By Pam Martens and Russ Martens: March 8, 2023 ~ A very peculiar headline appeared at Bloomberg News yesterday concerning the collapsing federally-insured bank, Silvergate Bank, which became the go-to financial institution over the past few years for crypto exchanges around the globe. The headline read: “Silvergate Is in Talks With FDIC Officials on Ways to Salvage Bank.” That headline moved quickly to other news outlets, which dutifully regurgitated that there was an effort underfoot by the Federal Deposit Insurance Corporation to save Silvergate Bank. Bloomberg News then went further out on a shaky limb with this paragraph: “Federal Deposit Insurance Corp. officials have been discussing with management ways to avoid a shutdown, according to people familiar with the matter. One possible option involves lining up crypto-industry investors to help Silvergate shore up its liquidity, said one of the people. FDIC examiners arrived at the firm’s La Jolla, California, offices last week, … Continue reading →

By Pam Martens and Russ Martens: March 7, 2023 ~ On Friday, March 4, 2022, the Dow Jones Industrial Average closed at 33,614.7971. Yesterday, one year later, the Dow closed at 33,431.44, a negligible loss of a fraction of one percent – but still a loss. The Dow is composed of just 30 stocks. The S&P 500, a broader stock market index, includes the common stocks of 500 of the largest companies in the U.S. Over the past year, the S&P 500 fared even worse than the Dow. It went from 4,328.8729 on Friday, March 4, 2022 to yesterday’s closing price of 4,048.42 – a decline of 6 percent. The tech heavy Nasdaq Composite, which consisted of 3,607 component companies as of yesterday according to Nasdaq, delivered the worst performance of the three major indices over the past year. It traveled from 13,313.438 on Friday, March 4, 2022 to a closing … Continue reading →

By Pam Martens and Russ Martens: March 6, 2023 ~ The Attorney General’s office of the U.S. Virgin Islands (USVI) has filed a First Amended Complaint against JPMorgan Chase that has less redactions than an earlier version. The complaint makes devastating and detailed charges. It charges that the bank sat on a pile of evidence that Jeffrey Epstein was running a child sex trafficking ring as it continued to keep him as a client; accept his lucrative referrals of wealthy clients; and provided him with large sums of cash and wire transfers to pay off victims – one of whom was a “14-year old sex slave.” Attorneys for the bank are now resisting allowing Chairman and CEO Jamie Dimon from being deposed under oath in the matter as to what he knew and when he knew it. The case is USVI v JPMorgan Chase Bank N.A. (22-cv-10904) in U.S. District Court … Continue reading →

By Pam Martens and Russ Martens: March 2, 2023 ~ The one thing a depositor never wants to hear from a bank that is holding his or her life savings is that it has doubts about its “ability to continue as a going concern.” Unfortunately, those very words appeared in a filing made yesterday by Silvergate Capital with the Securities and Exchange Commission – which pretty much guarantees that the ongoing run on deposits at Silvergate will continue with an added sense of urgency. Silvergate Capital is the owner of the federally-insured and taxpayer-backstopped bank, Silvergate Bank, which decided several years back that it would be a cool idea to become the go-to depository bank for crypto companies. One of those outfits was Sam Bankman-Fried’s now collapsed house of fraud. Accounts at Silvergate Bank included Bankman-Fried’s crypto exchange, FTX; his hedge fund, Alameda Research, which prosecutors say looted his FTX crypto … Continue reading →

By Pam Martens and Russ Martens: March 1, 2023 ~ On January 17, Sullivan & Cromwell law partner Andrew Dietderich filed a declaration in the U.S. Bankruptcy Court for the District of Delaware that acknowledged – after much prodding by the U.S. Trustee – the more than 20 legal engagements Sullivan & Cromwell had been involved in with Sam Bankman-Fried’s FTX Group before it filed for bankruptcy on November 11, 2022. According to the declaration, the law firm’s legal work began 15 months prior to the collapse of the firm. (See our previous report, Sam Bankman-Fried, BlockFi and Sullivan & Cromwell: A Viper’s Nest of Conflicts and Intrigue.) This does not look good for the 144-year old law firm because the Securities and Exchange Commission is now charging that FTX was a fraud from the very beginning and Sam Bankman-Fried illegally used FTX customer funds from the very beginning. Making the … Continue reading →

