British law firm cleared way for Lehman cover-up

[mgt23]

http://business.timesonline.co.uk/tol/b ... 059592.ece

British law firm cleared way for Lehman cover-up

Linklaters, one of Britain's leading law firms, approved controversial accounting practices that allowed Lehman Brothers to shift billions of dollars of debt off its balance sheet and mask the perilous state of the bank's finances before its catastrophic collapse in 2008.

A 2,200-page report into the collapse of the 158-year old institution has uncovered evidence that Lehman used "balance sheet manipulation" in the form of an accounting practice known as "Repo 105" without telling investors or regulators that made the business appear healthier.

Lehman had initially sought legal clearance from an American law firm to permit Repo 105 transactions but was denied. It then sought advice from Linklaters in London, which said the deals were possible under English law.

The Repo 105 practice had been in use by Lehmans since 2001 but it was in the bank's final two years that it was regularly used to alter public perceptions of the bank's balance sheet.
Related Links

    * Ernst & Young faces legal action over Lehman

    * Inside Lehman: Fuld's desperate housewives

    * Lehman 'used gimmick' to cover up insolvency

Multimedia

    * Read the Lehman report executive summary

In the run-up to a reporting period, Lehman would enter an arrangement to sell and then repurchase financial assets. Normally, such deals are accounted as "transactions" but by adding a cash element Lehman was able to call them "sales".

The bank's balance sheet could therefore be pumped up with cash from the sale and would also reduce its borrowings. At the beginning of a new quarter, Lehman would borrow more money and repurchase the assets to put them back on its balance sheet.

The assets were transferred through Lehman's London operations so the Repo 105 deals could be conducted under English law.

Anton Valukas, of Jenner & Block, who was appointed as examiner by the judge handling Lehman's bankruptcy, said: "Unable to find a United States law firm that would provide it with an opinion letter permitting the true sale accounting treatment under United States law, Lehman conducted its Repo105 programme under the aegis of an opinion letter the Linklaters law firm in London."

In 2008, just before Lehman filed for bankruptcy, it transferred $50.38 billion in a Repo 105 arrangement, reducing its leverage from 13.9 per cent to 12.1 per cent.

"Lehman's failure to disclose the use of an accounting device to significantly and temporarily lower leverage, at the same time that it affirmatively represented those 'low' leverage numbers to investors as positive news, created a misleading portrayal of Lehman's true financial health," Mr Valukas said.

Linklaters is part of Britain's "magic circle" of leading law firms, which includes Clifford Chance, Allen & Overy, Slaughter and May and Freshfields Bruckhaus Deringer, and is one of the biggest practices in the world.

Linklaters said it had not been contacted by the examiner during his investigation and stood by its advice to Lehman Brothers. In a statement, the firm said that Mr Valukas had not criticised the opinions provided to Lehman Brothers or found that they were improper. "We have reviewed those opinions and are not aware of any facts or circumstances which would justify any criticism," Linklaters added.

Mr Valukas's report also accuses Ernst & Young of professional negligence over a number of years before the catastrophic downfall Lehman and warns the British accountancy firm it could face legal action for signing off the Repo 105 arrangements.

Mr Valukas criticises Ernst & Young "for among other things its failure to question and challenge improper or inadequate disclosure in those financial statements."

He said the accountancy firm "was professionally negligent in allowing those [Repo 105] reports to go unchallenged." He added that there could be a colourable claim for professional malpractice against the accountancy giant.

Ernst & Young was appointed as Lehman's auditor in 1994, the same year that Christopher O'Meara left the accountancy firm, where he was a senior manager in the financial services practice, to join the US bank. Mr O'Meara eventually became Lehman's global head of risk.

Dick Fuld, the former chairman and chief executive of Lehman, and some of his closest lieutenants, are also facing legal claims for breach of fiduciary duty after using the "lazy accounting gimmick" to hide the fact that the bank was insolvent.

The Valukas report paints a damning picture of the bank's final two years, branding it as a hothouse institution so obsessed with growth that senior executives said openly they did not want to hear "too much detail" about the risks they might face in case it held them back.

The examiner concluded that although Lehman's top management chose to disregard or overrule the firm's risk controls on a regular basis and while certain of their risk decisions were "unwise" and represented poor "judgment", this did not amount to a breach of fiduciary duty.

He noted that the sole function of the Repo 105 transactions was "balance sheet manipulation", adding that even Lehman's own accounting personnel described them as an "accounting gimmick" and a "lazy way of managing the balance sheet".

Mr Valukas concluded that there were "colourable claims" against Mr Fuld, Mr O'Meara, Lehman's head of risk, Erin Callan, the chief financial officer and Ian Lowitt, who replaced Ms Callan as chief financial officer.

