“The development of our financial oligarchy followed, in this respect, lines with which the history of political despotism has familiarized us:-usurpation, proceeding by gradual encroachment rather than by violent acts; subtle and often long-concealed concentration of distinct functions….
……which are beneficent when separately administered, and dangerous only when combined in the same persons. It was by processes such as these that Caesar Augustus became master of Rome. The makers of our own Constitution had in mind like dangers to our political liberty when they provided so carefully for the separation of governmental powers”.
(1914) Other People’s Money and How the Bankers Use It– Chapter I: Our Financial Oligarchy
The Big Takeover
“The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution”
EXCLUSIVE: Ex-AIG unit head Cassano back in U.S.
Rigging The Municipal Bond Market
“”The “simple fraud” Waszmer described centered around public borrowing. Say your town wants to build a new elementary school. So it goes to Wall Street, which issues a bond in your town’s name to raise $100 million, attracting cash from investors all over the globe. Once Wall Street raises all that money, it dumps it in a tax-exempt account, which your town then uses to pay builders, plumbers, the chalkboard company and whoever else winds up working on the project.But here’s the catch: Most towns, when they raise all that money, don’t spend it all at once. Often it takes years to complete a construction project, and the last contractor isn’t paid until long after the original bond is issued. While that unspent money is sitting in the town’s account, local officials go looking for a financial company on Wall Street to invest it for them.To do that, officials hire a middleman firm known as a broker to set up a public auction and invite banks to compete for the town’s business. For the $100 million you borrowed on your elementary school bond, Bank A might offer you 5 percent interest. Bank B goes further and offers 5.25 percent. But Bank C, the winner of the auction, offers 5.5 percent”.(Rollingstone)
Rigging of Foreign Exchange Market Makes Felons of Top Banks, NYT
(Bloomberg) Sept. 29, 2008 – “As much as $37 billion from federal bailout loans to American International Group Inc. has gone to investment banks including Goldman Sachs Group Inc., the firm Treasury Secretary Henry Paulson used to run”.
“It was the biggest crisis ever — if you’re an investment bank,” said Joshua Rosner, a managing director at investment research firm Graham Fisher & Co. in New York. We didn’t just save AIG. We saved the counterparties, the banks. It’s true that it would have been a disaster, but it would have been a disaster for them.” The firms received cash as AIG borrowed from a Federal Reserve credit line endorsed by Paulson, Goldman’s former chief executive.
Without the government money, Goldman, Merrill Lynch & Co., Morgan Stanley, Deutsche Bank AG and other firms could have become some of the biggest creditors in a bankruptcy filing by AIG”
June 26 2006: 4:18 PM EDT NEW YORK (CNNMoney.com) — “The $183,500 salary for the Treasury Secretary post may not mean much to nominee Henry Paulson, Jr., who’s used to earning closer to $40 million”.
“Paulson, who is expected to get the nod from the Senate Finance Committee as early as Tuesday, owns about $480 million worth of Goldman Sachs stock, which the White House said he would sell to avoid conflicts of interest, according to published reports”.
In FX rigging: ‘If you ain’t cheating, you ain’t trying’, Reuters
The Man Who Crashed the World (Joseph Cassano, AIG)
Visium Asset Management Inflates Asset Prices
In the Matter of Visium Asset Management, LP Admin. Proc. File No. 3-18473
“Visium’s Sanjay Valvani found dead in apparent suicide after insider trading charge”
Hedge fund suing Sanjay Valvani’s widow to recover the millions he earned at firm
“Pharmaceutical Enron”. Plaintiff TIMBER HILL LLC
(Interactive Brokers) Vs Defendant Valeant Pharma
Defendants’ unlawful agreement exploited both the structure of the vast over-thecounter (“OTC”) secondary market for GSE Bonds and the lack of systems and controls in place during the Class Period to detect such misconduct. Unlike stocks, which trade on a national exchange at publicly visible prices, investors looking to buy or sell GSE Bonds in the OTC market must typically communicate directly with a salesperson or trader to request a price quote. Prices are given individually by dealers in response to such requests made by phone or in electronic chats, making the process of pricing a GSE Bond slow and opaque compared to exchange-based markets, like the stock market, where a multitude of banks and investors and other agents can see price information updated in real-time as they trade. This opaque structure supported Defendants’ agreement to unlawfully increase their own profits at the expense of Plaintiffs and the Class by fixing the prices of GSE Bonds.
Initial Public Offering Securities Litigation (laddering scandal)
All 310 Cases Listed in One Place
Non-Profit organization attempts to block the settlement of the above Citigroup CDO Litigation
“Goldman Sachs created what is referred to as the “Abacus deal,” which became notorious for the conflicts of interest it exposed at Goldman Sachs. In the Abacus deal, Goldman Sachs constructed a CDO whose failure was all but guaranteed. Goldman constructed the CDO with the help of one of its clients, who picked the mortgages that would make up the CDO. That client shorted the deal at the same time that Goldman was selling interests in the CDO to another client”.
Here’s the staggering amount banks have been fined since the financial crisis, Marketwatch
“The development of our financial oligarchy followed, in this respect, lines with which the history of political despotism has familiarized us:-usurpation, proceeding by gradual encroachment rather than by violent acts; subtle and often long-concealed concentration of distinct functions….
