By Pam Martens: July 19, 2013 Hedge Hogs, the Barbara Dreyfuss book that hit number 9 on the Washington Post’s Hardcover Bestseller List last week, should have a cautionary logo: “Don’t Start Reading This Book Late In the Day: It Could Be Hazardous To Your Sleep.” If you are an avid follower of Wall Street, you’ll read it in one sitting.   Sales of the book may soar if, as reported yesterday, JPMorgan reaches an estimated $500 million settlement with the Federal Energy Regulatory Commission shortly for rigging energy markets and we learn the details of just what its traders were doing to manipulate energy prices.  What does this have to do with Hedge Hogs? The Dreyfuss book is the fast moving and riveting account of Amaranth Advisors LLC, the hedge fund that went from holding $9.668 billion in client assets in August 2006 to flaming out in losses exceeding $6 billion … Continue reading →

By Pam Martens: July 18, 2013  The Wall Street Journal and the New York Times are reporting this morning that JPMorgan Chase, the mega Wall Street bank that has shelled out over $16 billion in the last three years for legal expenses connected to investigations and lawsuits, may shortly be inking a deal with the Federal Energy Regulatory Commission (FERC) that would settle claims it manipulated energy prices. The price tag for making another regulatory mess go away, says the New York Times, may reach $500 million.  The specifics of just what charges JPMorgan will be settling are not yet available, but the path to this outlay of a cool half billion is, without question, related to a regulator incensed with what it believes to be stonewalling on the part of JPMorgan’s lawyers.  On November 14, 2012, FERC suspended JPMorgan Ventures Energy Corp.’s electric market-based rate authority for submitting false information … Continue reading →

By Pam Martens: July 16, 2013  The battle intensified today between faculty at NYU and its Board of Trustees. The President of the University, John Sexton, has already received a no-confidence vote by five schools at the University. Now, a group of faculty have penned an 8,800 word treatise (which reads like a civil complaint for a lawsuit) calling for Martin Lipton, a legal icon on Wall Street, to step down as the Chair of the NYU Board of Trustees for failing to take the growing scandals seriously.  The letter comes amidst recent revelations of outlandish pay, perks and even forgivable mortgage loans to buy vacation homes being doled out to a small, select group of faculty and administrators while NYU tuition skyrockets to the most expensive in the nation. There is the distinct feeling of a circling of the wagons by Lipton, Sexton and a core group of administrators. … Continue reading →

By Pam Martens: July 16, 2013  There are two parties to the alleged crime of Fabrice Tourre who are not facing a jury trial this week in the Southern District of New York: Goldman Sachs and John Paulson.  The alleged crime involves a deal called ABACUS which was designed to fail with the knowledge of Goldman and Paulson and Tourre — but sold to investors as a worthy investment.  Goldman Sachs earlier this morning reported second quarter profits of $1.93 billion. It paid the government a fine of $550 million for the ABACUS deal back in July 2010, without admitting or denying guilt, and went on about its business of minting money.  Paulson was never charged officially by the government but he was named in the Securities and Exchange Commission’s outline of the crime.  Thanks to New York University, where he serves as a Trustee, Paulson is actually being held … Continue reading →

By Pam Martens: July 15, 2013  Last Wednesday, Eric Hunsader, the outspoken executive from data feed company, Nanex, posted a letter at the company’s web site that the big Wall Street law firm, Skadden, Arps, Slate, Meagher & Flom LLP, had filed with the Commodity Futures Trading Commission (CFTC) last December.  The letter was co-signed by Mark D. Young and Jerrold E. Salzman and was addressed to Dan Berkovitz, General Counsel of the CFTC. Skadden demanded answers as to how Section 8 trading data had fallen into the hands of academics not directly employed by the CFTC. (The academics had the temerity to analyze the data as it related to potential market manipulation by high frequency traders and publish the findings for the public at large to scrutinize – a travesty if ever there was one in the eyes of Wall Street.)  As it turns out, Skadden lawyer Mark Young has … Continue reading →

