Category Archives: Uncategorized

By Pam Martens and Russ Martens: April 30, 2014 The scene in the House Financial Services Committee hearing yesterday was surreal. After Mary Jo White bluntly told the panel that “The markets are not rigged,” (countering heavily publicized charges made by bestselling author Michael Lewis in his new book, “Flash Boys,” as well as a host of key market participants) members of Congress continued to ask about specific forms of market rigging that they know to be happening. While White refused to acknowledge that this obvious wrongdoing was occurring on her watch, she insisted repeatedly that these various non-problems were, nonetheless, being studied. Congressman David Scott from Georgia told White he sensed a lack of urgency on her part. The remarks from Congressman Michael Capuano of Massachusetts were particularly heated and generally reflected the frustration with White’s responses from a large part of the Committee. Capuano said: “Six years ago … Continue reading →

By Pam Martens: April 29, 2014 Mary Jo White, the Chair of the Securities and Exchange Commission, will appear before the House Financial Services Committee this morning at 10 a.m. to boast about the past year’s accomplishments at the SEC and possibly handle a few queries about the growing public perception that stock markets are rigged.  White’s appearance before a Congressional panel comes at a time when the SEC is undergoing a serious discrediting of its oversight of Wall Street. Earlier this month, James Kidney, an SEC trial attorney who retired at the end of March, unleashed a firestorm of negative attention on morale inside the SEC. In a March 27 retirement speech, Kidney criticized upper management for policing “the broken windows on the street level” while ignoring the “penthouse floors.” Kidney blamed the demoralization at the agency on its revolving door to Wall Street as the best and brightest … Continue reading →

By Pam Martens and Russ Martens: April 28, 2014 It doesn’t get any more Orwellian than this: Wall Street mega banks crash the U.S. financial system in 2008. Hundreds of thousands of financial industry workers lose their jobs. Then, beginning late last year, a rash of suspicious deaths start to occur among current and former bank employees.  Next we learn that four of the Wall Street mega banks likely hold over $680 billion face amount of life insurance on their workers, payable to the banks, not the families. We ask their Federal regulator for the details of this life insurance under a Freedom of Information Act request and we’re told the information constitutes “trade secrets.” According to the Centers for Disease Control and Prevention, the life expectancy of a 25 year old male with a Bachelor’s degree or higher as of 2006 was 81 years of age. But in the … Continue reading →

By Pam Martens: April 24, 2014 If one tallies up the members of President Obama’s cabinet who played a role in crashing a bank before coming to help him govern the country or worked for a major law firm serving Wall Street before being hand-picked by the President to head up the bodies charged with investigating Wall Street, the Executive Branch begins to feel a lot like Wall Street West. That might explain why so many fellow Americans feel like Wall Street is running (and ruining and rigging) the country. Is the President naïve or being maneuvered by the invisible hand? We were asking the same kind of question on May 6, 2008 during the President’s first campaign for the Presidency: “We are asked to believe that those kindly white executives at all the biggest Wall Street firms, which rank in the top 20 donors to the Obama presidential campaign, … Continue reading →

By Pam Martens: April 23, 2014  Last month, the Securities and Exchange Commission released the second in what looks to be a never-ending, head-scratching study into whether some aspects of high frequency trading are, in fact, the equivalent of rigging the stock market and thus patently illegal under existing law. In one long paragraph, the SEC appears to emphatically say that two strategies, order anticipation and momentum ignition, are manipulative and illegal. The SEC writes: “Directional strategies generally involve establishing a long or short position in anticipation of a price move up or down. The Concept Release requested comment on two types of directional strategies – order anticipation and momentum ignition – that ‘may pose particular problems for long-term investors’ and ‘may present serious problems in today’s market structure.’  An order anticipation strategy seeks to ascertain the existence of large buyers or sellers in the marketplace and then trade ahead … Continue reading →