…...which are beneficent when separately administered, and dangerous only when combined in the same persons. It was by processes such as these that Caesar Augustus became master of Rome. The makers of our own Constitution had in mind like dangers to our political liberty when they provided so carefully for the separation of governmental powers”.
Other People’s Money and How the Bankers Use It, 1914 – Chapter I: Our Financial Oligarchy
DOJ Will Not Prosecute Goldman Sachs in Financial Crisis Probe
Veteran Goldman Sachs Executive Leaves The Company Due To Ethical Concerns
“What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym”.(NYT)
During the summer and fall of 2007, Defendant Citigroup Inc. (“Citigroup”) made a series of material misstatements about its investment bank’s exposure to sub-prime mortgages..Citigroup made these misstatements at a time of heightened investor and analyst interest in public company exposure to sub-prime mortgages. Citigroup represented that it had reduced its investment bank’s sub-prime exposure from $24 billion at the end of 2006 to $13 billion or slightly less than that amount. In fact, however, in addition to the approximately $13 billion in disclosed subprime exposure, the investment bank’s sub-prime exposure included more than $39 billion of “super senior” tranches of-sub-prime collateralized debt obligations and related· instruments called “liquidity puts” and thus exceeded $5~ billion.
“The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers’ aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.
This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country”NYT
TBTF Banks Lawyers Meet Once Per Year In Versailles In Secret to Devise Plans on How They Can Work Together to Reduce Blowback From Constantly Being Sued Every Single Year For Various Systemic Thefts That They Have Institutionalized Into Their Business Models and Corporate Culture. Don’t Forget This Too: Their Profits Are Also Subsidized By The Government
(2007) Citigroup Appoints a Hedge Fund Manager to Run Their Government Subsidized Bank and Manage Millions of Americans Savings While Offering Practically No Interest on Their Deposits. He is Also Endorsed By Robert E Rubin, Former Treasury Secretary and Citigroup Executive
(Livemint) “Vikram has earned a reputation as one of the most respected leaders in the financial services industry. The combination of his deep executive experience and long history as a strategic thinker makes him the outstanding choice to be Citi’s CEO,”
“The Board is unanimous in its conviction that, as part of a new generation of executives in this industry, Vikram is the right leader to build on the exceptional strengths of this great company and take the steps necessary to lead us forward,” Rubin said in a statement.
(2012) “Citigroup CEO ousted for mismanaging operations: source”
“Citigroup Inc. directors ousted CEO Vikram Pandit after concluding he had mismanaged operations, leading to setbacks with regulators and a loss of credibility with investors, a person with knowledge of the discussions said”, Financial Post
Lehman Lending To Itself, Uses Collateral To Finance Repo Borrowing
The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going
“The trader known as the London Whale lost more than $6.2 billion for JPMorgan Chase & Co. last year. That’s a lot of money until you remember that it didn’t stop the bank from earning a record profit of $21.3 billion”. Bloomberg
Frontline Gets Its Man: Lanny Breuer Leaves DOJ After Exposé
SEC Hiring Freeze Hits Enforcement Staff Hard, Andrew Ramonas Sept. 4, 2018
“The Claytons (Current SEC Chairman) own a place in Ocean City, a beach community in southern New Jersey, that Clayton valued at $1 million to $5 million; a rental property there worth more than $1 million; and another property in Philadelphia, worth up to $5 million. And that doesn’t include their 3,000-square-foot loft apartment on Hudson Street, in Manhattan’s Tribeca, which they bought for around $3.2 million in 2006, according to city records. All told, the couple has a net worth of more than $50 million”. The Intercept
Before she could formalize her findings, Segarra said, the senior New York Fed official who oversees Goldman pressured her to change them. When she refused, Segarra said she was called to a meeting where her bosses told her they no longer trusted her judgment. Her phone was confiscated, and security officers marched her out of the Fed’s fortress-like building in lower Manhattan, just 7 months after being hired.
“They wanted me to falsify my findings,” Segarra said in a recent interview, “and when I wouldn’t, they fired me.” (Propublica)
“U.S. District Judge Ronnie Abrams in New York ruled late Wednesday that the assertion by Carmen Segarra that supervisors retaliated against her failed to fall within the whistleblower statute under which she filed her case”. Propublica
(This is terrifying)
“Plaintiff continues to object to Defendants inserting their versions of facts into the discussion at this point in the proceeding, when the Judge has granted their request to stay discovery. For example, Defendants continue to say Goldman is not a depository institution (This is like something you’d expect to see in Russia) when there has been no discovery and no stipulation regarding how or why Goldman came to be examined by the New York Federal Reserve Bank through Carmen Segarra. The Court has been abundantly considerate of Defendants’ wishes to stay discovery; for any discrepancy in facts, the Plaintiffs version of the facts must be given deference. Plaintiff continues to hope the Court will not find itself distracted by Defendants’ ‘red herrings.’” (Italicized text is my own)….