By Pam Martens: July 12, 2013  Wall Street regulators hauled before the Senate Banking panel yesterday were likely expecting compliments for their agreement on forcing big banks to boost capital. Instead, Senator Elizabeth Warren dropped a bombshell: she and three other Senators later yesterday were introducing legislation to restore the depression era Glass-Steagall Act. (The Senate co-sponsors were John McCain, Republican from Arizona, Maria Cantwell, a Washington Democrat, and Angus King, an Independent from Maine.)  As regulators from the Treasury, FDIC, Federal Reserve and Office of the Comptroller of the Currency stared back in silence, Senator Warren mapped out why the legislation was being introduced:  “…the four largest banks are now 30 percent larger than they were just five years ago and they have continued to engage in dangerous, high-risk practices. So, later today Mr. Chairman, Senators McCain, Cantwell, King and I will introduce a 21st Century Glass-Steagall Act. For half a … Continue reading →

By Pam Martens: July 11, 2013  The Federal Reserve used to manage its future monetary policy in bare whispers; under Chairman Ben Bernanke of late, it’s been lightning bolts of declarative statements that send the stock and bond markets careening in one direction and then another.  In June, Bernanke said the Fed might begin later this year to taper downward its monthly purchases of $85 billion of Treasury and mortgage-backed securities, signaling the beginning of the end of cheap money. While Bernanke did at the time mention economic caveats before this tapering would begin, the markets heard only the lightning bolt of an end to easing and sold off in short order.  Bernanke was out on the stump again yesterday, delivering a 4,000-word speech to the National Bureau of Economic Research at the Royal Sonesta Hotel in Cambridge, Massachusetts. This time, Bernanke delivered a history lesson on the Fed and curtailed … Continue reading →

By Pam Martens: July 10, 2013  The Partnership for Civil Justice Fund has filed Freedom of Information Act (FOIA) requests with the National Security Agency (NSA), the Department of Homeland Security (DHS), the Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) to learn further details about the mass surveillance programs exposed by Edward Snowden. The nonprofit organization is demanding to know the scope of the programs, their operating guidelines and procedures, the retention of data collected through such programs, and internal evaluations attempting to justify these programs’ legality and constitutionality.  The FOIA request reads in part: “The people of the United States have an urgent need for disclosure of the requested information regarding what appears to be the largest covert surveillance program directed against them in U.S. history. The U.S. government and its agencies that are carrying out these unprecedented surveillance programs are not entitled to hide these … Continue reading →

By Pam Martens: July 9, 2013 According to a report out of London this morning, the New York Stock Exchange (NYSE/Euronext) has been selected from a number of bidders to take over administration of Libor, the now discredited, rigged interest rate benchmark that had been previously overseen by the British Bankers Association, a lobbying organization for banks. The idea that turning over the administration of Libor to the NYSE, whose major shareholders include some of the Wall Street firms currently under investigation for rigging Libor, would restore confidence in using Libor as an interest rate benchmark is…well…typical of Wall Street’s irrational thinking. According to a March 31, 2013 report from Morningstar, the following Wall Street firms are among the major shareholders of NYSE/Euronext: Citigroup,  6.5 million shares; Morgan Stanley, 5.9 million shares; JPMorgan Asset Management (UK) Ltd., 4.9 million shares; Merrill Lynch & Co. Inc., 4.2 million shares; Deutsche Bank … Continue reading →

By Pam Martens: July 8, 2013  Senator Charles (Chuck) Schumer of New York is writing letters and pounding the table to try to stop sweeping new regulation of derivatives from being put into effect by the Commodity Futures Trading Commission (CFTC) four days from now on July 12.  Schumer is leading an assault against Gary Gensler, Chair of the CFTC, who wants to impose cross-border rules which would prevent firms like JPMorgan Chase from simply moving its derivative trades to London or another foreign trading venue to escape U.S. rules – the situation that allowed JPMorgan to lose $6.2 billion of deposits in its infamous London Whale derivatives episode.  Schumer’s actions and those of other Senate Democrats who joined with him in a letter to Jack Lew, Treasury Secretary, brought a sharp rebuke last week from the editorial board of the New York Times:  “In the letter to Mr. Lew, the senators … Continue reading →