DefundedAuditorGeneral

@MPelletierCIO oh to have young knees for a flat landing!! Nice work!

Markets and bomb holes. Going to be another week.

@Jason @vailmtn @eastdakota Come to Whistler. Runs like a top!!

.@vailmtn is the worst run company in America We need to get @eastdakota on the board and start a turnaround Safety, food, value, staffing, snow production and crowds — all disgraziad!! Who’s with me?

@LeylaKuni Look up bridging finance. Blackrock lost 70m audited by big 4

True story: I once saw audited financials of a fund where the auditor’s statement was something to the effect: “there are material inconsistencies in fund’s financials” And people STILL invested 🤦‍♀️ So bottom line: read the dang financials (and notes)

@BigJohn043 @NickNemo17 You will never convince these guys… it’s a waste of your time.

I really need to do a definitive post on my view of why PE markets are not systematically over stated. But three facts: Fist, in the secondary market most funds trade in the 90s. That is actually the best mark and you would expect a small discount for liquidity. Second, most assets that sell go for a premium to their mark in the last quarter, two quarters and three quarters. Third, most PE vintages settle on an IRR in about year 6 or 7 and generally don't vary a lot from that.

“Fully audited” by auditors the GP selects, on Level 3 marks the GP controls, with IRR goosed by subscription lines the GP draws down the day before capital calls. BTAS 2014: pitched at 13-15% net. Actual result after 11 years? 3.4%. The SEC doesn’t audit the marks. They audit the process. There’s a difference. Phalippou wrote 15 papers on it. If the existence of auditors and SEC oversight was a proof we’d still have Enron.

@TheMacroBunny @Todd_Sykon I think it is often first year premiums…. Commissions are fat, just look at the brokers.

@Todd_Sykon 50% of the first years premium. I used to work for a major insurance company.

Does anyone want to share what the average commission is on a whole life policy for the selling agent? Any guesses?

@spencertbarber @chadludeman Cool where is this? Or what are the good waves close?

@chadludeman No worries! The model should be done in April and if we have enough bandwidth we want to start a few more homes soon. Finally getting the infrastructure done has freed up some time. We’ll have a gym, pickleball courts, a dog run, and a playground. The real amenity is the surf!

I was asked by a potential buyer yesterday "Why did you build such a nice development in the middle of nowhere?" It's a funny question because that's the whole point of the development. I wanted a place where people could visit in luxury, but when they go to the beach, local restaurants, hikes, etc., they aren't surrounded by drunk tourists & heckling salesmen.  We picked a location within 2 hours of an international airport and within reach of hundreds of restaurants, but where if you wanted to, you could spend a whole week and never feel like you're in a tourism hub.  In short the answer is I wanted luxury & nature combined.

@VanIsleInvestor Sorry, this is meaningless. Pe in canada is mostly lp fund structures where you do not have redemption rights….

BNN Wasserman: - 50% of Canadian Private Equity is gated. Smart money is slowly scaling back and they need new money coming in and it seems too coincidental retail is being tapped here..

@leadlagreport The entire PC world relies on efficient liquid markets above and below. Meaning, all loans need to be refinanced... FEW of these borrowers borrows can ever actually repay the loan.

@leadlagreport Default rate is a meaningless stat. Recovery and redemption is all that matters. As one fund manager said to me "you just need to grow bigger than your problems..." when financial conditions tighten, these problems become bigger than your ability to raise.

40% of private credit borrowers have negative free cash flow. True default rate near 5%. Morgan Stanley honored only 5% of redemption requests. This isn't a footnote. It's the next crisis hiding in plain sight.

@MPelletierCIO This is great for Hawaii!!!

Jones Act suspended. Every country for itself.

@1CoastalJournal The ironic thing is, he was right... Wait until the flow of PC slows acquisitions and growth broadly across the economy. PE company sales will drop, multiples will drop... then all the PC the PEs used for acquistions will enforce on the PE businesses, literally eating PE.

This is not aging well at all

@MPelletierCIO CIRO gave Gary Ng clothes...

