Tag Archives: fraud

Big ETF Moves on Goldman News

Exciting day on Wall Street as the Securities and Exchange Commission sends a shot across the bow of Goldman Sachs.

The stock market started out mildly higher, when midmorning, the SEC charged Wall Street’s most influential bank with fraud over its marketing of a subprime mortgage product designed to fail. The SEC says a Goldman vice president was also charged with fraud for his responsibility for creating the questionable mortgage product, known as ABACUS. Surprisingly, criminal charges were not filed.

However, this makes many question whether the bull run of the last year is over.

According to Reuters, the SEC alleged that Goldman structured and marketed ABACUS, a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities. However, Goldman allegedly didn’t tell investors “vital information” about ABACUS, including that the hedge fund Paulson & Co helped choose the securities in the portfolio. Run by John Paulson, the hedge fund made billions of dollars betting that the housing market would crash. The SEC also alleged that Paulson took a short position against the CDO in a bet that its value would fall, reported Reuters. “This included an estimated $1 billion from the transaction detailed in the SEC lawsuit, which the agency said cost other investors more than $1 billion,” said Reuters.

Many people on Wall Street have said this is a politically motivated moved as Congress begins debating reform of financial industry regulation.

Goldman denied the charges. Its stock fell $23.57, or 12.8%, to $160.70, and it brought down the entire market with the Dow Jones Industrial Average losing 126 points, or 1.1% to 11018.66. The S&P 500 dropped 19.5 points, or 1.6%, to 1192.13.

Obviously, this means a lot of movement among ETFs.

The Direxion Daily Financial Bear 3x (FAZ) jumped $1.14, or 10.3%, to $12.18, posting the third-largest volume of the market gainers, 209.7 million shares.

ProShares UltraShort S&P 500 (SDS) gained 94 cents, or 3.3%, to $29.72.

ProShares UltraShort Financials (SKF) jumped $1.15, or 6.8%, to $18.11.

The Financials Select Sector SPDR (XLF) fell 62 cents, or 3.7%, to $16.36.

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Protection Against Identity Theft

This isn’t ETF news, but it is related to personal finance and another one of my areas of extreme interest: identity theft and privacy of personal information. Just got an email from my lawyer recommending people follow these ideas.

We’ve all heard horror stories about fraud committed after the theft of a name, address, credit cards or social security number. Once a thief has these numbers it’s easy for him to apply for new credit cards, get a cell phone service contract and cause other trouble that will cost your many hours and dollars to fix. I’ve been following most for a while, but it’s nice to have them written down all in one place.

1. Do not sign the back of your credit cards. Instead, put “PHOTO ID REQUIRED.”

2. When writing checks to pay on credit card accounts, DO NOT put the complete account number on the ‘For’ line. Instead, just put the last four numbers. The credit card company knows the rest of the number. Anyone else handling your check as it passes through the processing channels won’t have access to it.

3. NEVER, EVER, have your social security number printed on your personal checks.

4. If you have a post office box, use that as the address on the check. Some people say put your work address and phone number on the check. I say don’t put any phone number on the check. You can always add information with a pen if you have to, and most times you are not required to give it. But if you have information printed, anyone can get it.

5. We’ve been told we should cancel stolen credit cards immediately. But the key is having the card numbers handy and the companies’ toll free numbers so you know whom to call. Keep those where you can find them. Copy the contents of your wallet on a photocopy machine. Do both sides of each license, credit card, etc. If you lose the wallet, you will know what you had in it, all of the account numbers and the phone numbers to call and cancel. Keep the photocopy in a safe place.

6. Carry a photocopy of your passport when you travel.

7. If your wallet or credit cards are stolen, file a police report immediately in the jurisdiction where it occured. This proves to credit providers you were diligent and is the first step toward an investigation.

8. The most important thing to do immediately after the theft of a credit card or Social Security number is to call the three national credit reporting organizations to place a fraud alert on your name. Also call the Social Security fraud line number. The alert means any company that checks your credit knows your information was stolen and they have to contact you by phone to authorize new credit.

Here are the numbers of the three credit agencies. Contact them immediately if you have been the victim of a theft. Also, you are entitled to one free credit report a year from each of them so that you can make sure nothing funny has occurred in your files and to correct any incorrect information. You don’t need to use FreeCreditReport.com. That actually will cost you money.

1.) Equifax: 1-800-525-6285
2.) Experian (formerly TRW): 1-888-397-3742
3.) Trans Union: 1-800-680 7289
4.) Social Security Administration (fraud line): 1-800-269-0271