“At this direct link from the FDIC, we see that Goldman Sachs Bank USA is a direct unit of Goldman Sachs Group, Inc., the bank holding company. We also see that the commercial bank has been insured by the FDIC since November 28, 2008″
“Segarra’s lawyer, Linda Stengle, filed a letter with the court asking for a more complete disclosure of the Judge’s husband’s relationship with Goldman Sachs. The New York Fed responded with its own letter, writing: “Plaintiff’s request for additional disclosures raises concerns about the appearance of a different sort of impropriety: forum shopping…Under these circumstances, the Court should deny Plaintiffs request for additional disclosures and proceed with the case.”
Tower Financial Corp. and Jeffrey Epstein Ponzi Scheme Complaint
Andrew Madoff, Who Told of His Father’s Swindle, Dies at 48
JPMorgan Chase to pay $410 million penalty in electricity pricing scheme
Man Buys The Entire Float, Wakes Up The Next Day To See The Stock Still Trading Millions Of Shares!!
The Big 4 Banks Hold Deposits Equal To 27% of the Entire U.S. GDP, But They Couldn’t Come Up With $100 Billion For Repo Loans, WSP Reports
(WSP)Wall Street Is Gobbling Up Two-Thirds of Your 401(k)
Libor Scandal: Why the N.Y. Fed Must Be Investigated, Eliot Spitzer
The New York Fed is the most powerful financial institution you’ve never heard of. Look who’s running it. Eliot Spitzer
It’s a Big Club, and You’re Not In It:
(Reuters) “In the third quarter of 2014, Fidelity funds boosted their collective stake in Ultragenyx by 3.3 million shares to become the biotech firm’s largest mutual fund investor, with nearly 4.6 million total shares. By then, the average closing price of the stock had moved up to $50.24 from $41.17 in the second quarter. During the same quarter, F-Prime unwound most of its stake in Ultragenyx by distributing the stock to limited and general partners, U.S. regulatory filings show”.
F-Prime is owned by Johnson Family members, insiders and affiliates(agents, cronies, friends, however you want to put it — the club that you’re not in)
After Charges of Running a Price Fixing Cartel on Nasdaq in the 90s, Wall Street Banks Are Now Trading Their Own Stocks in Darkness(WSP)
(Leaking Fed Minutes Before They Are Released; Allows You To Trade Ahead of the Market Because Fed Policy Will Shift Equity and Bond Prices ) “During his employment at Goldman, the Associate wrongfully obtained confidential information, including approximately 35 documents, on approximately 20 occasions, from a former co-worker at the New York Fed (the “New York Fed Employee”). These documents constituted confidential regulatory or supervisory information – many marked as “internal,” “restricted,” or “confidential” – belonging to the Department, the New York Fed or the Federal Deposit Insurance Corporation (the “FDIC”). The Associate’s main conduit for receiving information from the New York Fed was his former coworker, the New York Fed Employee, who has since been terminated for this conduct.While still employed at the New York Fed, the New York Fed Employee would email documents to the Associate’s personal email address, and the Associate would subsequently forward those emails to his own Goldman work email address”. ValueWalk..
GREENSPAN CALLS FOR REPEAL OF GLASS-STEA…1987, NYT
“The Nasdaq stock market, filled with the stocks of rigged analyst research from the iconic firms on Wall Street (the target of investigation), had imploded, losing 66 percent of its pumped up value and wiping out $4 trillion in wealth”.(WSP)
“In 2003 there had been a few tens of billions of dollars of subprime mortgage loans. From June 2004 until June 2007, Wall Street underwrote $1.6 trillion of new subprime-mortgage loans and another $1.2 trillion of so-called Alt-A loans—loans which for some reason or another can be dicey, usually because the lender did not require the borrower to supply him with the information typically required before making a loan”
“I’m convinced that our input into the system led to a substantial portion of the increase in housing prices in the U.S. We facilitated a trillion dollars in mortgages,” says one trader. “Just us.(AIG)”
From “The Man Who Crashed the World”, by Michael Lewis
“The Fed Board of Governors contends that it is separate from member institutions, including the Federal Reserve Bank of New York, which runs most of the lending programs. Most documents relevant to the Bloomberg suit are at the New York Fed, ***which isn’t subject to FOIA law***, according to the central bank. The Board of Governors has 231 pages of documents, to which it is denying access under an exemption for trade secrets”.
“The Board cannot seriously maintain that the NY Fed does not perform governmental functions and control information of interest to the public,” Bloomberg said in yesterday’s motion”.(Bloomberg)
Sachs (Fake news, but still a lot of interesting facts embedded within the bs.)
(Bloomberg) “JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility ***“at the request of the Federal Reserve to help motivate others to use the system.”*** He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation.
“What the Energy Group had long lobbied for and finally received from its Federal regulator was the breathtaking ability to trade oil contracts and oil derivatives secretly in the over- the-counter (OTC) market, thus avoiding the scrutiny of regulated commodity exchanges, their CFTC regulator, and Congress. The April 6, 2001 letter was essentially to say thanks and interpret the new rules as favorably as possible for the Energy Group”. WSP
Citigroup literally writes the legislation word for word to remove restrictions on commercial banks holding exotic derivatives; the very financial products that brought down the financial system. Holding these financial products outside of their bank increases the cost because they cease to be insured by the FDIC. Today in 2020, Citi holds almost 1 trillion in derivatives in their commercial bank, subsidized by the government(NYT)
The Implicit Government Bank Bailout Subsidy Was Estimated to be as High as $300 Billion In 2011, Three Times that of all U.S Bank Holding Companies Annual Earnings in the Same Year (Yes, You Read That Right)
Sticker Shock: $23.7 Trillion Bailout? – ABC News (it was more!)