Where is CIRO and Canadian regulators in all of this? Why did it take a US regulator to flag? How much of this type of activity is happening in Canada? Here is the Canaccord piece unlocked. What a read. Wow. For years, Canaccord Genuity LLC conducted trades for a Russian oligarch’s financial fixer to skirt sanctions, a foreign bank flagged for a high risk of facilitating tax evasion and fraudsters conducting pump-and-dump schemes. That trading activity led to a record $100-million fine, unveiled last week by the Financial Crimes Enforcement Network, a branch of the U.S. Treasury Department. FinCEN said the penalties levied against the U.S. division of Toronto-based Canaccord Genuity Group Inc. were the highest amount ever paid by a broker-dealer for violating the U.S. Bank Secrecy Act. The case against Canaccord is the second time in as many years that a Canadian financial-services provider has faced punishment at the hands of American authorities. In 2024, Toronto-Dominion Bank pled guilty to conspiracy to commit money laundering and agreed to pay US$3-billion in fines. Documents behind the regulator’s findings show that Canaccord served as a tool for multiple scammers and a financial consultant that helped Russian billionaires close to President Vladimir Putin hide their assets. “Canaccord’s willful failure to implement controls resulted in Canaccord being used by illicit actors engaged in securities fraud,” FinCEN said in a consent order published alongside a news release announcing the penalty. Regulators urge vigilance on financial crime risks from Iran as banks brace for headwinds In 2017, Canaccord opened an account for an unnamed Cyprus-based investment company owned by a man identified in FinCEN documents only as “individual 2” and his two children. Canaccord records indicated that the firm’s assets grew by more than 400 per cent in a three-year period, but that the high rate of growth was not considered as part of its risk profile, which FinCEN cited as an example of Canaccord’s failure to adequately monitor the account. FinCEN said that a “series of articles” from 2023 in an unidentified publication detailed individual 2’s “years-long efforts to shield wealthy Russians’ assets,” yet Canaccord still did not change the firm’s risk profile. Even after Britain added the owner to its sanctions list in April, 2023, FinCEN said Canaccord still did not conduct adequate diligence. As a result, FinCEN said, Canaccord failed to identify evidence “that individual 2 helped Russian oligarchs move money out of Russia.” Opinion: In fighting organized crime, Canada is losing its way The series of articles may refer to Cyprus Confidential, a project led by the International Consortium of Investigative Journalists that was originally published in November, 2023. The investigation revealed that 67 Russian billionaires had utilized Cypriot financial consultants to evade Western sanctions after the 2022 invasion of Ukraine. MeritServus, a Cyprus-based corporate services firm known for establishing offshore trusts and shell companies for its clients, was the most widely utilized of those businesses, the investigation found. MeritServus is owned by former Deloitte partner Demetris Ioannides and his two adult children. In April, 2023, both MeritServus and Mr. Ioannides were added to the U.K. sanctions list for working on behalf of Russian billionaire and long-time Putin ally Roman Abramovich. “Ioannides is responsible for crafting the murky offshore structures which Abramovich used to hide over £760-million assets ahead of being sanctioned following Putin’s illegal invasion of Ukraine,” the British Foreign Office said in an April 12, 2023, statement that referred to Mr. Ioannides as a “financial fixer” for multiple Putin allies. FinCEN did not respond to a request for comment on whether Mr. Ioannides is “individual 2.” Mr. Ioannides also did not respond to a request for comment, though an April, 2023, article in The Guardian cited lawyers acting for Mr. Ioannides and MeritServus as saying they had “no involvement in any Abramovich family trusts.” Canaccord would not comment Wednesday and did not reply to a question about whether any senior staff changes were made as a result of its compliance failures. However, the company said in a statement last week that it had made a “wholesale change in compliance leadership.” Adult entertainment industry payments used to evade Russian sanctions in Canada FinCEN also cited multiple examples of Canaccord failing to catch blatant fraud-indicating red flags. In the first half of 2021, FinCEN said Canaccord “failed to report a significant volume of suspicious transactions” in the stock of Nevada-based cancer drug developer Oncology Pharma Inc., which traded on the over-the-counter, or OTC, market under the symbol ONPH. In March, 2023, stock promoters Joseph Padilla and Kevin Dills were indicted on federal fraud charges for allegedly orchestrating a US$150-million pump-and-dump penny-stock scheme involving ONPH shares. The stock price peaked at US$50 a share on March 1, 2021, despite being worth less than 50 US cents two months earlier. “During the period when Canaccord was trading ONPH, Padilla and Dills participated in a market manipulation scheme involving ONPH,” FinCEN said. “Despite its role as a market maker buying and selling millions of shares of ONPH, Canaccord failed to detect red flags of suspicious activity related to ONPH.” Another Canadian brokerage, Toronto-based Echelon Wealth Partners Inc., ran afoul of the Canadian Investment Regulatory Organization (CIRO) in 2024 for its own dealings with Mr. Padilla. In late 2023, Mr. Padilla pled guilty to U.S. criminal fraud charges, as well as a charge of attempting to obtain a fake Ukrainian passport, and subsequently began serving a 5½-year federal prison sentence. In 2022, the Securities and Exchange Commission (SEC) filed allegations of another pump and dump involving a company called Blue Eagle Lithium Inc., which traded on the OTC market under the ticker BEAG. More than two years earlier, in 2019, Canaccord’s then-head of trading compliance recommended that a suspicious-activity report, or SAR, be filed in relation to Blue Eagle after the company abruptly changed its name and business focus from Wishbone Pet Products Inc. to become a rare-earth metal miner. “Despite this recommendation, and notwithstanding the significant red flags presented by BEAG and its trading activity … Canaccord never filed a SAR on suspicious transactions involving BEAG or otherwise applied controls to its trading in this high-risk security,” FinCEN said. The SEC revoked the registration of all Blue Eagle securities as of Feb. 3, 2022. Also in 2019, Canaccord opened an account for an asset-management company based in Wyoming. FinCEN said the owner was subsequently fined more than US$5-million and barred from the penny-stock industry by the SEC for his role in several microcap fraud schemes that occurred during the time his account was open at Canaccord. Citing SEC disclosures, FinCEN said the owner of the Wyoming company paid stock promoters to tout the stock of three microcap companies he controlled – Odyssey Group International Inc., CannaPharmaRx Inc. and Scepter Holdings Inc. – then persuaded investors “through false and misleading representations to invest in the stocks.” “While Canaccord was well-positioned to identify the red flags associated with this activity, a meaningful amount of these microcap stock trades flowed through Canaccord,” FinCEN said. Canaccord also operated correspondent accounts for foreign financial institutions, which can be used for trading and that FinCEN described as “gateways to the U.S. financial system that can present heightened [anti-money-laundering] risks.” “Personnel responsible for onboarding customers did not consistently require or request critical information – such as the nature of the foreign financial institution’s business and the markets it serves – to properly mitigate the risks associated with such accounts," FinCEN said. One example occurred in 2017 when a Bahamas-based bank opened a correspondent account at Canaccord. FinCEN said that bank carried an elevated risk for tax evasion and that even though an internal Canaccord recommendation called for “heightened supervision,” steps were not taken to mitigate the increased risk. Canaccord later received information requests from both law enforcement and another financial institution indicating that the Bahamas-based bank was associated with suspicious transactions, yet FinCEN said additional due diligence was still not conducted. In June, 2023, Canaccord first warned investors that it was facing a potentially “significant penalty” related to its wholesale market-making business. Nearly two years later, in April, 2025, Canaccord sold that business to Cantor Fitzgerald, though it is unclear how much, if any, of the activity cited by FinCEN took place within the wholesale market-making business. In addition to FinCEN, the SEC and the Financial Industry Regulatory Authority, or FINRA, participated in the three-year investigation into Canaccord’s lack of compliance. Canaccord does not appear to be facing increased regulatory scrutiny in Canada. “CIRO regulates Canaccord Genuity Corp,” CIRO spokesperson Joanna Nicholson said in an e-mail. “The firm involved in the U.S. enforcement action is Canaccord Genuity LLC, a brokerage firm regulated by the SEC and FINRA.” Ontario Securities Commission spokesperson Curtis Lindsay said via e-mail that the regulator was aware of the U.S. settlement, but that “as a general policy, the OSC does not comment on whether it has had any communications with other regulators or firms, in order to preserve the integrity and fairness of its regulatory processes.”

