Daily Lessons from Life 09 August 2013 - UBS to pay US$120m in settlement over Lehman notes

Happy Birthday Singapore on turning 48!! "UBS to pay US$120m in settlement over Lehman notes - Reuters Aug 09, 2013 MANHATTAN - UBS AG has agreed to pay US$120 million (S$151.3 million) to settle a lawsuit by investors who accused the Swiss bank of misleading them about the financial condition of Lehman Brothers Holdings Inc in connection with the sale of structured notes. The preliminary settlement was disclosed in papers filed late Thursday in the US District Court in Manhattan, and requires court approval. It resolves claims over close to US$1 billion of Lehman structured notes that UBS sold between March 2007 and September 2008. Lehman filed for bankruptcy protection on Sept 15, 2008" Just a drop in the big wide deep ocean of financial deception? I wonder if the penalty of US$120m is more or less than the money that UBS had made from the 'offending transactions'? Lessons for me are: 1. when the punishment does not befit the crime, the criminals will always want to try their luck! Simple mathematics really!; 2. how many fines have we seen some of the bluest of the the blues investment banks being asked to pay after they have created a lot more damages with some of their deception or, as they would protest loudly, creatively financial engineering for the GOOD of making the world's limited capital work HARDER and SMARTER (for whom is not clear to the majority of the losers though!) without stopping or discouraging them to try their LUCK ONE MORE TIME not long after the fines were paid? Too many times in my opinions. Their so-called reputation get battered, for a while! Not long after that, it is back to business as usual. The 'clients' will return. The same or maybe slightly changed team of bankers will continue to serve the clients with some NEW imaginative financial instruments or transactions that will MAKE MORE MONEY for the clients UNTIL, maybe, they are caught again for 'deceiving' their clients!; 3. the root cause of this hypocrisy is: greed and lack of shame and integrity! Money talk and walk! I guessed it is the motto of the investment banking industry that: he or she who has the $$ is KING/QUEEN! Never mind the honors and trust that bankers like Mr Morgan once held dear! The failing is simple: when the punishment does not befit the crime, the criminals will try his or her luck! The enforcement authority may have a conflict of interest here too - why should one KILLS the Goose that lays the Golden Eggs? Without all these new and imaginative instruments and transactions, where are all the growth going to come from? where can one make money? So, maybe, it is the enforcement authority that is the root cause. Since the cat watchers know jolly well that it is futile to expect to ask the cats, especially the fat ones, to look after the fishes with eating them, the enforcement authority MUST come down hard on the criminals. Only then will the criminals pay heed. Only them will they NOT be prepared to pay a token fine in exchange for an outsize pay out somewhere! Hypocrisy. Integrity. Which will prevail? The idealist in me says Integrity. The realist in me say Hypocrisy! Sad.