“The rent-a-bank scheme works like this: More than half of all states have interest rate caps on consumer loans. They have been largely rendered irrelevant for credit cards, thanks to a court ruling that allows banks to adopt credit card interest rates in the state where they are headquartered. That’s because the National Bank Act of 1864 pre-empts state usury caps for national banks that do not reside in that state”. Prospect
“This couple went to a small business lender — within two years they had lost their house”
“They agreed to make repayments of $5,250 a month, but this would jump to $37,500 a month if they ever fell behind on the loan”.(ABC)
“From an office near New York’s Times Square, people trained by a veteran of Jordan Belfort’s boiler room call truckers, contractors and florists across the country pitching loans with annual interest rates as high as 125 percent, according to more than two dozen former employees and clients. When borrowers can’t pay, Naidus’s World Business Lenders LLC seizes their vehicles and assets, sometimes sending them into bankruptcy”.
How Banks Can Use Their Commercial Holdings to Manipulate Markets for the Purpose of Increasing their Trading Profits; Or Vise Versa
In the 11 Years Following the Financial Crisis, Not One Bank Merger Has Been Rejected According to the Committee on Financial Services
But the reservoir of other people’s money, from which the investment bankers now draw their greatest power, is not the life insurance companies, but the banks and the trust companies. Bank deposits represent the really quick capital of the nation. They are the life blood of businesses. Their effective force is much greater than that of an equal amount of wealth permanently invested. The 34 banks and trust companies, which the Pujo Committee declared to be directly controlled by the Morgan associates, held $1,983,000,000 in deposits. Control of these institutions means the ability to lend a large part of these funds, directly and indirectly, to themselves; and what is often even more important, the power to prevent the funds being lent to any rival interests. These huge deposits can, in the discretion of those in control, be used to meet the temporary needs of their subject corporations. When bonds and stocks are issued to finance permanently these corporations, the bank deposits can, in large part, be loaned by the investment bankers in control to themselves and their associates; so that securities bought may be carried by them, until sold to investors. Or these bank deposits may be loaned to allied bankers, or jobbers in securities, or to speculators, to enable them to carry the bonds or stocks. Easy money tends to make securities rise in the market. Tight money nearly always makes them fall. The control by the leading investment bankers over the banks and trust companies is so great, that they can often determine, for a time, the market for money by lending or refusing to lend on the Stock Exchange. In this way, among others, they have power to affect the general trend of prices in bonds and stocks. Their power over a particular security is even greater. Its sale on the market may depend upon whether the security is favored or discriminated against when offered to the banks and trust companies, as collateral for loans.
The control by the leading investment bankers over the banks and trust companies is so great, that they can often determine, for a time, the market for money by lending or refusing to lend on the Stock Exchange. In this way, among others, they have power to affect the general trend of prices in bonds and stocks. Their power over a particular security is even greater. Its sale on the market may depend upon whether the security is favored or discriminated against when offered to the banks and trust companies, as collateral for loans.
In 2008, The New York Times Said That Giving Investment Bankers Banking Charters Would Finally Put an End To Gluttonous Wall Street Paychecks
According to plea agreements to be filed in the District of Connecticut, between December 2007 and January 2013, euro-dollar traders at Citicorp, JPMorgan, Barclays and RBS – self-described members of “The Cartel” – used an exclusive electronic chat room and coded language to manipulate benchmark exchange rates.
One-Third of Americans’ Monthly Income Is Going Toward Paying Off Debt
“The top 20 stock buyback programs in corporate America have spent $1.4 trillion buying back their own shares since the Great Recession ended”.(CNBC)
The Average American millennial only has $8,000 in total net worth
“Researchers and popular media use the early 1980s as starting birth years and the mid-1990s to early 2000s as ending birth years”, Wikipedia
Bart Chilton Dies, April 27, 2019, Age 58. Final Interview, Here, and Here
“On March 18 of last year, Bart Chilton, then a Commissioner at the Commodity Futures Trading Commission (CFTC), stunned CNBC viewers with the announcement that wash sales were rampant in the futures markets. Speaking to Squawk Box host, Joe Kernen, Chilton stated”…….(WSP)
“Pittman asked Treasury officials for details related to guarantees the agency had provided on securities held by Citigroup, American International Group Inc. and Bank of America Corp”….”More than 20 months later, after saying at least five times that a response was imminent, Treasury officials responded with 560 pages of printed-out e-mails — none of which Pittman requested. They were so heavily redacted that most of what’s left are everyday messages such as “Did you just try to call me?” and “Monday will be a busy day!”, Bloomberg
The table below shows the short term loans that investment banks received from the fed during the financial crisis.
As of 2019, they are receiving similar loans in the form of Repo Agreements (Repurchase Agreements). The last time the fed was forced to resort to such drastic market intervention was during the financial crisis, and this is illustrated in the above table
You might have to lean in close, because those numbers are so large that you may dismiss what you are seeing as some kind of misunderstood anomaly; what they refer to as “cognitive dissonance“.