He described a "colourable claim" as one for which "there is sufficient credible evidence" to support a finding in a court.

Mr Fuld's lawyer said last night that the former Lehman boss did not know what the Repo 105 transactions were or their accounting treatment.

Ernst & Young said: "Our opinion indicated that Lehman's financial statements for that year were fairly presented in accordance with Generally Accepted Accounting Principles [GAAP], and we remain of that view."

When Lehman filed for bankruptcy on September 15, 2008, with about $600 billion in debt, its collapse contributed to the freezing of credit markets worldwide and to increasing the depth of the global recession.

Judge James Peck, who is handling the Lehman bankruptcy in the Bankruptcy Court of the Southern District of New York, appointed Mr Valukas a year ago to investigate the events that led to Lehman's collapse, including any possible "fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity".

On Thursday, Judge Peck unsealed Mr Vulakas's report, which had been presented to him last month.

The meticulously researched document describes Lehman's aggressive growth strategy, which, Mr Vulakas said, was intended to take advantage of the sub-prime mortgage crisis that broke in 2006 by increasing its exposure to real estate at a time when others were cutting back.

While Mr Vulakas concluded that Mr Fuld and other senior executives may have a case to answer in the use of Repo 105 arrangements, their management of Lehman's aggressive expansion and attitude to risk were not so "reckless and irrational" as to give rise to a breach of fiduciary duty.

Mr Valukas also concluded that after Lehman's collapse Barclays may have received "a limited amount of assets" improperly when it took control of Lehman's core US brokerage.

He added that Lehman could have potential claims against JPMorgan Chase and Citibank in connection with demands for collateral and certain changes made to guarantee agreements in Lehman's final days.

The long-awaited report, which cost $38 million to produce, is likely to give ammunition to shareholders suing Lehman as well as to government prosecutors.

Compiled with the help of a team of 70 attorneys, it is based on more than 250 interviews, five million documents and 26 million pages of company e-mails.

Hector Sants, chief executive of Britain's Financial Services Authority (FSA), was the only person to decline to be interviewed.

However, the FSA did provide detailed, written answers to specific questions regarding the FSA's involvement in the weekend before Lehman's collapse and in the Barclays transaction that would have been posed to Mr Sants.

[mgt23]

http://en.wikipedia.org/wiki/Linklaters

Most recently Linklaters has been in the news as the firm appointed to handle the insolvency of the Lehman Brothers companies. [5]

http://business.timesonline.co.uk/tol/b ... 898190.ece

A £600-an-hour City lawyer was left haggling with EDF, the French energy company, in a desperate attempt to keep the lights on at Lehman Brothers' London headquarters just hours after its American parent collapsed, it has emerged.

Euan Clarke, a Linklaters insolvency partner more accustomed to deconstructing complex financial products than electricity supplies, persuaded EDF not to switch off the power at Lehman's 33-storey office tower on September 18 last year.

During an emergency conference call convened after "repeated threats" from EDF, Mr Clarke agreed to the energy group's demands to transfer Lehmans' Canary Wharf supply to a more expensive electricity tariff.

Mr Clarke, part of an army of lawyers and accountants frantically trying to salvage Lehmans' $600 million of European assets, was interrupted to address the more pressing issue of keeping the air conditioning running.
Related Links

    * RAB Capital sues over Lehman collapse

    * Law firms line up for Lehman advisory work

According to court documents seen by The Times, just hours after Lehman collapsed on September 15 last year, EDF began issuing ultimatums to PricewaterhouseCoopers, the bank's administrators, to sign a new electricity contract.

EDF, which at one point gave Lehman 38 minutes to reply to an e-mail or be disconnected, claimed that by entering administration, the bank had forfeited its existing electricity contract and must sign a new agreement. When the bank refused, EDF said it must transfer to a higher interim tariff or it would be disconnected.

The dispute is now the subject of a High Court lawsuit. Lehman, which claims it was entitled to remain on its existing rate, is suing EDF for £3.5 million, the amount it says it has overpaid since being forced to move to the higher tariff. It is also seeking a declaration that EDF must continue to supply electricity at the original rate.

EDF said: "EDF Energy has endeavoured to resolve matters and regret the action which has been taken by the administrators. We have now served a defence and it would not be appropriate to comment further at this stage." PwC declined to comment.

Mr Clarke is one of 20 Linklaters partners and about 80 associates working full-time on the Lehman administration. They are part of a several hundred-strong staff of lawyers, accountants and former Lehman employees who are expected to remain in the bank's London headquarters for several years while its affairs are wound up.

[CrackSmokeRepublican]

Very interesting Mgt23, thanks for posting...

