French Stock Market Regulator Hits US Blogger With $10K Fine For Publishing Opinion On French Bank's Leverage Ratio

from the France-still-not-making-much-effort-to-shrug-off-the-'crazy'-tag dept

Everyone gather 'round as I regale you with a tale of stock exchange regulation and global finance bloggers!

Wait! Come back!

I'm sorry. Before your eyes glaze over again, let me entice you with a better opening sentence.

An American market blogger found himself on the receiving end of a 8,000 euro fine for quoting another blogger. In real money, that works out to an almost $11,000 fine. And all for quoting another blogger's best guess on a French bank's leverage ratio.

Mike "Mish" Shedlock is a US blogger who covers global markets and his story begins this way.

On August 15, 2011, I posted BNP Paribas leveraged 27:1; Société Générale Leveraged 50:1; Sorry State of Affairs of U.S. Banks; Global Financial System is Bankrupt

In that post I quoted Jean-Pierre Chevallier on his Business économiste monétariste béhavioriste blog, that BNP Paribas leveraged: 27!

I also cited Chevallier's Société Générale leveraged: 50!

Société Générale took exception to the numbers and came up with its own set of numbers. According to SG, its leverage was 9.3%.
Chevallier revamped his math after SG's initial noisemaking and Shedlock issued an addendum to his own post.
Société Générale disputes the numbers and new calculations using the banks' numbers are 28:1 or perhaps 23:1 not 50:1 as noted on Forex Crunch.
My position has not changed much. Something is seriously wrong at Société Générale. Banks do not plunge out of the blue on rumors. I do not know the precise leverage, but shares are acting as if Société Générale has severe capital constraints (which of course they will deny) and/or other major problems.
That only seemed to irritate SG more. It contacted the SEC and basically informed the American regulatory body that whatever numbers it's presented were to be taken as fact. The SEC passed this complaint on to Shedlock, adding (paraphrased by Shedlock) "French banks [are] notorious about filing frivolous complaints."

Shedlock received a few more letters (in French) which urged him to respond to the complaints (but only in French), which he duly ignored. Later, a French blogger compiling his own post on the issue (entitled: Gross Delirium: The AMF sanctions bloggers rather than financial corporations!) contacted Shedlock and offered his assistance. One of Shedlock's friends broke down the French bank's complaints into plain English.
The French authorities accuse Chevallier of 'knowingly disseminating false information' about SocGen and you to have disseminated it further on 'Chevallier's urging', although you should have known better and it was your duty to check if his numbers were right (that is the basis for fining him 10,000 and you 8,000 euros).
The French blogger's post pointed out that Chevallier didn't "falsify" anything. He merely used a standard calculation for leverage ratios, one that disregarded "risk weighting" of various assets. Shedlock himself found a Wall Street Journal article that put SG's leverage ratio at 23-24 times its equity, still considerably higher than SG's own figures.

None of this mattered to the French bank, which accused the bloggers' calculations of possibly "influencing" its share price. While the SEC may have passed on the complaint with an eyeroll, the AMF, which regulates the French stock market, took the accusations at face value and issued fines to both bloggers. Not that the AMF is going to have much luck collecting these fines. Chevallier is appealing the verdict and suing AFP (France's largest newspaper) for making "false and defamatory accusations." Shedlock, conversely, is doing nothing.
The Witch hunt is now over and I was fined nearly as much as Chevallier. It's absurd enough to fine someone for a quote, and even more so when the facts are accurate.

The AFM has no jurisdiction over me, so they won't collect. As a US citizen living in the US, I am not subject to the absurdities of French laws, or French witch hunts. All they get from me is a vow to never go to France.
Good idea, considering French law apparently provides regulatory bodies with the power to fine bloggers for publishing their opinions on French banks, even when these opinions are backed up by reasonable calculations. And Shedlock is almost certainly protected under the SPEECH Act, which protects Americans against foreign judgments that would violate the First Amendment here. There doesn't seem to be much "regulation" going on in this situation. (And any French legislation that touches on the internet is routinely terrible.) Conceivably, SG could leverage itself Lehman-style and financially beat into submission anyone who points out this fact by running and complaining to the nearest subservient "authority."



Reader Comments (rss)

(Flattened / Threaded)

  1.  
    icon
    That One Guy (profile), Nov 22nd, 2013 @ 7:20am

    Translation needed:

    How do you say 'Streisand effect, might want to look that up' in french?

    Seriously though, a bank is apparently having financial difficulties, two otherwise minor bloggers point it out, and rather than just let it go and have the blog posts fade away, they sue them, bringing even more attention to their financial difficulties... just brilliant, though given they actually got the authorities to fine both bloggers significantly for posting facts and opinions, maybe they thought the (apparently) significant clout they had would be enough to silence both?

     

    reply to this | link to this | view in thread ]

  2.  
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    Anonymous Howard (profile), Nov 22nd, 2013 @ 7:43am

    First, 8,000 euro fine for quoting another blogger. In real money, that works out to an almost $11,000 fine
    Is this supposed to mean that you do not consider € "real money" ?

    Second, how on earth can a french institute fine a foreigner with no presence in France?

     

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  3.  
    identicon
    Call me Al, Nov 22nd, 2013 @ 7:54am

    Don't forget the EU

    I don't know if it would apply in this case but it is something he should check. The EU has a European arrest warrant, so if this somehow became criminal then he'd have to be careful about going to any EU country.