Looks eerily similar to that first table, doesn’t it?
Yes, they are funneling 100’s of billions of dollars per day into Wall Street Trading Houses as of 4th quarter 2019.
From NYF Website: “In accordance with the most recent Federal Open Market Committee (FOMC) directive, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will conduct a series of overnight and term repurchase agreement operations (repos) at least through January of next year to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation”.
The Big 4 Banks Hold Deposits Equal To 27% of the Entire U.S. GDP, But They Couldn’t Come Up With $100 Billion For Repo Loans, WSP
(November 11, 2019) “Today’s Fed loans are being made at the ridiculously low interest rate of 1.55 percent (as of last Friday) and structured as repurchase agreements (repos) with U.S. treasuries or federal agency mortgage-backed securities (MBS) accepted as collateral for the loans. This is the first time that the Fed has made such loans since the financial crisis and yet no Fed official can explain what the crisis is today. It is completely possible that the Fed is loaning money at 1.55 percent to a trading firm and the trading firm is re-loaning that money as a 9 percent margin loan to a stock trading customer or using the funds to trade for itself”.(WSP)
(Reuters) U.S. banks’ reluctance to lend cash may have caused repo shock: BIS
Fed President Seems to Forget that Equities are Bought with Cash, and not T-Bills, Jan.17th, 2020
There Is Now Only One Clearing Bank In The United States, and The Financial Community Is Eerily Silent
“The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression…The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.”(WSP)
SEC short-selling focus snares Millennium over lapse in simple rule
Lynn Turner Wants to Break up the Big Four
“The people involved in that case are people who worked at a Big Four audit firm, went to work for the regulator, then left the regulator and went back to the firm. And when they went back to the firm, they illegally obtained information from the regulator that they then used inside the audit firm.”
“Dairy farmers who saw a $1.5 million portfolio incur $1.3 million in trading costs in a single year”.
“It’s a hollow victory because the award is probably not worth the paper it’s printed on,” said Andrew Stoltmann, president of the Public Investors Arbitration Bar Association. (Investmentnews.com)
(TheStreet) “The hearings are held behind closed doors, the rules are written by an operation that’s financed by Wall Street and the decisions of the arbitrators typically are issued with no explanation. Little surprise that many ugly details about the process stay private, too”.
“every individual investor in America with a brokerage account is forced to forego court and agree instead to use a closed-door council endorsed by Wall Street”.
(Bloomberg) “When a couple in Wichita claimed they lost $187,500 in what they called a Ponzi scheme orchestrated by a Morgan Stanley broker, the industry-funded Financial Industry Regulatory Authority (Finra) provided a list of potential arbitrators to resolve the dispute. Two of the people were dead, one for more than two years, according to Diane Nygaard, the couple’s lawyer. She calls the faulty list a sign of a broken system that has failed to protect investors. “If it were a regular judicial system, you would not have a case appointed to people who are dead,” she says. “Wall Street should not have a special pet court that they operate.”
Securities and Exchange Commission v. Pequot Capital Management, Inc. and Arthur J. Samberg
Full text of “Robert Booth Nichols Deposition – Sam Israel Case”
Selling PIPE Securities Short, Then Covering With Those Same Securities After Registration, SEC Complaint
This case involves a serial insider trading scheme perpetrated by a group of stock traders that generated over $4.4 million in profits. The primary component of their scheme was the systematic misappropriation of material non-public information from investment banks confidentially marketing secondary stock offerings by publicly traded issuers. The individuals who participated in this aspect of the scheme – Fishoff, Petrello, Chernin and Costantin – together made over $3.2 million by obtaining advance knowledge of the offerings from the investment banks and then, after tipping other members of the group, selling short the issuers’ stock before the offerings were publicly announced. The confidential offering information obtained by these defendants was material because the offering shares were sold by the issuers at a discount to the market price and diluted the holdings of existing shareholders. As a result, the issuers’ stock prices dropped substantially after the offerings were announced, thus enabling the defendants who shorted the stocks to cover their short sales at a hefty profit
In re REFCO, INC. SECURITIES LITIGATION
AMR ELGINDY, and JEFFREY ROYER TRANSCRIPT OF TRIAL
Martin Shkreli kept hedge-fund investor in dark about botched short trade, misled him on auditors: testimony
Merrill Lynch salesman describes shock, anger after Shkreli lost $7 million for Merrill on short trade and then threatens firm if it tries to collect(CNBC)
“I just finished watching your story about naked short selling and must say that I’m extremely disappointed. For a story that has been rumored to be in the making for such a long time, it’s brevity spoke volumes”
(2004)According to a trader who has been in the business for over 20 years, “the issue of naked short selling, or to put it more bluntly, ‘stock counterfeiting’, affects nearly every person who has ever bought or sold stock or invested in mutual funds. This scandal has cost investors and companies trillions of dollars, cost our country billions in tax revenues, and the money stolen from investors has even found its way into the hands of organized crime and terrorist organizations.”