[mgt23]

This is big!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Linklaters is single handedly legally responsible for the onset of the financial 2008 CRASH and the following BAILOUTS and have been assigned to cover it up on the insolvency!!!!!!!!!!!!!!!!!!!

http://www.guardian.co.uk/business/2010 ... -105-enron

Lehman Brothers: Repo 105 and other accounting tricks


There are lies, damned lies and investment bank balance sheets. It's always been a puzzle how Lehman Brothers was able to spout reassuring figures on declining indebtedness and healthy underlying trends until the day it collapsed, sending the global financial system into a near-apocalyptic meltdown.Now, thanks to bankruptcy examiner Anton Valukas's exhaustive 2,200-page "autopsy" of the bank, we have a clearer idea of how Dick Fuld and his team disguised the 158-year-old firm's desperate predicament and carried on trading through weeks of insolvency.

The term "Repo 105" will take its place in the annals of big-brained, misguided Wall Street distortions. It was a trick allowing Lehman to sell packages of mortgages, Treasury bonds, Eurobonds, even Canadian government instruments, on a temporary basis at the end of an accounting quarter, with an obligation to buy them back a few weeks later. The deals, amounting to $50bn, allowed Lehman to publish healthier accounts than it really had.

People within the bank knew this was a sleight of hand. In one exchange of emails, a senior Lehman executive wrote: "It's basically window-dressing." A colleague replied: "I see...so it's legally do-able but doesn't look good when we actually do it? Does the rest of the street do it?" One of Fuld's top lieutenants, chief operating officer Bart McDade, referred to Repo 105 as "another drug we're on". A US law firm didn't like the look of the practice, so Lehman turned to Britain's very own Linklaters, which duly signed it off as lawful. London-based auditor Ernst & Young concurred, taking "virtually no action" when a Lehman whistle-blower, Matthew Lee, raised a red flag.

While Repo 105 may have been a uniquely Lehman trick, it gives a broader clue to one of the mysteries of the credit crunch. Top executives at Bear Stearns, Washington Mutual, Royal Bank of Scotland and Northern Rock were adept at rattling off impressive figures on healthy debt ratios in the run-up to financial collapse. Citigroup and Merrill Lynch produced evidence that they were solvent – while analysts were dubious and the US government's "stress tests" found otherwise. However, tightly drawn accounting standards may be, the finest financial brains will find ways to bend them.

Fuld and his lieutenants are already under criminal investigation and were subpoenaed as early as October 2008 in grand jury probes. It isn't easy to pin lawsuits on professional advisers. Before a top law firm or "big four" accounting practice signs anything off, they will at least have constructed an argument of legality. A successful prosecution would need to prove conscious wrongdoing - that they actually knew what they were doing was over the line.

We've been here before. There are eerie echoes of a certain Texas energy trading firm known as the "crooked E" that collapsed in 2001. Sam Buell, a former Enron prosecutor turned US law professor, says there are "uncanny" parallels in colourful internal emails about accounting tricks, signed off by a major auditing firm, used to bolster balance sheets at the end of a quarter: "This is exactly the kind of shenanigans that went on at Enron. It doesn't seem like anyone learnt their lesson."

[mgt23]

http://www.guardian.co.uk/business/2010 ... n-brothers

Linklaters defends handling of Lehman Brothers deals

Report for United States Bankruptcy Court says City law firm approved off balance sheet transactions that disguised true state of Lehman Brothers' finances

 

Hector Sants

Hector Sants, the Financial Services Authority chief executive, was appealed to by US authorities to help Lehman Brothers avoid falling into administration

Linklaters, one of London's premier law firms, is battling to defend its reputation after a US report into the failure of Lehman Brothers showed it approved controversial deals that shifted billions of dollars of debt off the balance sheet in the years before the bank collapsed.

The hard-hitting report found that the crucial deals, which were also sanctioned by Lehman's auditors, Ernst & Young, were described as "window dressing" by bank staff and masked the precarious state of its finances while it was under scrutiny from regulators and investors.

Linklaters is expected to come under intense pressure to reveal the full extent of its dealings with Lehman in the run-up to the bank's crash in September 2008. The firm is one of the "magic circle" of solicitors operating in the City, which in recent years have expanded rapidly to compete with US rivals.

The impact of the bank's crash has been described as incalculable by some economists after governments around the world were forced to implement trillion-pound bailouts for their own banks caught up in the disaster. Investors are preparing lawsuits against the bank and are expected to turn their fire on lawyers and auditors advising it.

