminal complaint March 6, charging Homm with conspiracy and fraud. The founder and former chief investment officer of Absolute Capital is accused of “cross trading” hundreds of millions of shares of penny stocks between the company’s funds to boost the value of the otherwise illiquid stocks. The trades, through a Los Angeles-based broker-dealer that Homm co-owned, generated fees for Homm and Absolute Capital and also inflated the price of Absolute Capital on the London Stock Exchange, Alternative Investment Market, according to the statement. Homm “dumped” his shares and resigned from Absolute Capital on Sept. 18, 2007, “in the middle of the night,” according to the statement.

$53 Million

Homm and his co-conspirators made more than $53 million from the scheme, prosecutors said. Adam Kravitz, a Miami lawyer who represents Homm in a civil lawsuit brought by the U.S. Securities and Exchange Commission, declined to comment on the criminal charges. Absolute Capital managed as much as $2.1 billion in September 2007, when Homm quit the fund business he ran from Mallorca, Spain, leaving a portfolio of hard-to-trade assets. Homm recently published a book in German called “Rogue Financier: The Adventures of an Estranged Capitalist,” according to an affidavit by a Federal Bureau of Investigation agent filed in support of the arrest warrant. In the book, Homm, who is about 6 foot, 6 inches (2 meters) tall, wrote that he had “$500,000 stashed in my underwear, my briefcase and my cigar box,” when he left Palma de Mallorca on a private plane Sept. 18, 2007. His “mule and friend Giorgio” was carrying another $700,000, according to the translation in the affidavit.

‘Bimbos, Dogs’

“As the jet climbed I was profoundly unsettled, my mind in a dense fog,” Homm said in the book, according to the court filing. “I was breaking all connections to my former existence: colleagues, clients, acquaintances, friends, bimbos, dogs, family and children, and annihilating my fast fortune in the process.” Chief U.S. District Judge George King in Los Angeles last month denied Homm’s request to dismiss the SEC’s claims against him. In his Dec. 19 request, Homm had argued that the SEC couldn’t sue him on basis of foreign transactions between foreign funds. In a declaration filed with his request to dismiss the SEC’s claims, Homm said he lived in the U.S. for extended periods until the early 1990s and has only visited the U.S. sporadically since then. “All of my activities were conducted in the good faith performance of my job, which was to increase the value of the relevant ACMH funds to the benefit of the ACMH funds’ investors,” Homm said in the declaration.

SEC Allegations

The SEC in February 2011 accused Homm and the other co- owner of Beverly Hills-based Hunter World Markets Inc., the broker-dealer through which the funds controlled by Homm bought the microcap companies’ shares, of “portfolio pumping.” The SEC alleged Homm and his co-defendants in the lawsuit brought microcap companies public through reverse mergers and manipulated the companies’ share prices upward before selling the shares to eight Absolute Capital hedge funds. Homm ran the alleged scheme from September 2005 to September 2007, according to the SEC. The case is U.S. v. Homm, U.S. District Court, Central District of California (Los Angeles). The SEC case is Securities and Exchange Commission v. Ficeto, 11-cv-01637, U.S. District Court, Central District of California (Los Angeles).

To contact the reporter on this story: Edvard Pettersson in the Los Angeles federal court house at +1- epettersson@bloomberg.net

http://www.bloomberg.com/news/2013-03-08/fugitive-hedge-fund-manager-homm-arrested-at-gallery.html

CORE EDUCATION.....DOWN..DOWN..DOWN.!!!!..

MUMBAI, FEB 27:  

Core Education and Technologies has moved SEBI seeking a probe into the high volumes of trading in its shares that led to a steep fall of 81 per cent in share prices.The stock fell from a high of Rs 300 to a low of Rs 56.55, in just three days.“We would like to request your office to assist the company in conducting your investigation in such unusual high volume and price movement…,” the company said in its letter to the market regulator.The technology-enabled education solutions provider has also sought the market regulator’s assistance in providing appropriate price circuits for its scrip. This is to prevent “further damage and repose shareholders and all stakeholders’ confidence,” it added.Though the stock is not traded under F&O list directly, since it is a part of CNX-IT, which has derivatives contracts, no circuit filter is applicable to the stock.

