Royal Bank of Canada in Tax Scheme?
Royal Bank of Canada stands accused of a scheme to minimize taxes by allegedly abusing "wash sale" rules. Click here for the story in the Wall Street Journal.
The CFTC, a regulatory body that oversees futures trading activity, initiated the action. The CFTC is the same regulatory body that has not been able to find a way to restore the money stolen from clients by MF Global. The case of MF Global is so egregious yet the CFTC did not consider the evidence such that the clients' money would be restored. In fact, despite recent headlines about an MF insider verifying that Corzine knew about the transfer of client funds for use in conducting MF Global business - a clear breach of the law - it's looking more and more like client money will never be returned.
The outrageous nature of this can't be exaggerated. Yet the CFTC now "plays" regulator and wants to be taken seriously. I have trouble taking them seriously.
My suspicion is that the CFTC is trying to deflect criticism from its disgraceful actions (or lack thereof) in the MF Global case by trumpeting this Royal Bank of Canada incident. Give credit to the WSJ report for pointing this out:
"The lawsuit comes as the CFTC grapples with pressure to step up oversight of the futures industry after the failure of MF Global Holdings Ltd. in October left an estimated $1.6 billion shortfall in customer funds."
Unfortunately the reporter doesn't follow through and explain the disgraceful fact that client money has not been restored.
I don't know whether RBC did what they're accused of doing. Maybe they did. But isn't it interesting that RBC's activities would (if true) have avoided taxes, and that's what the CFTC deems worthy of their efforts. Whereas the MF Global disaster resulted in the stealing of money from clients - many of whom were individual farmers hedging the price of their crops and cattle. And there the CFTC didn't think they could step in and save these "little people" from being robbed.
Meanwhile, the average person, who doesn't particularly follow or understand all this, might think that the CFTC is "catching" a bank in some illegal activity. Hmmm...let's see how this plays out. Here's a guess.
The bank - whether it is guilty or not - engages the CFTC in negotiations. The negotiations lead to a settlement involving millions of dollars. The result of all that will be little to no impact on the bank. Where would the millions in settlement money go? I don't know. (To the CFTC? To the government?)
What I do know is that none of the MF global clients who were robbed has received a penny and they may never receive a penny. The millions that will be involved in the settlement of the RBC case will go somewhere, anywhere but the pockets of the MF Global clients whom we know - beyond the shadow of a doubt - were robbed.
If you read the WSJ article, you'll see that this action on the part of the CFTC comes on the heels of increased powers given to them by Dodd-Frank, a new regulatory regime passed by Congress in 2010. So Dodd-Frank passed and, in the case of the CFTC at least, has resulted in a case where mostly everyday people had money stolen from them without any recourse or restitution, but a big bank is "caught" in activities that potentially reduced money that would have gone to the government in the form of taxes.
I'm sure you see how Dodd-Frank helps protect us regular folks, right? Don't you?
The CFTC, a regulatory body that oversees futures trading activity, initiated the action. The CFTC is the same regulatory body that has not been able to find a way to restore the money stolen from clients by MF Global. The case of MF Global is so egregious yet the CFTC did not consider the evidence such that the clients' money would be restored. In fact, despite recent headlines about an MF insider verifying that Corzine knew about the transfer of client funds for use in conducting MF Global business - a clear breach of the law - it's looking more and more like client money will never be returned.
The outrageous nature of this can't be exaggerated. Yet the CFTC now "plays" regulator and wants to be taken seriously. I have trouble taking them seriously.
My suspicion is that the CFTC is trying to deflect criticism from its disgraceful actions (or lack thereof) in the MF Global case by trumpeting this Royal Bank of Canada incident. Give credit to the WSJ report for pointing this out:
"The lawsuit comes as the CFTC grapples with pressure to step up oversight of the futures industry after the failure of MF Global Holdings Ltd. in October left an estimated $1.6 billion shortfall in customer funds."
Unfortunately the reporter doesn't follow through and explain the disgraceful fact that client money has not been restored.
I don't know whether RBC did what they're accused of doing. Maybe they did. But isn't it interesting that RBC's activities would (if true) have avoided taxes, and that's what the CFTC deems worthy of their efforts. Whereas the MF Global disaster resulted in the stealing of money from clients - many of whom were individual farmers hedging the price of their crops and cattle. And there the CFTC didn't think they could step in and save these "little people" from being robbed.
Meanwhile, the average person, who doesn't particularly follow or understand all this, might think that the CFTC is "catching" a bank in some illegal activity. Hmmm...let's see how this plays out. Here's a guess.
The bank - whether it is guilty or not - engages the CFTC in negotiations. The negotiations lead to a settlement involving millions of dollars. The result of all that will be little to no impact on the bank. Where would the millions in settlement money go? I don't know. (To the CFTC? To the government?)
What I do know is that none of the MF global clients who were robbed has received a penny and they may never receive a penny. The millions that will be involved in the settlement of the RBC case will go somewhere, anywhere but the pockets of the MF Global clients whom we know - beyond the shadow of a doubt - were robbed.
If you read the WSJ article, you'll see that this action on the part of the CFTC comes on the heels of increased powers given to them by Dodd-Frank, a new regulatory regime passed by Congress in 2010. So Dodd-Frank passed and, in the case of the CFTC at least, has resulted in a case where mostly everyday people had money stolen from them without any recourse or restitution, but a big bank is "caught" in activities that potentially reduced money that would have gone to the government in the form of taxes.
I'm sure you see how Dodd-Frank helps protect us regular folks, right? Don't you?
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