The report, for the United States Bankruptcy Court by examiner Anton Valukas, claims Lehman booked fund transfers as sales and failed to disclose them in regulatory filings in the US. Valukas alleges that Lehman turned to Linklaters after New York law firms said that they were unable to approve the deals under US law.

It was common practice to use so-called "Repo 105" agreements at Lehman to sell and buy back funds, but their frequent adoption in the two years before its collapse amounted to balance sheet manipulation, the report said.

Linklaters dismissed suggestions that it played a central role in disguising Lehman's mounting debt pile. A spokesman confirmed that the firm gave opinions on several transactions, but said it was not aware of any "facts or circumstances that would justify any criticism".

He also pointed out: "The examiner, who did not contact the firm during his investigations, does not criticise those opinions or say or suggest that they were wrong or improper."

Valukas said that the part played by auditors Ernst & Young was also crucial to hiding the fund transfers, and amounted to professional negligence.

UK regulators came under scrutiny in the report for their role during Lehman's collapse. While Hector Sants, the Financial Services Authority chief executive, refused to give evidence directly to the US investigator, he published written evidence that showed a series of transatlantic telephone calls during which the US authorities begged the UK to help facilitate a possible takeover by Barclays.

The FSA's evidence claims that Christopher Cox, then chairman of the US regulator the securities and exchange commission, was still lobbying the FSA at 3pm on Sunday 14 September – hours before Lehman called in administrators. Cox wanted the FSA to waive rules that required Barclays to hold a shareholder vote before the deal could take place.

Barclays later bought Lehman's US businesses from the administrator.

[mgt23]

HOLY SHIT scroll down to the awards section=======>

Anton Valukas*the court examiner of Lehman/Linklaters....................
http://www.jenner.com/people/bio.asp?id=2400

ANTON R. VALUKAS, Chairman of the Firm
Publications · Professional Activities

Chicago Office
Office: (312) 923-2903
Fax: (312) 840-7303
Email: http://en.wikipedia.org/wiki/Operation_Greylord

Operation Greylord
From Wikipedia, the free encyclopedia
Jump to: navigation, search

Operation Greylord was an investigation conducted jointly by the Federal Bureau of Investigation and the IRS Criminal Investigation Division into corruption in the judiciary of Cook County, Illinois (the Chicago region).

The 3 1/2 year undercover operation took place in the 1980s. Greylord is still recoginzed to this day as one of the FBI's most successful undercover investigations. The first listening device ever placed in a judge's chambers occurred in the undercover phase, when the narcotics court chambers of Judge Wayne Olson were bugged. Ten years after the undercover case concluded, the historical investigations, prosecutions and trials concluded in 1994. The last conviction was that of Judge Thomas Maloney, who was convicted of fixing three murder cases. Maloney was released from federal prison in 2008. A total of 92 people were indicted, including 17 judges, 48 lawyers, ten deputy sheriffs, eight policemen, eight court officials, and a member of the Illinois Legislature.

The key undercover FBI agents/lawyers were David Grossman, David Reis and Terrence Hake. Hake was a Cook County prosecutor, who complained about the bribery and corruption in the Murder and Sexual Assault preliminary hearing courtroom in Chicago. The FBI and United States Attorney's Office learned of his complaint and recruited him to pose as a corrupt prosecutor and later as a bribe-paying criminal defense attorney. While playing the role of a corrupt prosecutor, Hake supplied the evidentiary probable cause to bug Judge Olson's chambers.

First Assistant United States Attorney Daniel Reidy and Assistant United State's Attorneys (AUSA) Charles Sklarsky, Scott Lassar, Scott Mendeloff and Candace J. Fabri led many of the prosecutions. Three United States Attorneys, Thomas P. Sullivan, Dan K. Webb and Anton Valukas supervised the investigations and prosecutions. Valukus and AUSA James Schweitzer indicted 22 corrupt court personnel, along with the judge, who presided over the corruption and the courtroom, in one 1985 indictment. Lamar Jordan, David Benscoter, Marie Dyson, William C. Megary, and Robert Farmer were the principal FBI case agents and supervisors during the investigation.

Operation Greylord was named after a racehorse, although the national media reported it was named after the wigs worn by judges in Britain.

http://www.tulanelink.com/tulanelink/greylord_02a.htm
http://www.fbi.gov/page2/march04/greylord031504.htm
See also: Operation Gambat and Operation Silver Shovel

http://en.wikipedia.org/wiki/Operation_Silver_Shovel

Operation Silver Shovel
From Wikipedia, the free encyclopedia
Jump to: navigation, search
The official seal of the FBI.