By Pam Martens: April 22, 2014 There is now overwhelming evidence that Wall Street firms have entered a race to the bottom in high-tech trading wars. To grab the best programming talent, Wall Street firms are paying top dollar for the best and brightest coders and developers and potentially sapping the ability of other U.S. industries – those that make real products – to compete. Just this month, Jamie Dimon, CEO of JPMorgan, told the firm’s shareholders in his annual letter that JPMorgan employs “nearly 30,000 programmers, application developers and information technology employees who keep our 7,200 applications, 32 data centers, 58,000 servers, 300,000 desk-tops and global network operating smoothly for all our clients.” According to Anish Bhimani, Chief Information Risk Officer at JPMorgan Chase, in an interview published at the Information Networking Institute (INI) at Carnegie Mellon, JPMorgan has “more software developers than Google, and more technologists than Microsoft…we get … Continue reading →

By Pam Martens: April 21, 2014  Since the launch of the new Michael Lewis book, “Flash Boys,” at the end of March with wall to wall media coverage, including his pronouncement on 60 Minutes that the stock market is rigged against average investors, there has been a whirlwind of damage control. The FBI announced that an investigation was already in the works, the New York State Attorney General is issuing subpoenas and a civil war (frequently not so civil) has broken out among industry titans staking out their media turf on whether the market is or is not rigged by high frequency traders. Not in dispute is the fact that these high frequency traders have armed themselves with superfast computers, algorithms and artificial intelligence programs, all of which the New York Stock Exchange and NASDAQ have obligingly allowed – for annual fees running into tens of thousands of dollars – … Continue reading →

By Pam Martens: April 17, 2014 Bloomberg News is reporting that New York State Attorney General, Eric Schneiderman, has issued subpoenas to six high-frequency trading firms. The article, however, names only three firms, none of which are household names. According to the article, Schneiderman is asking the firms, which include Chopper Trading LLC, Jump Trading LLC and Tower Research Capital LLC about the “special arrangements they have with exchanges and dark pools as well as their trading strategies.” This is a curious approach. Why not ask the three big stock exchanges, the New York Stock Exchange, Nasdaq and BATS to hand over the names of all high frequency traders to whom they have sold expensive perks that have the effect of rigging the stock market against the average investor. On March 18 of this year, Schneiderman gave an address at New York Law School indicating his intimate knowledge of the … Continue reading →

By Pam Martens: April 16, 2014 As far as we can tell from his online bio, George Melloan has never worked a day inside a Wall Street firm – at least not in the past half century since that time has been spent writing or editing for the Wall Street Journal. But that small detail does not in any way inhibit Melloan from telling those of us who had long careers inside the belly of the beast how we should revise our thinking about what we saw and heard with our own eyes and ears. Michael Lewis, Yves Smith, Frank Partnoy, Gretchen Morgenson, Greg Smith, Nomi Prins (all with a strong foundational basis for their writings from having worked on Wall Street) apparently need to be set straight by Melloan’s outsider views. Nomi Prins has just come under the sharp pen of Melloan in a  Wall Street Journal review of … Continue reading →

By Pam Martens: April 15, 2014 In the past two years, two of the most senior, long-tenured and talented women at JPMorgan, Ina Drew and Blythe Masters, have bid adieu to the bank and its CEO, Jamie Dimon, under less than ideal circumstances. Questions are now emerging as to whether Dimon required that these senior supervisors hold proper industry licenses for the work they performed for the bank. Ina Drew, the former head of the Chief Investment Office, who supervised the traders responsible for losing $6.2 billion of the bank’s deposits in exotic derivatives trading in London, resigned from the firm over that firestorm on May 14, 2012. Drew had been with JPMorgan and its predecessor banks for 30 years. In Drew’s testimony before the U.S. Senate’s Permanent Subcommittee on Investigations on March 15, 2013, Drew told the hearing panel that beginning in 1999, she “oversaw the management of the … Continue reading →