TUMBLES CONTINUOUSLY

Last Monday, the company’s shares fell by more than 62 per cent on market talks that lenders were diluting shares pledged by the promoters. The prices recovered by noon on Tuesday, after it clarified that pledged shares were not sold in the market. On Wednesday, it fell further by 46 per cent to close at Rs 60.30.“Further, we would like to clarify on the rumours of promoters pledged shares being sold, that we have confirmed with all the financial institutions that none of them have sold the pledged shares and that they continue to hold the same,” it said. However, today IFCI sold 36.95 lakh shares.On Monday, Cresta Fund informed the exchanges that it sold 28.16 lakh shares or 2.4598 per cent stake in the company on February 25. After the sale, their holding reduced to 2.3572 per cent.On Tuesday, SEBI Chairman in Hyderabad, U.K. Sinha, said: “Whenever we worry either through our own surveillance mechanism or through other medium that somebody has tried to manipulate the market, we take action.” rajesh.kurup@thehindu.co.in

http://www.thehindubusinessline.com/markets/core-education-moves-sebi-for-probe-as-stock-crashes-81-in-3-days/article4459326.ece

As late as 2010- EXPORT DATA - TYPED FORMAT

24 FEB, 2013, 10.19AM IST, SHANTANU NANDAN SHARMA & AVINASH CELESTINE,ET BUREAU 

$8.8 bn missing link in exports figures: How government got economic data wrong

ast month commerce ministry officials accompanying minister Anand Sharma to Mauritius were at a loss when their counterparts from the island nation complimented India's initiative to supply petroleum products to their country.
Indian officials were surprised, as the export-import data maintained by Kolkata-based Directorate General of Commercial Intelligence and Statistics (DGCI&S), an arm that comes under Sharma's ministry, showed zero export of petroleum products to Mauritius between August and October 2012.
Back in Delhi, Udyog Bhawan officials probed a little further. It was only then that they figured out thatMangalore Refinery and PetrochemicalsBSE -0.42 %Limited, a subsidiary of ONGCBSE 0.84 %, did export petro products to the island nation. How could then such a grave error crop up in the first place?
This is hardly an isolated incident. In the past few years, senior bureaucrats and even ministers such as then finance minister Pranab Mukherjee have been quite publicly embarrassed by a series of errors in keyeconomic data such as GDP, Index of Industrial Production (IIP) and exports.
A Gaping Hole
In many of these cases, initial estimates of data were announced, only to be revised downward subsequently. While there are perfectly acceptable reasons for economic data to be revised down (or up) after they are released, it is the scale of the revisions that has been disturbing.

The IIP growth for January 2012 for instance was revised down from 6.8% to 1.1%. Export data for April-October 2011 was revised down by a whopping $8.8 billion. GDP growth for the last quarter of 2008-09 was revised down in later months to 3.5% from 5.9%, thus revealing that India was far worse hit by the global financial crisis than had previously been imagined. This month, cabinet secretary Ajit Kumar Seth called both revenue and commerce secretaries to his office to fix specific issues with the export data. In December, the parliamentary standing committee on finance, in a report on the ministry of statistics, slammed the department for numerous glitches. And while there are numerous reasons for data glitches and errors, there is one glaring cause — in government, the right hand often does not know what the left hand is up to.

When Data Attacks
Each export consignment generates an individual bill, and bunches of bills are collected into daily returns, which is what the DGCI&S compiles into export data. But this is a deceptively simply process.
Take the way the bills are actually moved from customs offices throughout the country to Kolkata. Shipping bills amounting to 58% of exports are cleared completely electronically. But till as late as 2010, more than a tenth of the value of exports was sent manually, in a typed format and had to be entered into computer systems by hand at the DGCI&S.

http://economictimes.indiatimes.com/8-8-bn-missing-link-in-exports-figures-how-govt-got-economic-data-wrong/articleshow/18645645.cms

Rate-Rigging Loses $53 Million....

Deutsche Bank Trader Fired Over Rate-Rigging Loses $53 Million

By Gavin Finch & Liam Vaughan - Jan 24, 2013 4:01 PM PT

Deutsche Bank AG (DBK)’s Christian Bittar, one of the firm’s best-paid traders, lost about 40 million euros ($53 million) in bonuses after he was fired for trying to rig interest rates, three people with knowledge of the move said. The lender dismissed Bittar in December 2011, claiming he colluded with a Barclays Plc (BARC) trader to manipulate rates and boost the value of his trades in 2006 and 2007, said the people, who requested anonymity because they weren’t authorized to speak publicly. His attempts to rig the euro interbank offered rate and similar efforts by derivatives trader Guillaume Adolph over yen Libor are the focus of the bank’s probe, the people said. Both traders declined to comment for this story.

“Upon discovering that a limited number of employees acted inappropriately, we sanctioned or dismissed those involved and clawed back all of their unvested compensation,” Deutsche Bank spokesman Michael Golden said in a statement. “To date we have found no link between the inappropriate conduct of a limited number of employees and the profits generated by these trades.” Regulators are investigating claims that traders at more than 16 companies manipulated submissions used to set benchmarks such as Euribor to profit from bets on interest-rate derivatives. Ex-traders say their firms had no rules governing how Euribor and Libor should be set and that managers were aware that traders, who stood to benefit from where the rate was fixed, were on occasions making submissions to the benchmarks.

Anshu Jain

Deutsche Bank’s Golden said the Frankfurt-based lender is cooperating with regulators and that its continuing internal investigation has cleared current and former management board members of wrongdoing. Co-Chief Executive Officer Anshu Jain, who said this week he was sickened by the scandal, has faced calls from German lawmakers to publish the findings of a probe by BaFin, the country’s financial regulator, into the lender’s rate-submission process. That inquiry is still to be completed.

