Supercars sell for millions, Libra’s scales are getting dangerously unbalanced and something smells wrong in the forex market.

We share our financial regulatory highlights from the week of 30 September 2019.

Falling Scales

Libra’s scales are set to come crashing down as partners flee. Reports are circulating of PayPal, Visa and Mastercard looking to pull out of the project following intense scrutiny and backlash over the cryptocurrency.

PayPal, in particular, is concerned around the lack of foundational discussions with regulators. Not only is that preliminary work vital, but businesses fear the knock-on consequences of intense scrutiny at this juncture. It could very well see Libra’s partners being investigated by Congressional committees too.

$10 million is the cost for each partner to take part in Libra, but the partnership aspect of the project hasn’t yet been formalized.

The companies hesitation comes at a time where France has already said it will not allow Libra to be developed in Europe over concerns regarding the privatization of money.

Corrupt Supercar Sales

A luxury car auction last weekend attracted car aficionados from around the world and raised an estimated $27 million in the process. The star of the show — a true feat in a field of 25 supercars — was a 2014 Lamborghini Veneno Roadster, one of only nine produced for the manufacturer’s 50th anniversary. Barely driven and in mint condition, the car sold for a record $8.3 million (or just shy of double its original sticker price).

The buyer’s name is unknown.

Sunday’s high-profile event concludes Switzerland’s multi-year-long money laundering and corruption probe into Equatorial Guinea’s vice president, Teodor Nguema Obiang Mangue, also known as Teodorin.

The high-ranking government official, who is also the son of the country’s president, had been suspected of misappropriating public funds. And his method of choice for laundering that money has been through the purchase of luxury goods to support his lavish lifestyle, including some of the most expensive cars in the world.

The case itself has been closed. And it was decided the cars would be auctioned off, with the proceeds going to social programs to benefit Equatorial Guinea’s citizenry.

This isn’t the first time the country’s leaders have been accused of corruption either. The oil-rich country’s government has the unfortunate distinction of being one of the most corrupt in the world.

Teodorin, in particular, has been ensnared in a number of investigations, including ones in France, Brazil, and the United States. The latter of which involved Michael Jackson memorabilia, valued at $2 million, a mansion in California and a private jet. That case was settled in 2014 to the tune of $30 million.

Forex Fraud

BGC Partners has been fined $25 million by New York regulators this week after it emerged that forex brokers at the firm had created fake trades to push clients to engage in forex options at unfair prices.

The fine is split between two units of the company, BGC Financial LLP and GFI Securities LLC who will pay $15 million and $10 million respectively.

The motivation for false pricing apparently stems from a desire to illustrate greater market liquidity to clients. A move that would incentivize clients to trade when they might not have.

The settlements are resolved under New York’s Martin Act, one of the many blue sky laws across the USA. The fraudulent work was done in 2014 and 2015 when fake bids and offers were being made in the hundreds of thousands.

It highlights how Forex Markets are currently open to abuse and threats are currently both internal and external.


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