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 →

By Pam Martens and Russ Martens: February 16, 2023 ~ If yesterday had been National Creepy Crooks Day, JPMorgan Chase would have taken top honors. Bloomberg News reported on the creepy emails that former JPMorgan Chase executive Jes Staley was sending back and forth from his email account at the bank to child sex trafficker Jeffrey Epstein, as the bank was only too happy to handle 55 accounts worth hundreds of millions of dollars for Epstein. One set of emails suggested Staley was having kinky or sexual relationships with individuals dressed up as Disney characters. (Leave it to JPMorgan to take down not only its own brand but taint Disney’s brand as well.) Anyone who has ever worked at a major Wall Street brokerage firm or investment bank knows full well that emails are monitored by the company. This suggests that Staley knew he had nothing to fear from the bank’s … Continue reading →

By Pam Martens and Russ Martens: February 15, 2023 ~ Editor’s Update: Judge Dorsey denied the motion by the U.S. Trustee for the appointment of an independent examiner at this morning’s hearing. In making his ruling, he cited the arguments made by Sullivan & Cromwell. ~~~ Judge John Dorsey is the presiding judge in the U.S. Bankruptcy Court in Delaware where Sam Bankman-Fried’s collapsed crypto exchange, FTX, filed its Chapter 11 bankruptcy petition. The U.S. Trustee, who provides oversight on behalf of the U.S. Department of Justice in bankruptcy cases, filed a motion on December 1 of last year requesting the appointment of an independent examiner in the FTX bankruptcy case, reminding the court that the appointment is mandatory under bankruptcy law if requested by the U.S. Trustee and debts exceed $5 million. Today marks the 76th day that this critical issue has been pending before this court. The Big Law … Continue reading →

By Pam Martens and Russ Martens: February 14, 2023 ~ To understand the deteriorating condition of American democracy, one needs to be able to spot corrupt patterns. Let’s take the Senate Banking Committee, for example. We previously explained how the Senate Banking Committee has subpoena power to get at the truth but never uses it, relying on Senator Elizabeth Warren to send out an endless stream of letters demanding information – which typically never comes because the target of those letters knows that a failure to respond will not result in a subpoena. The failure of the Senate Banking Committee to issue subpoenas stems from the fact that, according to the Congressional Research Service, the Senate Banking Committee has adopted a rule that requires a majority vote to issue a subpoena for documents or witnesses. And since this Committee has too many right-wing Republican members who take campaign funds from powerful players … Continue reading →

By Pam Martens and Russ Martens: February 13, 2023 ~ On December 21, Big Law firm Sullivan & Cromwell filed a conflict disclosure with the U.S. Bankruptcy Court in Delaware, where it was hoping to be officially appointed as lead counsel for the bankruptcy estate of Sam Bankman-Fried’s collapsed crypto house of cards – FTX, Alameda Research and its more than 100 opaque affiliates. Judge John Dorsey signed the order making Sullivan & Cromwell lead counsel on January 20, despite a mind-numbing list of conflicts of interests, including extensive past legal work for the FTX group and personal legal work for its now indicted kingpin, Sam Bankman-Fried. The disclosure showed that in addition to FTX and Alameda Research, Sullivan & Cromwell had 10 other current crypto clients, including four major crypto competitors to FTX — BlockFi, Coinbase, Gemini, and Kraken. Damian Williams, the U.S. Attorney for the Southern District of New … Continue reading →

By Pam Martens and Russ Martens: February 10, 2023 ~ Credit Suisse continued its long death spiral yesterday, losing 15.64 percent of its market value in one trading session to close at $3.02 on the New York Stock Exchange. The trading action came on the heels of an earnings report that was excruciatingly bad – even for Credit Suisse. The Global Systemically Important Bank (G-SIB), which means it’s interconnected to other G-SIBs that could bring down the global financial system, reported yesterday that its clients had yanked over $100 billion in just the fourth quarter — which was more than eight times the outflow in the third quarter. Its pre-tax loss for the quarter was $1.51 billion, marking its fifth consecutive earnings loss. Credit Suisse is Switzerland’s second largest bank, after UBS, but its troubled history looks more like that of a bank in a banana republic. On March 26, 2021, … Continue reading →