Bittar, who joined Deutsche Bank in 2001, was a proprietary trader specializing in short-term derivatives contracts and entitled to a percentage of the profit from his trades, the people said. He took billion-euro positions on the direction of short-term interest rates with the firm’s own money and reaped hundreds of millions of euros in profit for the bank, the people said. The bonuses Deutsche Bank pays its staff typically vest over a three-year period. After the lender started to scale back its proprietary- trading operations in 2008, Bittar was named head of money market derivatives trading in 2010 and moved to Singapore. He now works for Bluecrest Capital Management LLP, Europe’s third- biggest hedge fund with $30 billion under management.

Euribor Spread

One of his strategies involved betting that the cost of borrowing in euros for three and six months would rise more quickly than one-month rates, the people said. That paid off after the collapse of Lehman Brothers Holdings Inc. in September 2008, when banks became unwilling to lend to each other for all but the shortest periods, they said. The average spread between six-month Euribor and the overnight indexed swap rate, a gauge of banks’ reluctance to lend, widened to about 110 basis points in the 12 months ended Sept. 15, 2009, compared with an average gap of 68 basis points in the year-earlier period, data compiled by Bloomberg show. The spread between one-month Euribor and the overnight indexed swap rate widened to 48 basis points from 29 basis points in the same period. A basis point is 0.01 percentage point.  “The trading strategy, which was subject to the bank’s risk limits and used by many in the marketplace, was based on a legitimate market view that diversified and lowered the bank’s portfolio risk during the peak of the financial crisis,” Golden said.

Barclays Trader

Former Barclays euroswaps trader Philippe Moryoussef is under investigation by the U.S. Department of Justice, Commodity Futures Trading Commission, and Britain’s Financial Services Authority for colluding with counterparts at Deutsche Bank, Credit Agricole SA, Societe Generale SA and HSBC Holdings Plc to influence Euribor, a person familiar with the probe said. Moryoussef couldn’t be traced through the Internet or directory assistance. Euribor is derived from a survey of banks asking how much it costs them to borrow from one another in euros for periods from overnight to one year. About 241 trillion euros of interest rate swaps are tied to three-month Euribor alone. Like the London interbank offered rate, it’s based on estimates rather than actual trade data, leaving the rate vulnerable to manipulation. The 39 banks that contribute to the rate outnumber the 18 that help set dollar Libor, making it harder for individual traders to rig it.

Setting Rates

Bittar was also alleged to have had inappropriate communications with colleagues responsible for making the bank’s Euribor submissions, the people with knowledge of the firm’s internal processes said. Bittar and Adolph, a yen derivatives trader who joined Deutsche Bank from Merrill Lynch & Co. in 2008, are the only two employees to be fired by the German lender over rate-rigging to date, the people said. Adolph was dismissed in December 2011 for inappropriate communications with UBS AG (UBSN)’s Thomas Hayes, the people said. Adolph settled out of court with Deutsche Bank after the firm tried to withhold some of his stock awards that had already vested, according to two people with knowledge of the case.Adolph was responsible for inputting the firm’s submissions to the yen benchmark and trading derivatives whose values depended on it, the people said. U.S. prosecutors charged Hayes withwire fraud and price-fixing in December. His lawyers at Fulcrum Chambers declined to comment.

‘Gigantic Fix’

The Justice Department, in its December settlement with Zurich-based UBS, cited a conversation on or about May 21, 2009, between Hayes and an individual only identified as ‘Trader B.’ That trader is Adolph, two people with knowledge of the exchange said.“cld you do me a favour would you mind moving you 6m libor up a bit today, i have a gigantic fix,” Hayes said, according to the filing.“I can do taht,” Adolph replied. He later increased Deutsche Bank’s six-month yen Libor submission 6 basis points that day, the transcript shows. That was the first increase in the firm’s submission since March 3. It had remained unchanged since April 15.“u happy with me,” Adolph asked Hayes the following day.“thx,” Hayes replied.Deutsche Bank is among lenders that have yet to reach settlements with regulators probing the Libor-rigging scandal. Barclays, Britain’s second-biggest bank, was the first to settle, paying a 290 million-pound ($458 million) penalty in June for manipulating borrowing costs. UBS,Switzerland’s biggest bank, was fined $1.5 billion in December. Royal Bank of Scotland Group Plc (RBS), the biggest government-owned lender in the U.K., may pay as much as 500 million pounds in penalties in coming weeks, according to two people with knowledge of the talks.

To contact the reporters on this story: Gavin Finch in London at gfinch@bloomberg.net; Liam Vaughan in London at lvaughan6@bloomberg.net To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net;

http://www.bloomberg.com/news/2013-01-25/deutsche-bank-trader-fired-over-rate-rigging-loses-53-million.html