XIAM007 - Making Unique Observations in a Very Cluttered World: 05/09/10

Sunday, 9 May 2010

Moody's Says It Received Wells Notice From SEC - facing an enforcement action for its role in the financial crisis -

One of the nation's largest credit rating agencies—which has come under fire for its role in the financial crisis—says it is facing an enforcement action by the Securities and Exchange Commission.

Moody's Investors Service, one of only 10 so-called "Nationally Recognized Statistical Rating Organizations" or NRSRO's, disclosed in a quarterly SEC filing Friday night that the SEC is considering instituting "cease and desist" proceedings in connection with the firm's initial 2007 application for NRSRO status. The filing does not say what the consequences of such an action would be, but the NRSRO designation is crucial.

The NRSROs, which include Moody's [MCO 23.36

-0.18 (-0.76%)

], Standard and Poor's and Fitch among others, have been criticized for their overly positive ratings on what turned out to be toxic mortgage-backed securities during the housing boom.

In its filing, Moody's says it received a so-called Wells Notice from the SEC on March 18, saying the SEC staff is considering recommending "administrative cease-and-desist proceedings" against the firm in connection with its initial 2007 application for NRSRO status.

At issue, according to the Moody's filing, is the company's determination in 2007 that members of one of its European rating committees "engaged in conduct contrary to Moody's Code of Professional Conduct."

The filing does not say what the committee members did, but says the SEC believes the fact that the employees engaged in it is proof Moody's NRSRO application is false and misleading.

In its filing, Moody's says it disagrees with the SEC's position, and says the application was accurate. And, the filing says, Moody's believes the enforcement action is unwarranted.

White House's says there is no evidence that a cyber attack was behind the chaos that shook Wall Street last Thursday -

The White House's homeland security and counterterrorism adviser says there is no evidence that a cyber attack was behind the chaos that shook Wall Street last Thursday.

John Brennan told "Fox News Sunday" that they have uncovered no links to cyber attacks in examining the causes of the turbulence that sent Dow Jones industrials plunging almost 1,000 points before staging a partial recovery at the end of the day.
The market was already weak because of the Greek financial crisis. Beyond that, there was speculation that a typographical error might have triggered the massive computerized sell-off.

Read more -http://www.washingtonpost.com/wp-dyn/content/article/2010/05/09/AR2010050901238.html

Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February -

Nearly 40 million Americans received food stamps -- the latest in an ever-higher string of record enrollment that dates from December 2008 and the U.S. recession, according to a government update.

Food stamps are the primary federal anti-hunger program, helping poor people buy food. Enrollment is highest during times of economic distress. The jobless rate was 9.9 percent, the government said on Friday.

The Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January. USDA updated its figures on Wednesday.

"This is the highest share of the U.S. population on SNAP/food stamps," said the anti-hunger group Food Research and Action Center, using the new name for food stamps, Supplemental Nutrition Assistance Program (SNAP). "Research suggests that one in three eligible people are not receiving ... benefits."

Enrollment has set a record each month since reaching 31.78 million in December 2008. USDA estimates enrollment will average 40.5 million people this fiscal year, which ends Sept 30, at a cost of up to $59 billion. For fiscal 2011, average enrollment is forecast for 43.3 million people.

CME Issues Press Release, Confirms No Fat Finger - for a more than 900 point drop in the Dow on Thursday -

CME Group has issued a statement following rumors that erroneous or irregular trades by Citigroup Global Markets Inc may have been the cause for a more than 900 point drop in the Dow Jones Industrial Average during mid-day trading on Thursday:

“While our policy is not to comment on individual participation in our markets, in light of volatile market conditions, CME Group confirmed that activity by Citigroup Global Markets Inc. in CME Group stock index futures markets does not appear to be irregular or unusual in light of market activity today.”

"CME Group markets functioned properly yesterday despite significant market activity due to global macroeconomic conditions and apparent problems that resulted in the cancellation or 'busting' of securities transactions by The NASDAQ Stock Market and the NYSE Arca in coordination with all other UTP Exchanges.
Upon review of yesterday's trading activity in CME Group markets, we have concluded that we did not experience technology or systems issues associated with trading activity between 1:00 and 2:00 p.m. CST. Additionally, it does not appear that CME Group clearing firms or customers experienced any significant technological failures or trading errors during this timeframe.
Finally, CME Clearing participants have not experienced any difficulties as a result of market events yesterday and all clearing members remain in good standing having met all financial obligations to the CME Clearing House.
CME Group continues to actively monitor market participants' trading and clearing activity on the CME Group exchanges and to share information with our regulator, the Commodity Futures Trading Commission - which, in turn coordinates with other Federal agencies.
CME Group has developed and maintains industry-leading trading, credit and risk monitoring controls on the CME Globex platform. For more information on these controls please visit here:http://www.cmegroup.com/market-regulation/rulebook/index.html."
As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.
The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex, E-mini and CME ClearPort are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. NYMEX and New York Mercantile Exchange are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.
CME-G
SOURCE CME Group