@MPelletierCIO Just think about all of the CCP money being traded in the smaller bucket shops?

@BitBeaming @jameslavish It's the small things!!!

@defunded @jameslavish We need humor like this for good endorphins & such.

Good morning. The 20 millionth Bitcoin was mined yesterday. This means that 95% of all Bitcoin that will ever exist is now in circulation, and it will take 114 years to mine the remaining 5%. No other asset on earth works like this. Have a great day.

@ShipRektBTC @jameslavish I know right!!!!

@defunded @jameslavish Wow. You are a genius!

@anasalhajji How much Russian oil does China buy via India?

So, instead of depleting China's reserves, the US and its allies are depleting theirs? Is this a Chinese plan?

@anasalhajji @Kar_Sas123 Nothing from Iraq or Kuwait? I am very surprised!

@Kar_Sas123 🤣

♦️♦️♦️There is ONLY ONE COUNTRY that is exporting oil thorough the Hormuz Strait. Name that country!

@somwchi300 @TheELongWave lol if you’re sophisticated enough to buy puts, surely you can see how it is different, no?

@defunded @TheELongWave Thanks. I made some money, had puts on HCG. Seemed to be some real panic that Canadian finacial soltuions weren't enough as Trudeau and Morneau reached out to Buffett to inject money into HCG.

Canada just received a warning signal from its credit system. Shares of Goeasy Ltd., one of the country’s largest non-prime lenders, collapsed after rising loan losses forced the company to withdraw its outlook. Most people will dismiss this. They shouldn’t. 🧵👇

@somwchi300 @TheELongWave Fair point. My apologies. Home capital didn’t almost go belly up via loan losses. Some mrtgage brokers falsified income for loans & HC didnt adequately disclose. Osc announced an investigation which led to run on deposits. HOOPP provided a very profitable rescue loan.

@defunded @TheELongWave I don't know who the hell u are, so why are you being such an asshole when I simply asked someone else a question?

@somwchi300 @TheELongWave That was completely different. Lol do some research.

@TheELongWave any thoughts on home capital almost going belly up? That didn't lead to any contractions in lending.