The signs of a fraud are beginning to emerge. It is not uncommon for a company to suffer a large-scale loss due to a trader's mistake.
Some of these cases are caused by operational errors, while others are caused by concealing the losses from the headquarters. In order to make up for the losses, they use various means to secretly embezzle funds for larger and larger speculation.
For example, the Societe Generale case, one of the largest fraud cases to date, which will be discovered in January next year, caused the bank to lose 4.9 billion euros (equivalent to 7.1 billion U.S. dollars). The reason is just because of the illegal operation of a trader.
Well, this thing is likely happening.
Starting in 2007, 31-year-old futures trader Jerome Kerviel expected European stock markets to rise and invested a huge amount of money in trading that exceeded his personal authorization license.
Of course, everyone knows what he will encounter next...so naturally, his behavior caused huge losses.
After the losses occurred, he covered them up by modifying the bank's computer system data.
Finally, Societe Generale discovered this fraud in January 2008.
In the end, his operations brought huge losses to Societe Generale.
This incident clearly shows that there are huge loopholes in the internal management of Industrial Bank, and Barron certainly does not want such a thing to happen in his own company.
In fact, compared with most investment banks, the proportion of DS Group's fund's "investment on behalf of customers" business is extremely small, and most of the funds are based on the investment direction instructed by Barron.
Of course, some traders also have a certain amount of funds and can invest according to their own analysis results, but the proportion in the overall fund scale is not high.
Even so, as the scale of DS Group's funds increases greatly, there will be hidden dangers, and DS Group has not been established for a long time, and the corresponding risk management also needs to be improved.
...
On February 13, 2007, New Century Financial Corporation issued a profit warning for the fourth quarter.
New Century Financial Corporation is the second largest subprime loan company in the United States. It turned out that since the end of 2006, a large number of New Century Financial Corporation's customers began to default on loans...
And their mortgage loan source-Wall Street capital, after discovering this, forced New Century Financial Corporation to recover the subprime loans corresponding to the relevant subprime bonds.
Unlike commercial banks such as Citigroup and Goldman Sachs, New Century Financial Corporation does not have the ability to absorb deposits. The money it uses to issue mortgages to customers is obtained from Wall Street financing.
As mentioned before, they used to issue subprime mortgages and then sold them to Wall Street investment banks, which "made" them into subprime bonds. After collecting the funds, they continued to lend... and so on.
Now New Century Financial Corporation cannot sell its subprime mortgages and has stopped lending. It has no income and needs to repay debts, so they suffered a huge loss in the fourth quarter of 2006, almost eating up the profits of the whole year of 2006.
The next day, New Century Financial Corporation's stock fell 36%, and at the same time, the subprime loan index ABX fell 5 points.
The market felt the chill of subprime loans for the first time.
You know, the CDS held by the Black Swan Fund and the short-selling assets on CDO and ABX indexes now exceed 150 billion US dollars!
A 5% drop in the subprime loan index ABX means that the Black Swan Fund has made more than 7.5 billion US dollars in the morning!
So scary!
As mentioned earlier, subprime mortgage bonds CDO are often packaged by Wall Street investment banks as high-quality "investment products" with A ratings.
Initially, during the sale of mortgage bonds, there were always some high-risk bonds with the lowest ratings that could not be sold. Investment banks did not want to hold these high-risk bonds, so they repackaged these high-risk bonds and a small number of safe bonds to form a new investment product, which is the collateralized debt obligation CDO - it packages a large number of B-rated junk bonds into 3A-rated gold.
After the first packaging, the CDO will also have a 3A to B rating, so the investment banks packaged it a second time, and packaged the 3A and B-rated bonds of CDO into the quadratic of CDO for sale. After this cycle, not only CDO but also CDO to the Nth power are circulating in the market.
A large number of B-rated bonds have been packaged again and again and packaged as gold for sale, but their essence is actually garbage. In 2006, Merrill Lynch sold CDOs to the world. They charged 1%-1.5% for each CDO, and collected a total of $700 million in commissions. Other investment banks followed suit.
At the end of 2006, there were $1.2 trillion in subprime loans on the market, and $5 trillion in CDOs were born on top of them!
Soon, subprime loans were not enough for CDOs, so investment banks created synthetic CDOs. They turned the cash flow from CDS sold to short sellers such as the Black Swan Fund and Paulson Hedge Fund into CDOs, which became the mainstream of CDOs at the end of 2006.
Therefore, in fact, the strong participation of the Black Swan Fund has increased the continued "prosperity" of CDOs.
The rating agencies' fraudulent bond ratings, the research institutions' fraudulent real estate data, and the CDO investment frenzy have together concealed the decline of the real estate market, so that the already rising default rate has not attracted much attention.
This is good news for short sellers such as the Black Swan Fund - the market has been holding up the residual heat of the real estate market, making CDS very cheap.
This also helps the Black Swan Fund to increase its short-selling operations on all financial products that can be shorted, such as subprime mortgage bonds, ABX index, CDO, synthetic CDO, etc.
It allows them to successfully ambush all the chips for short-selling when the real estate market reaches the top.
...
"Thank you very much, Barron, I owe you a favor."
"Your Highness, we are friends, and this is what I should do."
After spending Valentine's Day with his wife Bonnie, Barron met the Duke of Westminster.
As soon as they met, he expressed his gratitude to Barron.
The whole story is that a reporter dug up the Duke of Westminster's explosive material - he found that he had solicited prostitutes four times in six months starting from December 28 last year.
And the specific time when he performed these behaviors, as well as the photos of the girls entering and leaving the Duke of Westminster's house, were all mastered by the other party...
They even interviewed two of the girls - according to them, the Duke of Westminster also revealed his name and position to the girls.
After discovering this, Barron privately "reconciled" with the reporter, paid for the photos and materials in his hands, and got the promise from the reporter not to make the matter public.
It can be imagined that after knowing these things, the Duke of Westminster was full of fear. Once this matter was made public, as the Deputy Chief of Staff, at the time when the Iraq War was controversial, it would definitely bring him big trouble.
Indeed, in Barron's previous life, this matter made a big fuss. Under the reports and public opinion, the Duke of Westminster at that time also suffered from mental illness, which also led to his later death to a certain extent.
In addition, it is worth mentioning that the reporter who followed this scandal this time came from the News of the World.
It was also an "accidental gain" when Barron sent people to "pay attention" to the other party's movements.
Of course, because Barron detonated the expansion of the "wiretapping gate" incident of News Corporation in advance, it is not ruled out that the other party will use this to try to use the Duke of Westminster for public relations, but now all this has been strangled by Barron.