Operation Silver Shovel was major United States Federal Bureau of Investigation (FBI) probe into Chicago political corruption during the 1990s. By the end of the probe illegal activities from labor union corruption to drug trafficking and organized crime activity were unearthed and corruption convictions were handed out to 18 individuals.[1]
Contents
[hide]

    * 1 Background
    * 2 The operation
    * 3 Those indicted
    * 4 References
    * 5 External links

[edit] Background
Main articles: Operation Greylord and Operation Gambat

In the 1980s, the federal Operation Greylord investigation of the Cook County courts found almost 100 lawyers and judges who were eventually sent to jail, disbarred or suspended for illegal actions. However, when the individuals were heading off to jail, some lawyers and judges fixed cases. That produced Operation Gambat, which sent more crooks off to jail.[2]
[edit] The operation

John Christopher was an FBI mole, an insider to the Chicago construction business and now a convicted felon and lifelong mob associate.[3] The FBI relied on Christopher to get audio or visual recordings of illegal transactions including bribes, money laundering and cocaine purchases. By 1995, Christopher had made over 1100 recordings. The informant gave cash payments or other bribes to city officials in exchange for help in obtaining work. These officials include city alderman, city inspectors, project leaders, and others. [4] The bribes centered on city contracts for hauling construction debris; Christopher paid officials to allow him to dump debris in illegal areas. The bribes totaled $150,000 in the end, and the money laundering over $2.2 million.[5]
[edit] Those indicted

Aldermen:

    * Ambrosio Medrano (Alderman 25th Ward)[6]
    * Allan Streeter (Alderman 17th Ward)[7]
    * Jesse Evans (alderman) (Alderman 21st Ward)[8]
    * Lawrence Bloom (Alderman 5th Ward)[9]
    * Virgil Jones(Alderman 15th Ward)
    * Percy Giles (Alderman 37th Ward)

Other:

    * 2 City inspectors
    * 10 other[10]

[edit] References

   1. ^ http://chicago.fbi.gov/silvershovel/silvershovel.htm
   2. ^ http://www.theconspiracy.us/vol7/cn7-26.html
   3. ^ http://www.highbeam.com/doc/1P2-4518934.html
   4. ^ http://chicago.fbi.gov/silvershovel/silvershovel.htm
   5. ^ http://www.theconspiracy.us/vol7/cn7-26.html
   6. ^ http://pqasb.pqarchiver.com/washingtonp ... 7+Fulltext)&edition=&startpage=A.02&desc=Probe+Unearths+Another+Load+Of+Graft+at+Chicago+City+Hall%3B+Alderman+Buried+in+FBI%27s+%60Operation+Silver+Shovel%27
   7. ^ http://query.nytimes.com/gst/fullpage.h ... A960958260
   8. ^ http://www.forensic-intelligence.org/co ... 70261.html
   9. ^ http://query.nytimes.com/gst/fullpage.h ... A961958260
  10. ^ http://chicago.fbi.gov/silvershovel/silvershovel.htm

http://chicago.fbi.gov/silvershovel/silvershovel.htm

[mgt23]

http://www.guardian.co.uk/business/2010 ... gal-claims

Lehman Brothers bosses could face court over accounting 'gimmicks'

• Former chief Dick Fuld and accountants Ernst & Young criticised in 2,200-page report

    * Andrew Clark in New York
    * The Guardian, Friday 12 March 2010
    * Article history

Lehman Brothers

A Lehman Brothers employee walks out of the bank in September 2008. Thousands of workers lost their jobs in the collapse. Photograph: Joshua Lott/Reuters

A court-appointed US bankruptcy examiner has concluded that there are grounds for legal claims against top Lehman Brothers bosses and auditor Ernst & Young for signing off misleading accounting statements in the run-up to the collapse of the Wall Street bank in 2008 which sparked the worst financial crisis since the Great Depression.

A judge last night unsealed a 2,200-page forensic report by expert Anton Valukas into Lehman's collapse, which includes scathing criticism of accounting "gimmicks" used by the failing bank to buy itself time. These included a contentious technique known as "repo 105", which temporarily boosted the bank's balance sheet by as much as $50bn (£33bn).

The exhaustive account reveals that Barclays, which bought Lehman's US businesses out of bankruptcy, got certain equipment and assets it was not entitled to. And it reveals that during Lehman's final few hours, chief executive Dick Fuld tried to get Gordon Brown involved to overrule Britain's Financial Services Authority when it refused to fast-track a rescue by Barclays.

With Wall Street shaken by the demise of Bear Stearns in March 2008, Valukas said confidence in Lehman eroded: "To buy itself more time, to maintain that critical confidence, Lehman painted a misleading picture of its financial condition."

The examiner's report found evidence to support "colorable claims", meaning plausible claims, against Fuld and three successive chief financial officers - Chris O'Meara, Erin Callan and Ian Lowitt.

