Tell It To Al

The top former executives of the world’s largest pension fund were arrested for fraud last week.

The California Public Employees’ Retirement System’s former CEO Federico Buenrostro Jr. and former board member Alfred J. Villalobos deny wrongdoing. They ended up with a firm that placed Calper’s money with private equity funds. Prosecutors allege they forged the disclosure documents required to do this.

The pension fund realm has been plagued with allegations that money flows to those managers who “pay to play.” In December, for instance, Alan Hevesi , the trustee of New York state’s pension fund completed his prison sentence. He stepped down in 2006 and later admitted he took about $1 million in benefits from a Los-Angeles money manager who got $250 million from the fund to invest. New York’s pension fund is the nation’s third-largest with $150 billion in assets.

Click here to read my column on Calpers in The Sunday Wall Street Journal. And click here to watch me talk about it with Will Ripley of Denver’s NBC affiliate, 9News.

Whenever you lose more than $6 billion, it’s good to have a mascot to blame it on.

For JP Morgan Chase, that mascot is the London Whale.

The real name of the so-called London Whale, Bruno Iskil, is not important. It’s difficult, in fact, to even remember the name of Bruno Iskil, a credit derivatives trader. It’s catchier to just say, the London Whale did it. And that’s pretty much how the JP Morgan trading debacle story has run since last year when these massive trading losses became known.

This week, a Senate subcommittee came out with a damning, 300-page report, concluded that the nation’s biggest bank ignored risks, misled investors, battled regulators and danced around the rules as its iconic whale spouted losses.

Senators, being senators, are using this case as an example of why banks need more regulation.

“The JPMorgan Chase whale trades provide another warning signal about the ongoing need to tighten oversight of banks’ derivative trading activities,” the Senate report said.

JPMorgan Chase, however, has portrayed it as a horrible mistake. The bank more or less just got taken by a whale.

The former head of the bank’s Chief Investment Office Ina Drew blamed underlings when she went before the Senate panel today. It’s difficult, however, to imagine how underlings can trade away billions of dollars without anyone at the top noticing.

Republican Senator John McCain of Arizona said it best: “The traders seemed to have more responsibility and authority than the higher-up executives.”

Yes, Senator, but one of them was a whale, the largest mammal on the planet.

Click here to read the Senate report. And click here to read more about the hearing from Reuters.

And who is really to blame? Looks like the blame starts all the way at the top. Click here to read about the email that links CEO Jamie Dimon to the fiasco.

Sometimes you read about octogenarians climbing mountains, running marathons,  and doing remarkable things that some people in their 20s can’t even do.

Hank Greenberg is one of those guys. At 87, he’s suing the federal government for $55 billion.

He doesn’t like the terms of the bailout his former company, American International Group, received from the federal government. He’s laid it all out in a class-action lawsuit before the Court of Federal Claims.

Click here to read my column on MarketWatch.

People sometimes ask me why I’m so mistrusting of leaders and authority figures.

I tell them it’s because I grew up in Illinois.

This week, the state settled securities fraud allegations with the Securities and Exchange Commission. The regulator alleged Illinois did not disclose to bond investors that it wasn’t sufficiently funding its pension plans.

In a state where four previous governors have been sent to prison, who can expect complete disclosures on a bond statement?

Meantime, Illinois’ pension shorfalls – totaling $97 billion – are well-known. Last year, Gov. Pat Quinn even rolled out a mascot, Squeezy the Pension Python, to generate more awareness of the problem.

Click here to read my column on MarketWatch.com

If the makers of Budweiser are watering down their beer as alleged in a slew of federal lawsuits, at least the Budweiser Frogs will be happy.

It all makes sense now. Frogs love water.

Anheuser-Busch denies that it has ever watered down its fine malt beverages, and it has taken out full-page ads in newspapers to counter the charges.

Click here to read my column on MarketWatch.

It was a tough week for J.C. Penney CEO Ron Johnson.

First, he delivered the bad news: $985 million in losses and shrinking sales for 2012, his first full year as CEO of the struggling retailer.

Then on Friday he took the witness stand in lawsuits that competitor Macy’s filed against J.C. Penney and Martha Stewart Living Omnimedia. Macy’s claims Mr. Johnson and Ms. Stewart have violated a contract it has to sell Martha Stewart-branded products, exclusively.

Mr. Johnson has included Ms. Stewart’s products in his larger strategy of putting boutique stores within his stores. So far, it doesn’t seem to be working out.

Click here to read my column in The Sunday Wall Street Journal. And click here to watch me talk about this and other subjects with Will Ripley of Denver’s NBC affiliate, 9News.

It’s been difficult to see how Mr. Johnson’s strategy would ever work out. Click here to read what I wrote about it last year.

RadioShack is learning an expensive lesson: You can’t fire people just for being old.

David Nelson, a RadioShack regional manager, got his walking papers in 2008. He says his firing came just after his boss made a derogatory remark about his age.

I wrote about Mr. Nelson in September after he won $187,000 in backpay from RadioShack in a lawsuit filed by the Equal Employment Opportunity Commission. The lawsuit allege age discrimination and retaliation. This week, a federal court awarded Mr. Nelson additional consideration – upping the judgment to $675,000.

“We are heartened that the jury saw RadioShack’s retaliatory behavior for what it was,” said EEOC attorney William Moench.

RadioShack has not commented on the case and has said it might consider an appeal.

The Great Recession has led to a lot of firings. Last year, the EEOC said it received 37,826 charges alleging retaliation and discrimination, the most it’s received in its history.

Click here to read the column I wrote about the case in September.

Click here to read more about the case from the EEOC.

If you can get away with securities fraud for five years, you are home free.

The Supreme Court ruled today that the U.S. Securities and Exchange Commission only has five years from the commission of the alleged fraud to sue. It can’t discover an alleged fraud five years after the fact and then sue.

Click here to read more from the Associated Press.

Securities fraud is a complicated offense – whether it’s the ol’ pump and dump, insider trading, or your basic failure to disclose material facts – and perpetrators hide in that complexity. The SEC, which is understaffed and overloaded with securities fraud cases already, can count this as an additional challenge.

You can bet that somewhere out there are fraudsters breathing signs of relief.

Usually, it’s pretty funny when people take popular songs and write their own lyrics to them, satirizing events in the news.

But a song by an analyst at Standard & Poor’s – revealed in court documents in the government’s lawsuit against the ratings agency- isn’t funny at all.

It makes it look like the analysts who mis-rated mortgage backed securities  did bad securities analysis, wrote bad songs about it, and fiddled while an economy burned.

Click here to read my column on MarketWatch. And click here to watch me talk about with Will Ripley of Denver’s NBC affiliate 9News.

I would love to see more inanimate objects plead guilty to felonies – not just companies.

BP’s guilty plea, accepted by a judge on Tuesday, is just a start. Click here to read more about it. The company is a convicted criminal. Its top executives are not.

Clearly, justice does not go far enough. Why not charge the oil rig, itself, for blowing up? Why not file a criminal complaint against the water for letting oil get in it? And to take it a step further, to slightly more sentient objects, what about those fish? Why did they have to swim into the oil like that?

The legal doctrine of charging things – like corporations – should be expanded to rocks and trees as well. Plenty of rocks and trees that ended up in the way of drunk drivers were complacent in those crimes.

“Whiskey bottles, and brand new cars. Oak tree you’re in my way.” That’s how Lynyrd Skynyrd put it oh so many years ago. Why has nothing been done?

I love justice. Don’t you? Especially when only things are involved in the crimes.