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Today's Top News1. Bank of America wealth advisor sues for job
Banks have been required by new rules in effect since May 2011 to conduct background checks on all employees, in an effort to ensure people guilty of past crimes are not put in position repeat their offenses. These regulations have produced some interesting results. In one incident, Wells Fargo ended up firing a Des Moines employee because of an event in 1963 when he plugged a cardboard cutout of a dime into a Laundromat. He was convicted of "operating a coin-changing machine by false means." The case drew national attention, as the hundreds of workers who were let go for this reason pressed their case. The man has since refused Wells Fargo offer to reclaim his job. A related case, with a twist, involves a Bank of America wealth advisor. The Houston Chronicle reports that Paul Boudwin was "a successful wealth manager at the bank's Houston office. Last year, he was recognized with the bank's 'Chairman's Club' award, which came with a trip to Philadelphia for training at the University of Pennsylvania's prestigious Wharton School. He was on track for a big bonus." But then a back ground check revealed that 14 years ago, he was arrested with other fellow college students as part of misunderstanding involving a check at Denny's. The charge was later dismissed, but the bank initially tried to fire him. Boudwin submitted court records showing the charges were dismissed, and "bank officials assured him the matter would be sorted out, and the bank even filed for a waiver from the Federal Deposit Insurance Corp. on his behalf, court records show. However, the bank said because of the new rules, Boudwin couldn't continue to work during the six to nine months it might take to get the waiver." The article continues, nothing that "He was put on an unpaid leave of absence, and his Wharton trip was canceled. He was told he would receive his back pay and bonus when he was reinstated, he said. In late February of this year, his boss called. Boudwin thought his ordeal was over and the FDIC had granted the waiver. Instead, his boss told him he was being fired. The bank was tired of waiting, he said his boss told him. Two weeks later, the FDIC granted the waiver, but Bank of America refused to reinstate Boudwin to his old position." He has ended up suing. For more:
Read more about: jobs, Employment
2. Money market funds aims for new rules soon
Recall that back in 2008, the $62.5 billion Reserve Primary Fund essentially failed. It was a seismic event that rocked the staid money-fund industry and triggered a run on the fund by investors. That prompted the government to wisely step in and offer guarantees against default. Can you imagine the fallout in the commercial paper market if the run had been allowed to spread? Fixing the problem was a big goal of regulators and the industry, but unfortunately, we still have not arrived at a solution. Indeed, a plan put forward recently by the SEC, which would have allowed for floating stock prices (not just the time-honored $1) and a requirement for cash reserves, was recently nixed, as the agency couldn't muster enough commissioner votes to pass its new rules. As of late, activity toward a solution has stepped up, as companies like BlackRock rear their heads on the issue. Bloomberg reports that lobbyists from several financial firms and the Investment Company Institute, a big lobby for the mutual fund industry, met recently with SEC and Treasury Department officials "to discuss proposals for a potential compromise, according to a person briefed on the discussions. The plans included temporary withdrawal fees and other redemption restrictions that would be imposed when a money fund is under stress." The proposal was said to be similar to a plan offered recently by BlackRock, "proposing that money funds under some circumstances impose 'stand-by liquidity fees' on investors who withdraw money. Such fees would be triggered only when a fund's liquidity failed to meet existing minimums, or when a fund's mark-to-market share value dipped below a certain level." The danger, from the industry point of view, is that the FSOC will soon grow frustrated by the lack of a solution (especially after the SEC's proposal was shot down) and move to bring the industry under direct supervision by the Fed. For more:
Read more about: money market funds, Lobbyists 3. Businesses activate continuity plans
