Background Authorization- Release Form Disclosure: Fill & Download for Free

We don’t really know that Adam Schiff does know the identity of the whistleblower, although that is entirely possible. There are unsubstantiated rumors that the report was written with the assistance of his staff, so it is entirely possible.Nancy Pelosi likely did not know the content of the call. I believe she was responding to her caucus, which appears to be led by AOC and “the squad”, instead of by the Speaker.Yes, the whistle-blower rules were reportedly changed to allow hearsay evidence just a few weeks before the report was filed. Coincidence? Perhaps. Nobody has said who changed the rules, but a lot of people want to know, so I’m sure it will come out eventually.There’s a lot of fishy stuff going on here. The whistle-blowers report doesn’t match the transcript of the call or the recollection of Presidents Trump or Zelensky. This isn’t particularly surprising since the whistle-blower never saw the transcript or heard the call, instead relying on rumors.I’m sure many of these questions will be answered in the next month. I suspect that many Democrats will end up with egg on their faces (again).EDIT: Shortly after I wrote this response, I began receiving comments that the form, in fact, has not been changed. Well, yes and no. It’s never that simple.First, the form was changed. The change did not have to do with the first hand information, as reported in many, many news sources. The changes were to clarify certain question on the form. When a form is submitted, the IC IG provides a written statement to the whistle-blower to let them know precisely what happens next. This form, called the “Background Information on ICWPA Process” includes the following verbage about first hand knowledge:In order to find an urgent concern “credible,” the IC IG must be in possession of reliable, first-hand information. The IC IG cannot transmit information via the ICWPA based on an employee’s second-hand knowledge of wrongdoing. This includes information received from another person, such as when a fellow employee informs you that he/she witnessed some type of wrongdoing. (Anyone with first-hand knowledge of the allegations may file a disclosure in writing directly with the IC IG.) Similarly, speculation about the existence of wrongdoing does not provide sufficient basis to meet the statutory requirements of the ICWPA. If you think wrongdoing took place, but can provide nothing more than secondhand or unsubstantiated assertions, IC IG will not be able to process the complaint or information for submission as an ICWPA[1]If you disagree with this, that’s fine. Blame the IC IG, not me. They’re the ones who produced this statement. You can read the entire press release as it is referenced by the footnote. All I did was cut and paste. Warning, this is a PDF document.The same release also states:The ICIG’s Center for Protected Disclosures has developed three new forms entitled, “Report of Fraud, Waste, and Abuse UNCLASSIFIED Intake Form”; “Disclosure of Urgent Concern Form-UNCLASSIFIED”; and “External Review Panel (ERP) Request Form – UNCLASSIFIED.” These three new forms are now available on the ICIG’s open website and are in the process of being added to the ICIG’s classified system. The ICIG will continue to update and clarify its forms and its websites to ensure its guidance to whistleblowers is clear and strictly complies with statutory requirements.So, the form has been changed. More details are in the four page release.Thank you to those individuals who informed me of the changes politely.I also received several comments that I reported as disparaging. If I’m incorrect, tell me. Don’t call me names or disparage me or I will report your comment and it will be deleted. Anybody can only use information available at the time they write a response. If facts change, it doesn’t mean they are a liar or any other names you may wish to call them. It simply means facts changed.Footnotes[1] https://www.dni.gov/files/ICIG/Documents/News/ICIG%20News/2019/September%2030%20-%20Statement%20on%20Processing%20of%20Whistleblower%20Complaints/ICIG%20Statement%20on%20Processing%20of%20Whistleblower%20Complaints.pdf

The Background of the Basel norms: (Why it come into picture)On 26 June 1974, a number of banks had released payment of Deutsche Marks (DEM - German Currency at that time) to Herstatt ( Based out of Cologne, Germany) in Frankfurt in exchange for US Dollars (USD) that was to be delivered in New York. Because of time-zone differences, Herstatt ceased operations between the times of the respective payments. German regulators forced the troubled Bank Herstatt into liquidation.The counter party banks did not receive their USD payments. Responding to the cross-jurisdictional implications of the Herstatt debacle, the G-10 countries, Spain and Luxembourg formed a standing committee in 1974 under the auspices of the Bank for International Settlements (BIS), called the Basel Committee on Banking Supervision. Since BIS is headquartered in Basel, this committee got its name from there. The committee comprises representatives from central banks and regulatory authorities.Basel I:In 1988, the Basel Committee on Banking Supervision (BCBS) in Basel, Switzerland, published a set of minimum capital requirements for banks.These were known as Basel I. It focused almost entirely on credit risk (default risk) - the risk of counter party failure. It defined capital requirement and structure of risk weights for banks.Under these norms:Assets of banks were classified and grouped in five categories according to credit risk, carrying risk weights of 0%(Cash, Bullion, Home Country Debt Like Treasuries), 10, 20, 50 and100% and no rating. Banks with an international presence are required to