From the February 2013 issue of Futures Magazine • Subscribe!

Tops & bottoms of 2012


SuperStorm Sandy: For the second year in a row a huge tropical storm targeted the Northeast. This year it wouldn’t miss, causing hundreds of billions of dollars in damages and creating one of the strangest photo ops of the year as New Jersey Gov. Chris Christie embraced and praised President Obama for his quick response. 

Sanctity of customer-segregated funds shattered: With the futures industry still reeling from the MF Global debacle, it was revealed in July that Peregrine Financial Group founder Russ Wasendorf had been embezzling customer money for more than 20 years after he failed an attempt at suicide.

U.S. drought: The Midwest experienced one of its worst droughts in decades, spurring huge rallies in the grain complex but wreaking havoc on the Midwest region, including low water levels on the Mississippi River that are affecting traffic.

Libor scandal: In June, Barclays Bank agreed to pay $466 million (£290 million) to numerous U.S. and U.K. regulators after admitting that some of its traders had manipulated the key Libor interest rate benchmark that underpins trillions of dollars of loans around the globe. Worse yet, we learned that Barclays was not a unique case, just the first to acknowledge its crime. In December UBS agreed to a $1.5 billion fine related to its manipulation of Libor and more fines are expected. However, no one to date has been criminally prosecuted for manipulating the benchmark that sets global interest rates.

Regulatory enforcement: A year ago we praised U.S. District Judge Jed Rakoff for refusing to rubber stamp enforcement agreements that allow large banks to simply pay a fine and not acknowledge any wrongdoing in cases that include substantial charges of fraud. While there are numerous cases that we list here, the overwhelming theme appears to be if you are large enough and wealthy enough, you can pay a fine and be on your way. Such seems the case of HSBC and Standard Chartered, banks accused of laundering money and accepting funds from Iran. In most worlds, these are crimes, not simple violations.

Now about that solvency thing: The European Union was awarded the Nobel Peace Prize in October “for fostering peace on a continent ravaged by war.” The prize was not celebrated across the Eurozone as countries facing solvency issues are unhappy with some of the heavy-handed austerity measures pushed by the EU. 

Unliked and unfollowed: Although it started as the year’s most-anticipated initial public offering, Facebook’s foray into the public space was replete with “issues.” Both Nasdaq and Morgan Stanley got egg on their faces for giving Main Street one more reason to shy away from Wall Street.

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