From the February 01, 2010 issue of Futures Magazine • Subscribe!

Tops & bottoms of 2009

Signs Of The Times

• Sausage making: Proposed regulatory changes in the futures industry kept coming and coming in 2009. Countless bills regulating over-the-counter (OTC) derivatives were bandied about the House and Senate. After his swearing in as CFTC chairman on May 26, Gary Gensler testified before the House and Senate seven times from June through October. On Dec. 11, the House passed the Wall Street Reform and Consumer Protection Act of 2009, which calls for all standardized swap transactions between dealers and major swap participants to be cleared and traded on an exchange or electronic platform. Regulatory reform is sure to be a major issue for the futures industry in 2010.

• BYOB or move down under: The number of firms holding holiday parties in 2009 dropped to 62% from 77% in 2008 and 90% in 2007 according to a survey from Challenger, Gray and Christmas Inc. Conversely, Reuters cites a IBIS World forecast that the number of Australian companies that will have holiday parties will increase to 92% in 2009 from 67% in 2008. The survey expects Australian companies to spend 560 million Aussie dollars, an increase of 76%, on year-end events.

• Ph.D. in financial journalism: Former Lehman executive Lennie Fuller is considering creating a Ph.D. track for financial journalism at the University of Stirling in Scotland, according to Felix Salmon’s blog. Fuller is a qualified Scottish chartered accountant. We don’t know what role he played in Lehman’s troubles, if any, but it seems they had a whole bunch of people with the proper certification, as did all of the investment banks.

• How the mighty… Richard Rubin, an economic stalwart of the Clinton Administration and exalted Goldman Sachs alum, left Citigroup, which received more bailout money than any other existing investment bank, with a diminished reputation.

• Clean energy?: In November, Netherlands-based power company Essent announced the opening of the Eco Zather power plant. The fancy name belies that it will power homes through fermenting cow manure from nearby farms.

Rogues

Bernie Madoff was sentenced to 150 years in prison in June for operating the biggest Ponzi scheme (not including the Federal Reserve) ever. No word on any sentence for the regulators who failed to do anything about it, despite being handed a detailed analysis of the fraud a decade earlier.

Former Merrill Lynch CEO John Thain managed to redecorate his office, including an $87K area rug, and pass out $5.8 billion in bonuses to Merrill executives in 2008 before handing over the reins of Merrill to BofA CEO Ken Lewis. Lewis showed Thain — who could win the title of all-time clueless greedy corporate executive — the door in 2009.

Lewis would leave as well after he acknowledged he was bullied by the Fed and Treasury to close the Merrill deal despite revelations of fourth quarter losses that were not shared with shareholders.

In early 2009, deaf people became the latest victims of financial fraudsters. In February, CNBC reported that the SEC stopped an alleged Ponzi scheme by Billions Coupons, a firm in Hawaii that raised more than $4.4 million from deaf investors. Billions Coupons reportedly raised the cash by holding investment seminars for investors who were deaf, and then the firm’s CEO pocketed the profits.

Our biggest rogues, once again, are the political leaders who failed to protect us from those gaming the system. They are the ones that removed depression era regs, and the ones who signed off on the bailouts without the sense of making sure any profits derived from our generosity be returned to us.

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