hold capital equal to 8% of their risk-weighted assets (RWA) - At least, 4% in Tier I Capital (Equity Capital + retained earnings) and more than 8% in Tier I and Tier II Capital. Target - By 1992.One of the major role of Basel norms is to standardize the banking practice across all countries. However, there are major problems with definition of Capital and Differential Risk Weights to Assets across countries, like Basel standards are computed on the basis of book-value accounting measures of capital, not market values. Accounting practices vary significantly across the G-10 countries and often produce results that differ markedly from market assessments.Other problem was that the risk weights do not attempt to take account of risks other than credit risk, viz., market risks, liquidity risk and operational risks that may be important sources of insolvency exposure for banks.Basel II:So, Basel II was introduced in 2004, laid down guidelines for capital adequacy (with more refined definitions), risk management (Market Risk and Operational Risk) and disclosure requirements.- use of external ratings agencies to set the risk weights for corporate, bank and sovereign claims.- Operational risk has been defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputation risk, whereby legal risk includes exposures to fines, penalties, or punitive damages resulting from supervisory actions, as well as private settlements. There are complex methods to calculate this risk.- disclosure requirements allow market participants assess the capital adequacy of the institution based on information on the scope of application, capital, risk exposures, risk assessment processes, etc.Basel III:It is widely felt that the shortcoming in Basel II norms is what led to the global financial crisis of 2008. That is because Basel II did not have any explicit regulation on the debt that banks could take on their books, and focused more on individual financial institutions, while ignoring systemic risk. To ensure that banks don’t take on excessive debt, and that they don’t rely too much on short term funds, Basel III norms were proposed in 2010.- The guidelines aim to promote a more resilient banking system by focusing on four vital banking parameters viz. capital, leverage, funding and liquidity.- Requirements for common equity and Tier 1 capital will be 4.5% and 6%, respectively.- The liquidity coverage ratio(LCR) will require banks to hold a buffer of high quality liquid assets sufficient to deal with the cash outflows encountered in an acute short term stress scenario as specified by supervisors. The minimumLCR requirement will be to reach 100% on 1 January 2019. This is to prevent situations like "Bank Run".- Leverage Ratio > 3%:The leverage ratio was calculated by dividing Tier 1 capital by the bank's average total consolidated assets;....more to follow

Let's start with a few important caveats:Though I've reviewed another of his financial products before, I'm not here to offer an opinion on James directly. He may be the love-child of Gandhi and Warren Buffet. I wouldn't know. Though we're part of the same club, our paths have never crossed.My background is as a freelance business analyst (not the same as a financial analyst) and as a copywriter (i.e., one who writes sales pitches). I’m here to give clarity, not investment advice.I’m going to refer to the pitch as “theirs” instead of “his”. That’s because these products are usually created by publishing outfits (in this case, Agora Financial). Only James could say what role he had in drafting it or how clearly it represents his views. (If he wants to clarify or argue anything, I’ll happily give him space to do so.)That housekeeping in mind, on with the show.#1: What is the “wiretapping technique”?Simplifying a bit, the basic premise seems to be:Look at what large hedge funds are doing.Copy their most promising trades.That anyone can do this is because said funds are legally obligated to make a 13F disclosure of their trades every three months (within 45 days of that period having elapsed, which is a timeline that’ll be important in a minute).Theoretically, this exploit allows you to make the same trades as the big guys without having to hand over exorbitant management fees.Theoretically.#2: What’s the offer being made?For $2,000 USD, the buyer gets:An ebook outlining how the method works (which is also available for free in exchange for the recipient’s email address).An ebook outlining “The One ‘Wiretap’ to Produce Profits for the Next 20 Years” (more on that later).Membership in “Altucher’s Top 1% Advisory” (which seems to consist of both weekly and monthly emails with specific recommendations).A year of access to a library of some three hours of video content (which, best as I can tell, is priced at $1,000 beyond the first year).#3: What guarantees come with said purchase?To quote from the pitch directly:I promise that if I don’t show you 1,000% cumulative gains during your subscription, I’ll give you a second year of Altucher’s Top 1% Advisory, absolutely FREE.But I hope you’ll understand that, through this offer, I just can’t accept any refunds.The reason is simple…If I offer a refund, anyone could gain access to my most closely guarded “wiretapping” technique… make an incredible fortune on their money… then get their money back by refunding.I’ll leave it to the reader to judge the merits of such an argument.