By Pam Martens and Russ Martens: February 28, 2023 ~ As we reported on February 7, there are some very strange things going on at Goldman Sachs. After reading the Wall Street investment bank’s annual report, which was filed with the Securities and Exchange Commission last Friday, the word “strange” doesn’t seem to do justice to the situation. Goldman Sachs is looking more like a litigation warehouse these days than an investment bank. According to Goldman’s annual report, it is being investigated for pretty much everything it does to make money: derivatives, currencies, mortgages, financial advisory, securities lending, dark pools, investment management, commodities, U.S. Treasuries, corporate bonds, credit cards, hiring and compensation practices, research practices, compliance with the Foreign Corrupt Practices Act, transactions involving government-related financings – and on and on. Things are so bad that it concedes in this annual report that it may have under-reserved for its legal costs … Continue reading →

By Pam Martens and Russ Martens: February 27, 2023 ~ On December 13, the U.S. Department of Justice released an 8-count criminal indictment against the former crypto kingpin, Sam Bankman-Fried. He was charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.  Last Thursday, the Department of Justice added four additional criminal counts against Sam Bankman-Fried in a superseding indictment. These include: bank fraud; conspiracy to operate an unlicensed money transmitting business; and two counts involving the purchase and sale of derivatives. Bankman-Fried’s jury trial is scheduled to start in October. The charge of bank fraud is something that jury members can get their minds around – particularly when the alleged bank fraud is shown to have taken place at federally-insured banks which are backstopped … Continue reading →

By Pam Martens and Russ Martens: February 23, 2023 ~ Judge John Dorsey is the presiding judge in the bankruptcy proceedings for Sam Bankman-Fried’s collapsed house of cards, which includes the now frozen crypto exchange, FTX; his now shuttered hedge fund, Alameda Research; and more than 100 opaque affiliates operating in the shadows around the globe. Undisputed is the fact that despite FTX being represented by some of the most prominent law firms in America as it built this criminal enterprise – notably Sullivan & Cromwell – more than 10.3 million user accounts were looted of more than $8 billion right under the nose of Big Law. We say “notably Sullivan & Cromwell” in the above paragraph because not only did it work on more than 20 matters for the FTX group of companies for 16 months prior to its bankruptcy filing but its former law partner, Ryne Miller, served as … Continue reading →

By Pam Martens and Russ Martens: February 22, 2023 ~ The Dow Jones Industrial Average plunged 697 points by the closing bell yesterday, wiping out all of its gains this year. Here’s a rundown of what happened. At 2 p.m. ET today, the Federal Reserve will release the minutes of the Federal Open Market Committee (FOMC) meeting it held on January 31 and February 1. The stock market is particularly skittish on the day prior to the release of those minutes, out of concern that an overly hawkish tone on interest rates will tank stocks. Given that skittishness, all the stock market needed for a major selloff was a trigger. It got that when Bloomberg News published this headline at 1:36 a.m. in the morning: Morgan Stanley Says S&P 500 Could Drop 26% in Months. Morgan Stanley’s opinion matters for two main reasons: it has just shy of 16,000 stockbrokers (a/k/a … Continue reading →

By Pam Martens and Russ Martens: February 21, 2023 ~ The shares of Credit Suisse can’t find a bottom. They plunged to a new intraday low this morning in Europe to trade at the equivalent of $2.79 – down over 6 percent from their previous close. Sparking the continued exodus out of Credit Suisse shares is the growing concern that the exodus of client assets from Credit Suisse has not found a floor. Reuters is reporting this morning that the Swiss financial regulator, FINMA, is investigating remarks made by Credit Suisse Group Chairman Axel Lehmann to the media in early December, which suggested that client asset outflows had stabilized. Simple math indicated they had not. When Credit Suisse reported its earnings results in early February, CEO Ulrich Koerner had told Wall Street analysts that 85 percent of the client asset outflows in the last quarter of 2022 had occurred in October … Continue reading →