A Real Life Example Of A Short Sale Fail To Deliver, Also Known As A “Naked Short”. Courtesy, From Everybody’s Favorite Villain, Martin Shkreli
Nanopierce Technologies, Inc vs .Southridge Capital Mgmt
The Commission alleges in its complaint that Langley Partners and Thorp, after agreeing to invest in a PIPE transaction, typically sold short the issuer’s stock, frequently through “naked” short sales in Canada. Among other things, the Commission’s complaint alleges that: Once the Commission declared the resale registration statement effective, Thorp used the PIPE shares to close out the short positions ? a practice Thorp knew was prohibited by the registration provisions of the federal securities laws. To avoid detection and regulatory scrutiny, Thorp employed a variety of deceptive trading techniques, including wash sales and matched orders, to make it appear that he was covering his short sales with legal, open market stock purchases. In fact, the covering transactions were not open market transactions because Thorp was on both sides of the trades.
In re Adler, Coleman Clearing Corp.
Journalist Sues For Further Disclosure
Gary J. Aguirre Gives Damning Testimony About Regulatory Capture In 2006
MASTERS OF THE UNIVERSE:BID RIGGING BY PRIVATE EQUITY FIRMS IN MULTIBILLION DOLLAR LBOS
“After nearly seven years of litigation, in 2014, a shareholder class of investors settledtheir antitrust claims against some of the world’s largest private equity (“PE”) firms – BainCapital Partners, Blackstone Group, Carlyle, Goldman Sachs, Kohlberg Kravis Roberts & Co.,Silver Lake Technology Management, and TPG Capital – who agreed to pay $590.5 million”
At the core of this scheme was defendants’ perpetration of a massive and fraudulent disinformation campaign attacking the stock of Biovail and other targeted publicly traded companies, including the preparation of ostensibly objective, but in fact biased, analyst reports; defendants’ accumulation of short positions in the stock of those companies, i.e., bets that the stock prices would decline; and defendants’ subsequent unleashing of the disinformation campaign and biased
Biased Research (Sworn Testimony)
” One shareholder avoided much of that drop: the CEO. On June 19, the day the stock peaked, Olsen contracted with an investment bank to hedge 150,000 shares—a quarter of his stock in the company—against losses if the price fell below 18. As part of the complex maneuver, he agreed to sell his shares to the bank one year later and got an advance of $2.2 million. Olsen, who disclosed his hedging in public filings, declined to comment for this story”. To facilitate this transaction, the banker would immediately short the stock, then buy a call to protect themselves from further appreciation. They make money by charging a fee, while also potentially attracting new customers. (Bloomberg)
SHORT SALE ANTITRUST LITIGATION, 2007
“ETG also claims that since brokers are not required to report the identities of Purchasers or Short Sellers to regulators and because two of the Defendants generally act as Seller’s Broker and Purchaser’s Broker, Defendants conspired not to enforce delivery of shorted securities, allowing persistent FTDs. ETG claims that instead of forcing delivery, Defendants maintain running IOU tallies among themselves with the Seller’s Broker debiting Short Seller’s account and Purchaser’s Broker crediting Purchaser’s account so as to make it appear as though the securities were delivered. Accordingly, a given Short Seller and Purchaser will not know whether the securities they sold and purchased were ever borrowed or delivered”.
For a hard to borrow security, borrow rates can go anywhere from 20-100 percent per year, but these rates can go much higher in some cases. For a short period of time, TLRY had a borrow rate that was more than 900%, so charging these rates on fictitious loans is obviously the most brazen and shameless form of fraud.
Here are some examples. They are the usual suspects — usually have poor business models, way overvalued, bad press, pump and dumps, over-hyped etc.
“Testifying recently in a lawsuit that is unrelated to Copper River’s closing, Mr. Cohodes maintained that actions taken in the fall of 2008 by Goldman in the handling of trades for Copper River had done irreparable damage to the fund. His testimony, which has not been made public, was obtained by The New York Times. Goldman has sought to seal the transcript of Mr. Cohodes’s deposition, which is part of a case brought by Overstock.com, an Internet retailer, against two of the biggest Wall Street firms. Overstock contends that the firms — Goldman Sachs and Merrill Lynch — failed to borrow company shares that they or their clients sold short, a practice known as naked shorting. Overstock says that the firms essentially evaded rules intended to prevent stock manipulations, and that its stock came under outsize selling pressure as a result”. NYT
“Other People’s Money and How the Bankers Use It”, (1914)
“These bankers are, of course, able men possessed of large fortunes; but the most potent factor in their control of business is not the possession of extraordinary ability or huge wealth. The key to their power is Combination….
“There is the obvious consolidation of banks and trust companies; the less obvious affiliations–through stockholdings, voting trusts and interlocking directorates–of banking institutions which are not legally connected; and the joint transactions, gentlemen’s agreements, and “banking ethics” which eliminate competition among the investment bankers”.
“Greenspan Admits Market Can’t Regulate Itself”
After years of believing the market will regulate itself, e.g. (people looking out for their own self interest acting together to maximize profits), and fighting what at times appeared to be common sense regulation, Greenspan finally admits he was wrong in 2008
(Strangely This Was Removed???) They must have known people would archive it. Shows desperation. “A.G. Schneiderman Calls For New Efforts To Eliminate Unfair Advantages Provided By Trading Venues To High-Frequency Traders”.