#4: What should I know before buying a product like this?The most important thing to figure out before making any investment is the level of information asymmetry involved (i.e., “what does the other party know that I might not, and how might this knowledge gap affect the deal?”).To use a common example: when it comes to traditional stock purchases, the seller is willing to let go of their shares at the same price you’re willing to pay. Why? Do they know more than you about their true value? If so, you need a robust argument for why your insight is more valid than theirs. If you don’t have one, you’re basically pulling on a slot machine and hoping to beat the house.When it comes to paying someone for financial guidance, you have to both ask a version of that same question (i.e., “how will they help me shrink the information gap?”) and figure out why they’re willing to educate you instead of using said insights to make money for themselves.In this particular case:You see, I’ve made all the money I need, and I want to share what I’ve learned with you.I’ll again leave it to the reader to decide how compelling that argument might be.#5: Is there anything in this pitch that I should pay special attention to?Oh, yeah. Lots.I’ll categorize the highlights under four general principles that ought to guide any consideration of a financial product or service.#5a: Keep an eye out for selectivity and vagueness.Whenever someone is showing you evidence of past performance (which, as the saying goes, is no guarantee of future results), it’s important to focus on both the nuances of the stated details and what they leave out.In 2006, for example, the bottom guy on a list of hedge fund earners took home a whopping $240 million.See what they did there? There’s a world of difference between “this list” and “a list” (especially in the absence of a clarifying link or footnote). I could write down the names of two outlying performers on a dirty napkin and call it a list.Let’s also remember that our core premise here is essentially that some stocks get purchased in bulk by hedge funds and then go up in value. Well, hedge funds make large investments every day. Coming up with dozens of successful cases is trivial. What that wouldn’t tell you is how these deals work out on average.#5b: Pay attention to the caveats.963 words into the pitch, we’re suddenly met with a mild warning:And keep in mind, these examples are of past trades. I can’t promise you’ll see winners on each and every trade you make using this technique…You don’t say?There are a few more statements to that effect sprinkled throughout the pitch, most of them artfully placed after some dizzying claim intended to make you so greed-focused that you become insensible to the risks being described.Of course, hitting only winners is rare… and gains this high don’t come around every day… but I’m hoping these examples show you how powerful this “wiretapping” strategy can be.One might note that “can be” is a very different thing than “is”.#5c: Pay even more attention to the appeals to authority.This pitch includes a particular set of claims that aim to provide a sense of academic credibility. I’ll focus on just one of them.Harvard and Yale University researchers agree: The concepts behind “wiretapping” WORK.Which is later expanded in more concrete detail:Harvard and Yale University researchers conducted a study in 2003 and discovered that, “In raw returns, [the concepts behind ‘wiretapping’] beat the market returns by 11.2% per year.”First, note the slipperiness of the wording “the concepts behind”. There’s a reason for that.Here’s the study being referred to: Estimating the Returns to Insider Trading: A Performance-Evaluation Perspective. You may notice that the title suggests a somewhat different subject than legal “wiretapping”.This is clarified further in the abstract itself.This paper uses performance-evaluation methodology to estimate the returns earned by insiders when they trade their company's stock. Our methods are designed to estimate the returns earned by insiders themselves and thereby differ from the previous insider-trading literature, which focuses on the informativeness of insider trades for other investors.I’ll leave it to better minds to figure out how exactly insider trading in its various forms relates to betting on stocks based on routine hedge fund disclosures.That aside, we should also note that the study’s quoted “11.2% per year” figure was calculated from the dates that insider transactions were made, not the dates they became public. Given that 13Fs (the “wiretappable” disclosures) are released some 40-135 days after trades take place, this stat is even more irrelevant.#5d: Do some homework before you buy.And now we arrive at “The One ‘Wiretap’ to Produce Profits for the Next 20 Years”.I won’t spoil it, but I will link to the publicly available (and easily Googled) 13F which the pitch claims is the source of this one wiretap to rule them all:Arbiter Partners Capital Management LLC - 13F Filing for period 2016-12-31A diligent person might notice that only one item in it matches the pitch’s description. Such a person might also discern that said stock was trading at $16.71 on the date of Arbiter’s 13F filing; and, if they got that far, they’d likely further discover that said stock is trading roughly 12% below that value today.(In the interest of fairness, you could have made a theoretical return of 20% if you somehow knew to wait months after Arbiter’s 13F filing to buy said stock and subsequently sold all shares the day after the company’s Q3 earnings came out.)Might this stock still yet rise to the promised heights? It’s certainly possible. But would you "easily DOUBLE your money" by purchasing it today? Anyone suggesting such a thing either has a crystal ball or is selling you something.As with all things, buyer beware.EDIT: This was originally written in December, 2017. Came back some 9 months later to see how that stock was doing. Currently $9.01. It went as low as $7.25 this summer. Buying an index fund would have cost you about the same as a cup of coffee and would have returned you in the double-digits over that same period.