Valukas said the bank tried to lower its leverage ratio, a key measure for credit rating agencies, through a device dubbed "repo 105", through which it temporarily sold assets with an obligation to repurchase them days later, at the end of financial quarters, in order to get a temporary influx of cash. Lehman's own financial staff described this as an "accounting gimmick" and a "lazy way" to meet balance sheet targets.

A senior Lehman vice-president, Matthew Lee, tried to blow the whistle by alerting top management and Ernst & Young. But the auditing firm "took virtually no action to investigate".

During the bank's final hours in September 2008, Fuld tried desperately to strike a rescue deal with Barclays but the FSA would not allow the British bank an exemption from seeking time-consuming shareholder approval. The chancellor, Alistair Darling, declined to intervene and Fuld appealed to the US treasury secretary, Henry Paulson, to contact the prime minister.

"Fuld asked Paulson to call prime minister Gordon Brown, but Paulson said he could not do that," says the examiner's report. "Fuld asked Paulson to ask president Bush to call Brown, but Paulson said he was working on other ideas."

In a "brainstorming" session, Fuld then suggested getting the president's brother, Jeb Bush, who was a Lehman adviser, to get the White House to lean on Downing Street.

Barclays eventually bought the remnants of Lehman's Wall Street operation from receivership for $1.75bn - a sum that has enraged certain bankruptcy creditors who believe it was a windfall for the British bank.

The examiner's report finds grounds for claims against Barclays for taking assets it was not entitled to, including office equipment and client records belonging to a Lehman affiliate, although it says these were not of material value to the deal - the equipment was worth less than $10m.

A lawyer for Fuld last night rejected the examiner's findings. Patricia Hynes of Allen & Overy said Fuld did not structure or negotiate the repo 105 transactions, nor was he aware of their accounting treatment. She added that Fuld "throughout his career faithfully and diligently worked in the interests of Lehman and its stakeholders".

A spokesman for Ernst & Young, which is headquartered in London, told Reuters the firm had no immediate comment because it was yet to review the findings.

[mgt23]

http://en.wikipedia.org/wiki/Hector_Sants

Hector Sants is a British investment banker. He was appointed Chief Executive Officer of the Financial Services Authority in July 2007, and he will leave that organisation in the summer of 2010.
Contents


Sants was educated at Clifton College and Corpus Christi College, Oxford and obtained an MA in Psychology and Philosophy.

[edit] Phillips & Drew and UBS

He joined the Research Department of Phillips & Drew in 1977, and from 1978 to 1983 he was the Senior Analyst responsible for Food Manufacturing and Overseas Traders sectors. In this capacity he achieved considerable success, regularly featuring in institutional client surveys and becoming a partner in 1984.

In December 1984 he moved to New York where he was a Director of Phillips & Drew International, the New York subsidiary. In 1985 he became Managing Director of that operation. Phillips & Drew International was subsequently acquired by Union Bank of Switzerland and Sants was appointed First Vice President, responsible for the international securities activities of UBS Securities.

In January 1988, he returned to London where he became responsible for the worldwide co-ordination of research for the UBS investment banking operation. In September 1988, he became Vice Chairman of UBS Phillips & Drew Securities Ltd, renamed UBS Limited in 1993, initially responsible for all equity and equity-linked secondary activities in London and later, from 1996, responsible for all equity business in Europe, Africa and the Middle Near East. In 1994, with the formation of the Global Equity Management Committee of which Sants was a founding member, he also took collective responsibility for UBS's worldwide equity operations. In December 1997 he became Global Head of Equities but continued to retain direct responsibility for the European product. From 1998 he was also on the Executive Management Committee for all UBS wholesale activities in Europe.

In March 1998, as a result of the merger with Swiss Bank Corporation he became Joint Head of European Equities at Warburg Dillon Read.
[edit] DLJ and CSFB

Sants left in July 1998 to join Donaldson, Lufkin & Jenrette. At DLJ he was Global Head of International (non-US) Equities and Chairman of Donaldson, Lufkin & Jenrette International Securities Ltd.

