JPMorgan Broker-Dealer and Custodian Hit with $1 Million Fine

Source: Financial Advisor 

JPMorgan’s broker-dealer and custodian have been fined more than $1 million for supervisory and operational failures related to record keeping, Finra reports.

The regulator has fined J.P. Morgan Securities $775,000, and J.P. Morgan Clearing Corp. $250,000, for failing to provide certain information to customers in two segments of the bank’s global wealth management unit during various times between 2006 and 2014, Finra says in its disciplinary action document.

J.P. Morgan Securities, a brokerage, allegedly failed to send investment objective letters to more than 3,000 JPMorgan Global Wealth Management clients from 2006 to 2012, according to the regulator.

From 2009 through 2013 the firm also allegedly failed to send copies of account records within 30 days of account opening to more than 1,300 Private Bank customers, and from 2007 through 2014, the company failed to deliver transaction confirmations to more than 7,000 Private Bank customers.

The firm also allegedly failed to properly monitor outside brokerage accounts of close to 2,000 of its employees and preserve certain customer correspondence, according to the regulator.

The custodian J.P. Morgan Clearing Corp., meanwhile, allegedly failed to send annual privacy notices from 2011 to 2013, affecting more than 965,000 account holders in 2013, according to Finra.

Police investigate suspected 45m diamond fraud at world’s largest exchange

Excerpted article was written by  in Jerusalem

Israeli police are investigating claims of massive theft from the world’s leading diamond exchange, amid reports that at least a dozen dealers may be facing bankruptcy over the affair.

According to initial reports, the value of the diamonds and cash involved in the alleged fraudulent activity at the Israel World Diamond Exchange in Ramat Gan, east of Tel Aviv, could amount to up to $65m (£45m).

A well established diamond dealer, Hanan Abramovich, allegedly acted as a middle man and failed to deliver cash and promised diamonds to other dealers.

He appeared in court on Wednesday to have his arrest extended for two days on suspicion of fraud worth millions of dollars, according to court reports. He claims business problems not criminality are behind the complaints.

The Israel Diamond Exchange was established in the late 1960s and is now the largest diamond trading centre in the world. Its buildings cover 80,000 sq metres and house approximately 1,050 diamond companies. It accounts for the import of $5bn in rough diamonds annually – around 40% of global rough diamond production. Israel’s diamond trade is valued at $10bn annually.

The exchange’s management said the investigation had been launched after a number of dealers complained they were owed tens of millions of dollars for goods sold to Abramovich’s company.

Eli Avidar, the managing director, said: “The diamond exchange’s management will show zero tolerance to those who hurt other members of the exchange. Israel’s diamond sector has been going through difficult times in recent years and to our regret we are being exposed to unfortunate instances like these where the situation is being exploited.

“The diamond exchange management will work resolutely to clarify the case, including working with the enforcement authorities.”

In an interview with the Hebrew-language business newspaper the Marker, Avidar said the exchange’s management had been approached by other companies who complained that they had not received money and diamonds promised by Abramovich over a period of months.

“They believe it is a fraud and last month he gave 10 to 12 different explanations to sellers that he needed to receive money from Hong Kong and then receive rough diamonds, none of which happened.

“He continued taking more without paying. When we contacted him several days ago he said people would have money in the bank tomorrow. At the exchange, people believe that this is a fraud and he is hiding diamonds and money somewhere.”

Abramovich’s lawyer, Avihai Vardi, denied to the same publication that the money and diamonds had been stolen and insisted his client’s business had simply failed.

It is not the first scandal to hit the exchange in recent years. Four years ago an alleged tax avoidance was discovered. Individuals are still facing charges over illegal cheque cashing and a service in fake invoices.

Source: The Guardian

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Berkshire profit falls 37 percent on investment, insurance slump

By Jonathan Stempel and Jennifer Ablan

(Reuters) – Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) (BRKb.N) said on Friday its second-quarter profit fell 37 percent, reflecting a significant decline in investment gains and an underwriting loss from insurance operations, which include Geico.

Net income for the Omaha, Nebraska-based insurance and investment company fell to $4.01 billion, or $2,442 per Class A share, from $6.4 billion, or $3,889 per share, a year earlier.

Operating profit dropped well below analysts’ forecasts, declining 10 percent to $3.89 billion, or $2,367 per share, from $4.33 billion, or $2,634 per share, despite improvements at the BNSF railroad and Berkshire Hathaway Energy units.

Analysts on average expected operating profit of about $3,038 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 3 percent to $51.37 billion. Book value per share, Buffett’s preferred measure of growth, rose 2 percent from the end of March to $149,735.

Net investment and derivative gains plummeted 94 percent to $123 million from $2.06 billion a year earlier, when Berkshire shed its 40-year stake in former Washington Post publisher Graham Holdings Co (GHC.N).

The most recent quarter included losses on contracts betting on long-term gains in major stock market indexes.

Accounting rules require Berkshire to report investment and derivative gains and losses with earnings. Buffett considers the amounts in any given quarter irrelevant, and not reflective of Berkshire’s business performance.

GEICO WEAKENS

Earnings from insurance, Berkshire’s best-known operating sector, fell 39 percent to $939 million, and included a $38 million underwriting loss versus a year-earlier $411 million profit.

Much of that weakness stemmed from the Geico car insurance unit. Its pretax underwriting gain fell 87 percent to $53 million, as it paid out more of the premiums it collected to cover losses from accidents. Berkshire is boosting premium rates as a result.

Meanwhile, a Berkshire business that insures against major catastrophes suffered a $411 million pretax underwriting loss, reflecting currency fluctuations and a storm loss in Australia.

Berkshire has been paring back in some insurance areas, particularly reinsurance, as new investors enter the industry, reducing the premiums that Berkshire can charge.

“Everyone is chasing the business,” said Jeff Matthews, a principal at the hedge fund Ram Partners.

“Outside of insurance,” he added, “things look fine.”

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