Category Archives: Uncategorized

By Pam Martens and Russ Martens: August 12, 2014 Tax lawyers do not typically blow the whistle on their corporate employers because that law degree cost them (or their parents) a serious amount of money; the degree will result in outsized lifetime earnings; and, most importantly, because it is career suicide. Even when the tax lawyer may believe there is fraud that would trump the attorney-client privilege, whistle blowing in a court of law against one’s employer is a rarity for a tax lawyer. So one must seriously ask what would motivate David Danon, a 1998 magna cum laude graduate of Fordham University School of Law who proceeded to work at top tier corporate law firms (where he obviously saw a lot of questionable tax deals) to blow the whistle on the gold standard of the mutual fund industry, the Vanguard Group, Inc. In making his claims, Danon is also … Continue reading →

By Pam Martens: August 11, 2014 Meet the new, slimmed down, less complex, more manageable Citigroup. Or not. Figuring out what Citigroup owns and what it has sold is getting harder by the day as a vast number of its subsidiaries in the 160 countries in which it operates have up and vanished from its public filings but do not actually appear to have been sold in many cases. One can understand why the global bank’s Federal regulators have thrown up their hands in despair and sent it back to the drawing board on its capital plans and so-called “living will” measures to unwind itself should its future insolvency threaten the financial system as it did in 2008. According to Citigroup’s annual 10K filing with the Securities and Exchange Commission, the number of Citigroup’s subsidiaries have shrunk by a whopping 91.8 percent since December 31, 2008. Or not. Take the … Continue reading →

By Pam Martens and Russ Martens: August 7, 2014 The U.S. Senate has been holding hearings since June which show a clear rethinking on what type of legislation it must enact going forward to achieve meaningful reforms of Wall Street and protect the economy from its excesses. The 849-page Dodd-Frank financial reform legislation, enacted four years ago in 2010, mandated 398 new rules; just 208 of those rules, or 52 percent, have been enacted and none of them seem to be reining in excesses on Wall Street. To understand why Dodd-Frank has been such a failure in reforming Wall Street conduct, one need only read the following sentence and think about it for a moment: Public Law 73-66, 73d Congress, H.R. 5661: An Act to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into … Continue reading →

By Pam Martens and Russ Martens: August 6, 2014 Getting what should already be public domain information from Wall Street’s regulators using the public records law known as the Freedom of Information Act (FOIA) has become next to impossible; and it’s fueling contempt for the Obama administration. Yesterday, a new NBC/Wall Street Journal poll found that a majority of Americans, 54 percent, now believe the President is unable to “lead the country and get the job done.” That poll follows another one from NBC and the Wall Street Journal that was released on September 13 of last year which found that only 14 percent of Americans held a favorable view of Wall Street. Another Gallup poll released in May found that stock ownership among U.S. adults is at a 16-year low, reflecting a growing distrust of a level playing field on Wall Street after bestselling author of “Flash Boys,” Michael … Continue reading →

By Pam Martens: August 5, 2014 For years now, Paul Krugman, the esteemed Professor of Economics and International Affairs at Princeton University, has been using his columns at the New York Times to defend President Obama on multiple fronts. Until yesterday’s column, Krugman, who is typically spot on in the arena of monetary and economic issues, could be forgiven for his self-imposed myopia of a President who ran not once, but twice, on a populist message and then enabled the greatest wealth inequality in our nation’s history through his obsequious servility to Wall Street. Krugman cannot be forgiven for his latest missive, however. There is simply too much at stake for our nation to allow Krugman’s misguided musings to stand. Krugman starts off with the subtitle “Dodd-Frank Financial Reform Is Working” and ends with this stunning pronouncement: “For all its limitations, financial reform is a success story.” Judging by the … Continue reading →

By Pam Martens: August 4, 2014 It’s so crazy that one’s first instinct is that it must be a spoof web site. It reads: “A Citibank International Personal Bank FX Leveraged Loan Account can help you maximize the most of what you have. It allows you to borrow up to 5 times your deposit balance to trade in foreign currencies, so you may increase your potential investment power.” (The italics on deposit balance are ours.) It turns out that this is a real Citibank offering, a real Citibank web site, and there is a similar deal being offered in Hong Kong by Citibank – one of Wall Street’s largest banks – a bank that appears hell bent on setting a Guinness World Record for the most screw ups in one decade. Putting aside the fact that Citigroup, parent of Citibank, is under investigation for potentially helping to rig foreign currency … Continue reading →

By Pam Martens: July 31, 2014  Senator Sherrod Brown, Chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, will take testimony at 2 p.m. today on market subsidies enjoyed by implied future government bailouts of the too-big-to-fail status of Wall Street’s bloated and serially malfeasant banks. The hearing is set to coincide with a new report from the Government Accountability Office (GAO). An early peek at written testimony by three separate professors set to testify guarantees a belated July 4 fireworks display — one that is not likely to enjoy a welcome reception within the Wall Street corridors of power. Expect the phone lines of lobbyists and congressional campaign managers to be lighting up all over the nation’s capitol this afternoon. Edward J. Kane, Professor of Finance at Boston College will get things off to a rousing start by telling the Subcommittee that any suggestion that the … Continue reading →

By Pam Martens and Russ Martens: July 30, 2014  As Wall Street On Parade reported last week, Jeffrey Kleintop, Chief Market Strategist for LPL Financial, reports that corporations are now the single largest buying source for U.S. stocks – authorizing buybacks of their own stocks to the tune of $754.8 billion in 2013 alone. And it’s a long-term trend. According to Birinyi Associates, for calendar years 2006 through 2013, corporations authorized $4.14 trillion in buybacks of their own publicly traded stock in the U.S. — raising the question, just what kind of a bull market is this? JPMorgan Chase, the largest U.S. bank by assets, has turned share buybacks into an art form, buying back a whopping $17,945,000,000 of shares from 2010 through 2013. In just the calendar year of 2011, JPMorgan spent a stunning $8,827,000,000 on stock buybacks. According to JPMorgan’s most recent quarterly report filed with the Securities … Continue reading →

By Pam Martens and Russ Martens: July 29, 2014 In 2012, Wall Street Journal reporter, Scott Patterson, released his 354-page prescient overview of U.S. market structure titled, Dark Pools: High Speed Traders, A.I. Bandits, and the Threat to the Global Financial System. (For those whose computer prowess is limited to turning on a laptop, like millions of fellow Americans, “A.I.” means artificial intelligence – machines teaching themselves to think like humans, but faster.) Patterson comes to an epiphany on page 339 of his book, writing in the notes section: “The title of this book doesn’t entirely refer to what is technically known in the financial industry as a ‘dark pool.’ Narrowly defined, dark pool refers to a trading venue that masks buy and sell orders from the public market. Rather, I argue in this book that the entire United States stock market has become one vast dark pool. Orders are … Continue reading →

By Pam Martens and Russ Martens: July 28, 2014 Wash sales – one of the most virulent forms of stock manipulation that bankrupted banks and corporate conglomerates in the Great Depression and intensified the stock market crash of 1929 to 1932 – has reached scandalous proportions in today’s markets. The response from regulators? Gut the rules that make it a crime. 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: “Well these wash sales, Joe, people know they’re illegal; they’re not allowed. A wash sale is when somebody trades with themselves. But what we’ve discovered is that they are going on at this large, voluminous level. I mean, to me, a shocking level. And they’re impacting what … Continue reading →