In October 2000 DLJ merged with Credit Suisse First Boston and Sants became a Vice Chairman with responsibility for the equity businesses outside of the USA. In November 2001 he became Chief Executive officer for the European, Middle East and Africa region and joined the Executive Board and the Operating Committee of Credit Suisse First Boston.
[edit] FSA

In May 2004 Sants joined the Financial Services Authority as the Managing Director responsible for Wholesale and Institutional Markets.[1]. He was appointed FSA Chief Executive in July 2007.[2] In February 2010, it was announced that he would resign in the summer of that year.[3] This may have been motivated by the announcement by the UK Conservative Party that they will abolish the FSA. [4]
[edit] Other appointments

Concurrently with his main career, Sants has held non-executive directorships at organisations including the Securities and Futures Authority (no longer extant as such), the London Stock Exchange and LCH.Clearnet. He has also served on the Practitioners Panel of the FSA, the Securities and Investments Board, the initial committee to start up CREST, the Financial Law Panel, the Practitioner Investment Advisory Committee to the Public Trustee Office and the LIBA Chairman's Committee.
[edit] Criticisms

Sants was criticised in October 2008 over his renovation of a Victorian house, costing him a reputed £3 million, which included a lift, a subterranean indoor swimming pool, a gym, electronic gates, six bedrooms, and nine bathrooms. When the planning application was made, the chairman of the Victorian Group of the local Architectural and Historical Society, Peter Howell said "The application proposes to use the original house as the shell for an extravagant and vulgar new one". Sants claims he and his wife were saving a house "which was wrecked". [5]

John McFall, Chairman of the House of Commons Treasury Select Committee, after Sants had been called before it to answer questions on the work of the FSA in 2007-2008, commented "Your long answers are not helping us." (At the end of the hearing, however, he added "you did very well".) [6]
[edit] References

   1. ^ Hector Sants: Smooth Christian banker turned watchdog, The Guardian
   2. ^ Biography, FSA website, retrieved on 12 February 2010
   3. ^ Statement of 9 February 2010, FSA website, retrieved on 12 February 2010
   4. ^ Why Sants' exit is embarrassing for the Tories BBC website, Peston's Picks, 9 February 2010, retrieved on 12 February 2010
   5. ^ Finance watchdog chief splashes £3m on 'vulgar' home renovations, The Daily Mail, retrieved on 15 January 2009
   6. ^ Transcript of meeting 15 December 2008, UK Parliament publications website, retrieved on 15 January 2009

http://www.guardian.co.uk/business/2005/dec/16/1

Hector Sants: Smooth Christian banker turned watchdog

After nearly 30 years at the sharp end in the City, this wealthy operator sees regulation as a duty


Like most investment bankers, Hector Sants always said that he would be doing something else by the time he reached 50. Unlike any others, however, he celebrated his 50th birthday yesterday with a full day's work as a senior City watchdog.

While most of his peers tend towards golf and advisory roles by the time they reach their mid-centenary, Sants left the industry 18 months ago to join the Financial Services Authority (FSA) as head of the division overseeing his former banking colleagues. It was a career shift more common on Wall Street, where there is a well-trodden two-way street between big banks and public office. In the City, most wondered why such a wealthy, successful man would do such a thing.

Asked now why he did it, Sants talks of a sense of duty and of doing something "good" after almost 30 years in the City. After his appointment last year, he wrote: "As a Christian, I feel strongly that in the latter part of one's career, it is important to give back to the community."

He is less keen to talk about such beliefs now, saying that neither he nor the FSA like to give "personal profiles". He is, however, ready to proselytise. "I would genuinely like to encourage other people to give consideration to making the switch," he says.

Crossover careers such as those common in the US - where a stint in government does a banker's career no harm - are good for all sides, he says. "It's clearly good to have a mix of backgrounds and it's good to encourage the idea that people can move around between industry and regulator. That's something I'd like to see more of."

Since arriving, Sants has used his knowledge of the industry to tackle some thorny issues. These have included the many ways conflicts of interests affect the integrity of markets, such as how banks sell their research to fund management clients.

Insider trading and market abuse have been top of his hit list and this summer, he turned to the notoriously secretive but increasingly powerful hedge fund industry with a report outlining the industry's potential for wrongdoing. Hedge funds, which account for up to half of the daily turnover of the London stock exchange, are subject to the lightest regulatory touch. The results of the FSA "discussion" with the industry, which will be published early next year, is expected to add a firmer grip.

"What we've been suggesting is that they should be giving a bit more information to us in order to enable us to more effectively organise our supervisory engagement with them," says Sants.

Market abuse

An alumnus of Clifton College, a leading private school, and Oxford University, Sants is invariably described as smooth by anyone who has had dealings with him. He is at pains to point out that the hedge fund review does not suggest guilt. "We have identified various risks ... They may be prone to committing market abuse. But just because they are prone, does not necessarily mean that they were."

Having decided that the hedge fund market did not pose a "significant systemic threat" in the summer, Sants has decided to monitor the industry every six months. "We weren't seeking to particularly single out hedge funds," he says. "There are other market participants who could be seen as prone to market abuse." He does not name them.

Besides, the "external threats" from natural disasters or terrorism, the subject of a review published this week, are of greater concern, he adds.