     

    reply to this | link to this | view in thread ]

  4.  
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    scotts13 (profile), Nov 22nd, 2013 @ 7:55am

    Re:

    "Second, how on earth can a french institute fine a foreigner with no presence in France?"

    If you substitute "American" for "French" there, it doesn't seem quite so absurd. France wishes it still ruled the world, just like America is beginning to.

     

    reply to this | link to this | view in thread ]

  5.  
    identicon
    jackn2, Nov 22nd, 2013 @ 8:00am

    Re:

    Read the article above, then, hopefully, you will see why € doesn't have value (as in real money). Namely, at least in France, the value is heavily manipulated.

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    Anonymous Coward, Nov 22nd, 2013 @ 8:11am

    Re:

    "Second, how on earth can a french institute fine a foreigner with no presence in France?"

    Kim Dotcom could ask the same of the US in relation to New Zealand.

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    Anonymous Coward, Nov 22nd, 2013 @ 8:25am

    Re: Re:

    Luckily no such thing happens with real currency like the dollar.

    (Tries to contain laughter)

     

    reply to this | link to this | view in thread ]

  8.  
    identicon
    Anonymous Coward, Nov 22nd, 2013 @ 8:49am

    Re: Translation needed:

    vous etes vouliez celá voir l'effet Streisand!

    ...OR something.

     

    reply to this | link to this | view in thread ]

  9.  
    icon
    Deranged Poster (profile), Nov 22nd, 2013 @ 9:08am

    Re: Translation needed:

    Maybe the banks are behind suing them because they need all the money they can get?

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    Anonymous Coward, Nov 22nd, 2013 @ 9:23am

    Re: Don't forget the EU

    Unless they slap terrorist on the folder, I doubt it is something interpol would bother touching. Of course terrorist in the UK context would probably cover it, so there may be some cause for concern at least there...

     

    reply to this | link to this | view in thread ]

  11.  
    icon
    John Fenderson (profile), Nov 22nd, 2013 @ 9:30am

    Re: Re:

    How so? It's no less absurd when the US does it.

     

    reply to this | link to this | view in thread ]

  12.  
    identicon
    Anonymous Coward, Nov 22nd, 2013 @ 9:53am

    Re: Don't forget the EU

    Are EUAWs valid in the US?

     

    reply to this | link to this | view in thread ]

  13.  
    icon
    John Fenderson (profile), Nov 22nd, 2013 @ 10:12am

    Re: Re: Don't forget the EU

    No.

    The US and the EU countries do have an extradition treaty, so if the blogger is facing a charge that could land him in hail for a year or more (in both countries), then a US arrest warrant could be issued and he could be extradited.

    This is not a case like that, though.

     

    reply to this | link to this | view in thread ]

  14.  
    identicon
    Anonymous Coward, Nov 22nd, 2013 @ 10:39am

    watch out Mike

    SG now can fine you for two quotes... let see that is 2x... I wonder if French math is the same as American math... maybe we should call in the RIAA and MPAA to work out the math... the are good at random numbers.

     

    reply to this | link to this | view in thread ]

  15.  
    identicon
    Anonymous Coward, Nov 22nd, 2013 @ 10:40am

    Re:

    You might want to check your sarcasm meter, I think it's broken.

     

    reply to this | link to this | view in thread ]

  16.  
    identicon
    Anonymous Coward, Nov 22nd, 2013 @ 12:59pm

    When Hitler rose to power, a lot of people just stopped playing. And you know who those people were? The French.

    No worries lol.

     

    reply to this | link to this | view in thread ]

  17.  
    icon
    John Fenderson (profile), Nov 22nd, 2013 @ 1:10pm

    Re:

    The French were also, at one point in time, the oppressive, dominant military force on the planet. That's just as relevant to French character today as misguided WWII references are. Which is to say, not at all.

     

    reply to this | link to this | view in thread ]

  18.  
    icon
    Bergman (profile), Nov 23rd, 2013 @ 12:12am

    Re: Re: Don't forget the EU

    What does Interpol have to do with it? Contrary to HollywoodA-inspired myths, Interpol has about as much authoritybas the Better Business Bureau.

     

    reply to this | link to this | view in thread ]

  19.  
    icon
    Niall (profile), Nov 27th, 2013 @ 12:53am

    Re:

    Sorry, what?

    The French actually declared war on Hitler in September 1939 along with Great Britain precisely to live up to its treaty commitments, and because it was the 'right' thing to do. This is the nation that had had a substantial part of WW1 fought on its territory and had fought the Germans for four times as long as the US did during that conflict.

    Ok, so they overestimated their defences and didn't understand mobile tank warfare (no-one really did outside the German High Command), but they continued to fight the Germans as best they could after their invasion in mid-1940. A full year and a half before the Americans bothered their asses to join a war they'd only joined because the Japanese and Germans declared war on them!

    This is the same fighting French who gave us the words 'Maquis' and 'The Resistance'.

    Coming from a country that cries when its furthest extremities are hit (i.e. Hawaii), and doesn't have to guard its national borders against anything more than Mexicans, Canucks and Siberians, you sure can be quick to dish out abuse to countries with long, actually difficult-to-defend borders.

     

    reply to this | link to this | view in thread ]


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