The Market Ticker
Commentary on The Capital Markets- Category [Corruption]

Gee, just one eh?

The Justice Department announced Thursday it had brought first-ever charges against a high-frequency trader for manipulating prices in commodity markets.

Calling it the first federal prosecution of its kind, the Justice Department said it had charged a New Jersey-based trader with six counts of commodities fraud and six counts of “spoofing,” stating he reaped nearly $1.6 million in ill-gotten profits.

The case marks the first time the government has brought charges under an “anti-spoofing” provision included in the Dodd-Frank financial reform law.

This goes on in the futures and stock markets literally every day.

Nanex has documented dozens upon dozens of instances, I put a video up a few years ago documenting a particularly-visible apparent case of it in the /ES futures over a holiday and there have been myriad other reports.

Nobody goes to jail and it isn't (obviously) stopped.

Will this (finally) get enough attention among the HFT crowd that the "issue and cancel" nonsense will end?

I'll take "No" on that wager.

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There is never only one cockroach....

BEIJING -- China has fined the British pharmaceuticals giant GlaxoSmithKline (GSK) $488.8 million (3 billion Yuan) for a "massive bribery network" to get doctors and hospitals to use its products. Five former employees were sentenced to two to four years in jail, but ordered deported instead of imprisoned, according to state news agency Xinhua today.

So let's see here -- we have a firm that got caught bribing hospitals, doctors and other institutions on a massive scale.

Wait a minute -- isn't there a law in the United States bearing on firms that engage in foreign bribery if their shares are listed here?  I think there is!

Does that apply in this case?  Good question -- and one that Eric (Place)Holder won't be answering, will he?

Just wonderin', you know.......

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This is being presented as "The Secret Goldman Tapes"; it is in fact about much more.

That (ed: the public's glazed-eye look when you speak of financial reform) may very well change today, for today -- Friday, Sept. 26 --- the radio program "This American Life" will air a jaw-dropping story about Wall Street regulation, and the public will have no trouble at all understanding it.

The reporter, Jake Bernstein, has obtained 46 hours of tape recordings, made secretly by a Federal Reserve employee, of conversations within the Fed, and between the Fed and Goldman Sachs. The Ray Rice video for the financial sector has arrived.

The half-baked conclusion?

The Fed encourages its employees to keep their heads down, to obey their managers and to appease the banks. That is, bank regulators failed to do their jobs properly not because they lacked the tools but because they were discouraged from using them.

They weren't "discouraged", they were fired when they attempted to use them.

Further, this isn't just a matter of not asking questions, it is a matter of willful and intentional malfeasance -- that is, the willful refusal to act on known (not suspected) information:

For instance, in one meeting a Goldman employee expressed the view that "once clients are wealthy enough certain consumer laws don't apply to them." After that meeting, Segarra turned to a fellow Fed regulator and said how surprised she was by that statement -- to which the regulator replied, "You didn't hear that."

If you remember when the Valukis report came out after Lehman's collapse, a forensic look into Lehman in the months leading up to the firm's detonation, there were several stunners in the report that nobody in the media paid attention to.  Indeed, I think I've been the only one banging the drum on this since the report was issued.

Specifically, in the weeks leading up to the detonation Lehman attmepted a tri-party Repo with Citibank.  Citibank rejected their collateral, calling it trash, and asked what else Lehman had they could put up.  Lehman's reply: Nothing.

Now this wouldn't be so extraordinary (people say "nuts!" to a proposed transaction all the time) except that a tri-party repo involves, as the name implies, three parties, not two.  

The third party was the NY Fed, at the time under control of one TurboTax Tim Geithner.

In other words The NY Fed was a party to the failed transaction attempted by Lehman before they got into critical liquidity trouble and blew up.  In point of fact at that instant in time the NY Fed knew they were out of collateral and, thus, out of money.  So did Citibank.

This is the stock price chart from the time:

Citibank didn't know of this just in those last five days -- they knew factually when the Repo failed and so did the NY Fed.

How much money do you make if you buy PUTs and short a stock when you know the company is going to under but that material inside information has not yet been disclosed to the public at large?  Remember: For everyone who did have that information, bet using it and won someone else lost and that someone was likely someone like you.

Further, the economic damage from the Fed's willful failure to intervene, when under the law The Fed is required to deal only with solvent institutions and had to know, by the manifest weight of the evidence, that the firm was bankrupt, was to at least some extent avoidable if they had simply done their job.

It is often said in America that nobody pays attention to anything, even when it has to be true until there are audio or video tapes shown to the public.  The disgraceful and willful behavior of the Federal Reserve, which I will remind you crosses the line of their statutory authority and thus they are not immune, either as an institution nor are the persons involved personally immune from prosecution and/or lawsuit, has been apparent for a very long time.  Incidents like Lehman's failure have left indelible and quite damning evidence "in print" that this is the case.

But now we have audio tape, and like the video of a woman getting decked in the elevator, it is in your face America.

Are you going to stand up and do something about this, or will you continue to accede to being ripped off wholesale and on purpose, not only by the banks themselves but by the so-called "government agencies" that are charged formally and legally with preventing it from happening?

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2014-09-26 07:10 by Karl Denninger
in Corruption , 636 references
 

It's about damn time.

One of the main reasons for the American Revolution was the arrogance of British officials who searched and raided people’s property at will. To keep that from recurring in the new United States, this language was included in the Fourth Amendment: “The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures shall not be violated.”

Grand words, but unfortunately they cannot prevent government officials from engaging in such conduct. Consider the following case.

Florida has a statute requiring that barbers be licensed and it gives the Department of Business and Professional Regulation (DBPR) authority to enforce it through biennial inspections of barber shops. Two inspectors conducted an inspection of the Strictly Skillz shop in Orlando on August 19, 2010. They found no violations.

But only two days later, DBPR came back to Strictly Skillz, this time with an astounding display of force: eight armed officers, including narcotics agents, some of them wearing masks and bullet-proof vests burst into the shop with weapons drawn. Squad cars blocked off the parking lot. The officers shouted that the customers were to leave immediately and that the shop was “closed down indefinitely.”

Four of the barbers sued, arguing not just that the raid was unconscionable but that the officers had violated their civil rights under color of law or authority and thus were exposed personally to damages.

Note the distinction here, because it's an important one: Suing a police agency or city is all well and good, but you're suing yourself in part, because anything you get comes not from the individual officers involved but rather from the taxpayers!

This is a major problem because there is zero deterrent value to such a lawsuit; it may make you whole but it will never deter further behavior of that sort because the person who does the bad thing never faces any consequence personally.

As expected the officers claimed "qualified immunity" -- that is, that they were immune from personal suit as state actors.

The court disagreed, ruling (properly so, I might add) that when a government actor goes beyond their lawful remit they lose that immunity and are exposed to personal liability.

Good!

Now, all you ****headed pigs in Boston and Pennsylvania who violated (and in the case of PA continue to violate) the rights of hundreds if not thousands of people who had committed no crime and you know it because you think you're entitled to invoke special protections and protocols when one of your own is subjected to a crime that you would never invoke for anyone else and which trample on the rights of all of those innocent people....

Consider this: How would you like to lose your cushy job and pension and, in states other than the few that provide full protection of your residence in bankruptcy, your house?

I hope you think long and hard on that, and for those who have been similarly abused, I hope you sue the magical blue costumes off these jackbooted *******s -- not as an agency but in their personal capacity.

That's what the law provides for, and it's what you should do.

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