Max Keiser Reveals Stunning Revelation
“The Wild Ride of Tut Systems”
(October 2004) “What happened here is that there was most likely some kind of manipulation to move the stock price higher in order for Tut Systems to sell shares at an inflated price. Mere coincidence?”
In the image below, you can see that even after the hedge fund asked for direct ownership, Computershare (the transfer agent) refused, which directly affected its ability to nominate new directors at a pivotal moment.
“NEW YORK, July 31, 2019 (GLOBE NEWSWIRE) — The Nasdaq Stock Market announced today that it will delist the common stock of Legacy Reserves Inc. Legacy Reserves Inc.’s stock was suspended on June 28, 2019 and has not traded on Nasdaq since that time”.
MIDLAND, Texas, Dec. 11, 2019 /PRNewswire/ — Legacy Reserves Inc. (“Legacy”) and certain of its subsidiaries (collectively, the “Company”) announced today that it has emerged from chapter 11, successfully completing its financial restructuring and implementing the Company’s confirmed plan of reorganization (the “Plan”). The Company has significantly reduced its debt through a combination of an equitization of existing debt and approximately $255 million of new equity capital. The Company emerges with $388 million of total debt outstanding, all of which is under a new reserve-based credit facility with an initial borrowing base of $460 million. This facility is led by Wells Fargo Bank, National Association as Administrative Agent, RBC Capital Markets as Syndication Agent, Joint Lead Arranger and Joint Bookrunner, along with Wells Fargo Securities, LLC, BMO Capital Markets Corp., Barclays Bank PLC, BofA Securities, Inc., JPMorgan Chase Bank, N.A., Citigroup Global Markets Inc., and Credit Agricole Corporate and Investment Bank as additional Joint Lead Arrangers and Joint Bookrunners”.
“The most alarming problems are represented by those shareholders who have been requesting certs from their brokers since the company’s first announcement of a distribution seven months ago. Here is a sampling of excuses being given to shareholders as reasons for their inability to obtain a cert:“
The Subversion of Shareholder Democracy and the Rise of Hedge-Fund Activism, Jang-Sup Shin
“This paper explains how hedge-fund activists are exerting power over corporate resource allocation far in excess of the actual voting power of their shareholdings”
Shareholders: Don’t give away your voting rights
“Less than 30% of shareholders voted their shares this year, according to voting administrator Broadridge”. Fortune, Dec.16th, 2014
Initiating analyst coverage on companies they indirectly control..”“I’ve never seen a firm that needs to raise a lot of capital acquire a brokerage for that purpose,” said Benjamin Edwards, an associate professor of securities law at the University of Nevada, Las Vegas, echoing nearly a dozen other experts in corporate finance and securities law whom Reuters interviewed for this article”.
Wall Street’s self-regulator blocks public scrutiny of firms with tainted brokers
“Last year, a FINRA official told Reuters, the regulator identified 90 firms as posing the highest risk to investors and flagged them internally for higher scrutiny. But FINRA declined to name the firms publicly or to release statistics showing the concentration of brokers with a history of FINRA flags within each firm”.(Reuters)
Brokers Face $100 Million in Losses From MJK Failure
“Four brokerage firms may have lost more than $100 million in a stock trading scheme involving a cast of characters including a global arms dealer and a woman who claims to have been the model for Mattel Inc.’s Pocahontas doll”.
“The Commission brings this civil action against Thomas G. Brooks (“Brooks”), the former manager of the Stock Loan Department (“SL Department”) at MJK Clearing, Inc. (“MJK”) for his fraudulent conduct relating to the stock loan business of MJK and for his aiding and abetting of MJK’s violations of its customer reserve and record-keeping requirements under the federal securities laws”.
“German financial giant Deutsche Bank has agreed to a $270 million settlement of claims that it participated in a complex securities fraud orchestrated by a fugitive Saudi arms merchant that bankrupted Minneapolis-based securities firm Stockwalk Group four years ago”.
“The settlement largely ends a strange tale that began just days after U.S. securities markets resumed trading following the Sept. 11, 2001, terrorist attacks and led to the largest liquidation of a securities firm in U.S. history”.
Fund scandal clips JB Oxford
“JB Oxford is drawing attention because of itsagreement with Canary to clear the hedgefund’s paperwork on after-hours trades. JBOxford got compensation equaling 1% of assetstraded, according to Spitzer’s complaint against Canary”.
“In the mid- and late-1990s, JB Oxford was a major clearing firm that processed the brokerage trades of micro-cap stocks, the tiny, obscure companies with little market value. The stocks often were sold by “boiler-room” brokerages, also called”bucket shops,” which used high-pressure telephone sales tactics to run investment scams on unwary customers”.
“JB Oxford did fine during the dot-com boom. It posted record revenue of $104 million in 1999. It had offices in Beverly Hills, New York, Miami and Basel,Switzerland. It ran a $10 million advertising campaign with former MASH television star Wayne Rogers, who once owned 1% of JB Oxford”.
J.B. Oxford to Sell Retail Brokerage Accounts to Ameritrade.