Most banks are required to develop detailed business continuity plans designed to help them stay up and running in the face of a disaster. While banks frequently stage dry runs, the storm bearing down on New York is no drill. This is the real thing, and banks--and lots of other companies in the region--have activated their plans, according to Bloomberg and other news organizations. Goldman Sachs, headquartered at 200 West St., is in the middle of an evacuation zone. It will be open for business but the bank told many employees to work from home. Other precautions have been taken as well. "Some activities will be shifted to London and other locations around the world, and some employees will work from offices in Greenwich, Connecticut, and Princeton, New Jersey. Staff deemed critical may be called upon to report to offices in Lower Manhattan and Jersey City, New Jersey, according to the (Goldman Sachs) memo," as reported by Bloomberg. Citigroup and other banks have likewise invoked telework plans. Behind the scenes, there's no doubt a massive effort underway to make sure all network and infrastructure redundancy plans are activated in order to keep critical processes (internal networks and public networks) up and running, even if some systems are knocked off line Vanguard Group says its may activate its "Swiss Army" contingency telephone force, a group of employees who are trained to handle client inquiries and transactions in such situations. The DTCC remains confident that its continuity plans will prove up to the task. Some companies not in the primary evacuation zone are telling employees to use their discretion. For more:
Read more about: Business Continuity, Disasters 4. Markets close for first time in 27 years
For the first time in 27 years, the financial markets will close due to weather. Hurricane Sandy, which will usher in a perfect storm of sorts, is heading straight toward the country's financial center and will likely wreak havoc. The industry has little to gain from staying open. The initial decision by NYSE Euronext was to shut its floor but allow ARCA to remain open, which would have been a nice way to underscore its electronic trading capabilities. But in the end, that minor victory likely would not have been worth the costs, when the storm looms so epic. All the equities markets will close, including the NYSE, Nasdaq, Direct Edge and BATS. Some dealers may be open for electronic bond trading market for about half the day on Monday, but my guess is that many will decide to shut down in accord with regulator guidance as the brunt of storm appears in full. What's going on now is real-time execution of the business continuity plans that all banks have in place. Banks have planned meticulously for what to do in the face of certain threats and disasters to maintain viability, and those plans have been activated. The New York Federal Reserve has scheduled conference calls for early Monday to see what each dealer is doing to cope with the storm, and will modify its plans accordingly, according to CNBC. Depending on the storm's strength, the markets may be shut down Tuesday as well. For those who are curious, the last time weather forced a shutdown of the main stock exchange was in 1985, when Hurricane Gloria blew through. For more: Read more about: Business Continuity, Disasters 5. Markets to stay closed on Tuesday
As of lunchtime on Monday, the full brunt of super-storm Sandy had still not been felt in New York City. The Southern tip of Manhattan, however, offered some foreboding signs of what's to come, as the storm continued to bear down on the region. Elsewhere on the Eastern seaboard, an eerie calm had settled in, as people hunkered down in telecommute mode, waiting for the really high winds to attack. The storm's full attack is no doubt on the way, and the officials yesterday afternoon confirmed that they New York is that the markets will likely remain closed for a second day in a row. As for the bond markets, Sifma has suggested that the most likely scenario is for the market to remain closed as well. Several companies have been forced to postpone earnings announcements, notes the AP. For more: Related articles: Read more about: Business Continuity Also NotedSPOTLIGHT ON... Decisions lead to lost tech fortunes Joe Green was a dorm-mate and hacking buddy of Mark Zuckerberg when they were in college, but Green's dad advised against working with Zuckerberg on Facebook, meaning that he lost out on a stake in the company that would have been worth at least $3 billion today, reports Bloomberg. This recalls the story of Ron Wayne, Apple's forgotten founder. He was in fact the third founder of Apple, along with Steve Jobs and Steve Wozniak. He held a 10 percent stake that would be worth $22 billion today, but he bailed out after just 10 days, according to the San Jose Mercury News, because he was the only "adult" among the three and didn't want to held financially liable for the shenanigans of the other two. He now lives a simple life in Nevada. Company News:
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Tuesday, October 30, 2012
| 10.30.12 | Bank of America wealth advisor sues for job
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