Sants has introduced a more "pro-active" approach to regulation and he "expects to see the number of market-abuse sentences increasing". This is partly because he has redirected resources to deal with such problems. One piece of software designed to measure trading patterns more accurately - codenamed Sabre by an organisation keen not to be seen as a toothless watchdog - is expected to cost more than £10m.

His first successful court case came earlier this year when the former executive chairman at the call-centre software firm AIT became the first boss in Britain to be jailed for publishing a misleading statement to the stock exchange.

It would also be wrong to paint him as a sabre-rattling regulator. While admitting that "we wouldn't want the marketplace to think we were a soft touch", Sants firmly believes in the sort of regulation typical of British institutions: one based on principle rather than prescription. "We will bring criminal proceedings when the offence warrants it but our principal objective is to achieve effective deterrence," he says.

He also lauds the sort of negotiated settlement that saw Citigroup, one of the world's biggest banking groups, fined almost £14m for failure to control its bond business.

Described as the "brains behind the FSA" in an annual list of the 100 most powerful financiers in the UK, Sants often debates or rephrases questions before answering them. Ask him what he learnt from his time in the City and he says: "What I can say and what you're sort of asking is: did I come with an agenda? I did have an understanding of what the City was looking for in terms of having a well-run regulator."

This "understanding" was that City types, who are "decent people seeking to do the right thing" want a "firm and decisive" regulator ready to crack down on market abuse and ensure a fair market. This came after years when the FSA was criticised for its ever-increasing costs and ever-decreasing effectiveness. "Historically, the FSA wasn't as effective as it should be," admits Sants.

Sants has a loyal following among his own staff and arrived at the FSA with a reputation as one of the City's foremost bankers, yet few will talk openly about him, citing his power as a regulator.

Conflicts of interest

Sants is also unable to speak specifically about individual banks, even historically. This is a shame, as his stellar career did see two awkward phases, neither of which he is keen to talk about.

The first occurred some 15 years ago. Sants was a member of UBS's senior management when the bank sacked and sued its head of research, Terry Smith, over a book in which he questioned accounting techniques used to boost financial statements. Some of the companies cited were UBS clients.

Sants is now responsible for monitoring such potential conflicts of interest and is seen an advocate of transparency. Yet he blushes when asked to talk about the link and refuses to do so. Eventually, he says, "The only thing I would say, as a former analyst, is that the piece of research was an excellent one."

He is only slightly less constrained talking about his last job. During his four years as vice-chairman of CSFB, the bank paid out millions of pounds in regulatory fines. To be fair, all of the headline-grabbing problems - such as its fine for attempting to mislead the Japanese regulatory authorities or the fuss over the "Flaming Ferraris" - occurred before he arrived.

When pushed, Sants laughs and admits his role in "concluding a number of historic cases with the regulator" gave him a "practical understanding of what it's like to be in a firm that's in the enforcement process".

Partnerships is Sants's key word when discussing the City. He readily admits this is self-serving. Abuse is more likely to be first noticed by firms themselves and the FSA relies on their staff and systems to do so. "It is not realistically possible for us to be successful in our deterrent objectives if [we are] solely reliant on our own resources."

Several times, Sants says he is "optimistic" that he will set a trend for greater movement between industry and regulator. In spite of his long-term game plan to leave the industry, the youthful-looking Sants does not rule out a return to the industry before the age of 60, though it is unlikely to be full time.

He is unlikely to still be at the FSA in 10 years' time, he says, but refuses to say what he might be doing instead: "Being an old trader, I'd like to hedge my bets."

Sants on Sants

What are your tips for the top?

Be lucky

What job would you be doing if not this one?

My family would probably like me to stay at home

What have been your best and worst decisions?

My best decision was, of course, to join the FSA. The worst is the length of my commute (from Oxford to Canary Wharf)

What is the most important thing you have learnt?

Keep learning and make sure your colleagues are willing to learn too

[CrackSmokeRepublican]

That's a tip of the spear in the heart of the Global crime network... Repo 105 is a dead ringer for the ages... pathetic to see these Canary Wharf crimesters like Sants just doing it without a blush of rectitude....  indeed huge like a massive well roped noose!!! Smells like cryto-J.S. to me.

"As a Christian, I feel strongly that in the latter part of one's career, it is important to give back to the community."

He is less keen to talk about such beliefs now, saying that neither he nor the FSA like to give "personal profiles". He is, however, ready to proselytise. "I would genuinely like to encourage other people to give consideration to making the switch," he says.

[mgt23]

am looking at Hector Sants now. We need to find out if he is a christian zionist of a crypto jew.........they could be controlling both sides of the investigation across the atlantic.