“Regulators in the SEC’s Los Angeles office have recommended that the agency “institute civil and administrative proceedings” against J.B. Oxford, stemming from an investigation of the firm’s National Clearing Corp. subsidiary, because of its alleged role in the mutual fund scandal. The J.B. Oxford subsidiary, which processes and executes trades for a number of small brokerages and hedge funds, might have processed some illegal mutual fund trades for the now infamous”
THE OCTOPUS (Search for each article within archive.is if archive.org doesn’t work)
CMKX SHAREHOLDERS COALITION VS. THE SEC, Trillion Dollar Lawsuit(Real)
” During the period from at least in or about September 1996 through October 1996, *****(name redacted) offered to pay, and orchestrated the payment of, undisclosed compensation to person(s) whom he believed to be registered representative(s) or registered principal(s), to induce such registered representatives, registered principals or persons to purchase the common stock of GRAY for the accounts of customers. For example, on or about September 26, 1996, *****, directly or indirectly, transferred or caused to be transferred, 15,000 shares of GRAY stock to a broker-dealer which was undisclosed compensation for a previous purchase of 50,000 shares of GRAY at approximately $0.375 per share by the broker-dealer. Accordingly, ***** willfully violated, and committed and caused violations of, Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder”. Not linking to the original report. Just thought this was a good example of market manipulation
PwC investigation finds $7.4 billion accounting fraud at Steinhoff, company says
HK suspends UBS sponsor license, fines it and others $100 million for IPO failures
CSFB SHARED PROFITS FROM HOT INITIAL PUBLIC OFFERINGS (“IPOS”)
SEC probes IPO of VA Linux
“GLG and Chelsey received 35,000 shares and 15,000 shares, respectively, of the VA Linux deal, a person on Wall Street says, giving them stakes that by the end of the company’s first trading day generated one-day paper gains of $7.3 million and $3.1 million, respectively, for GLG and Chelsey. It is unclear whether the funds later sold their VA Linux shares.
By comparison, some of the largest U.S. mutual-fund groups — including Alliance Capital Management and AIM Management Group, which oversee equity assets that dwarf those of GLG, the larger of the two funds — received 60,000 to 75,000 shares of the Linux deal, the same person said”.
South Florida Securities Lawyer Convicted by Jury of Conspiracy, Securities Fraud, Wire Fraud, and Money Laundering in Connection with Shell Factory Stock Swindle
How the secret currency traders’ club devised the world’s biggest market’s rates
Justice Department, Federal and State Partners Secure Record $13 Billion Global Settlement with JPMorgan for Misleading Investors About Securities Containing Toxic Mortgages
Bank of America to Pay $16.65 Billion in Historic Justice Department Settlement for Financial Fraud Leading up to and During the Financial Crisis
SPENCER ROLAND BUENO vs CBOE GLOBAL MARKETS, INC
“Cases alleging one of the most pervasive Wall Street insider trading rings since the days of Ivan Boesky and Dennis Levine.
What is so alarming about the conduct alleged in the SEC’s case isn’t just the scope of the scheme – fourteen defendants, five years of illegal trading, hundreds of tips, and well over $15 million in illegal trading profits – but, sadly, who is at the center of it”.
“This case involves two insider trading schemes in which Wall Street professionals serially traded on material, nonpublic information tipped — in exchange for kickbacks — by insiders at UBS Securities LLC (“UBS”) and Morgan Stanley and Co., Inc. (“Morgan Stanley”). In the first scheme, which has been ongoing since 2001, at least eight securities industry professionals, three hedge funds, two broker-dealers, and a daytrading firm, made thousands of illegal trades and millions of dollars in profits using”
“One day in 2003, Sam Childs, a compliance officer at Assent, noticed Tavdy’s unusual trading patterns: large positions on a single stock the day before it happened to be upgraded by UBS. Childs didn’t turn him in. Instead, according to an FBI recording, he merely warned Tavdy, telling him he needed to start losing a few hundred dollars so his remarkable winning streak didn’t look so suspicious. (Tavdy’s lawyer disputes this.)”
Dan Loeb Was Mr.Pink On Silicon Investor
Fraud police smash ‘boiler room’ ring in raids in London and Spain | Daily Mail Online
Silicon Investors thread gives further detail on the above story
2 Wall Street banks made millions selling the collapsing shares of MoviePass’ parent company, as their analysts kept ‘buy’ ratings on the cratering stock
The Secrets of Eddie Stern If you think you know how bad the mutual fund scandal is, you’re wrong. It’s worse. By Peter Elkind Reporter associates Christopher Tkaczyk and Doris Burke.
April 19, 2004
Montreal Mafia lawyer going to prison for becoming one of the gangsters he defended | National Post
Montreal’s underworld: Mafia, Hells Angels, street gangs worked in concert | Regina Leader-Post
Florida Board of Health suspends hundreds of health care licenses over student loan defaults | News | wtxl.com
Former Wells Fargo Financial Advisor John Schmidt Charged with $1 Million Ponzi Scheme – Erez Law
Members of Blair management, together with the broker groups, took steps to increase the prices of Blair stocks in the early aftermarket for those stocks. Before the deals went effective, there were trading agreements between members of management, at times including Stahler, and the leader or leaders of the broker group for that particular deal.
SLUSSER v. COMMODITY FUTURES TRADING COMMISSION