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 →

By Pam Martens and Russ Martens: February 9, 2023 ~ The shenanigans going on in Judge John Dorsey’s bankruptcy courtroom, which is overseeing the FTX bankruptcy proceedings of Sam Bankman-Fried’s collapsed crypto empire, are reaching levels that should be attracting the attention of federal prosecutors. The head of the newly-created FTX Task Force, U.S. Attorney for the Southern District of New York, Damian Williams, has called the looted FTX customer accounts “one of the biggest financial frauds in American history.” On Monday, February 6, the lead counsel in the bankruptcy case, Sullivan & Cromwell, and its hand-picked CEO for FTX, John Ray, argued vehemently against the appointment of an independent examiner in the FTX matter. The independent examiner has been requested since December 1 by the U.S. Trustee, who works for the U.S. Department of Justice. Sullivan & Cromwell law partner, James Bromley, and Ray, cited the high cost likely to … Continue reading →

By Pam Martens and Russ Martens: February 7, 2023 ~ Goldman Sachs’ online bank, Marcus, is offering an interest rate on its savings accounts that is 350 times the interest rate being offered by its competitors, JPMorgan Chase and Bank of America. That’s not normal. Not normal at all. (Above screen shots were taken this morning. Chase and Bank of America screen shots come from BankRate; Marcus screen shot comes from Marcus.) Marcus is the online banking platform offered by Goldman Sachs Bank USA – a federally-insured bank backstopped by the U.S. taxpayer. But what 99 percent of Americans don’t know about Goldman Sachs Bank USA is that it is the unit of Goldman Sachs that holds trillions of dollars in derivatives, including the kind of credit derivatives that blew up the U.S. economy in 2008 and would have taken down Goldman Sachs were it not for sneaky bailouts. According to … Continue reading →

By Pam Martens and Russ Martens: February 6, 2023 ~ Just four days before Sam Bankman-Fried’s crypto exchange, FTX, collapsed into bankruptcy, Sullivan & Cromwell law partner Andrew (Andy) Dietderich sent an email to an attorney representing Voyager Digital’s Official Committee of Unsecured Creditors in its bankruptcy proceedings, stating that FTX was “rock solid.” At the time, Sullivan & Cromwell was representing FTX in a very aggressive move to purchase $1 billion of Voyager’s crypto assets. The law partner representing the Voyager creditors was Darren Azman of law firm McDermott Will & Emery. The email exchange on November 7, 2022 went as follows, according to exhibits McDermott Will & Emery submitted to the Voyager bankruptcy court in the Southern District of New York last week: Azman: “We are getting a lot of inbounds regarding liquidity issues at FTX/Alameda. We also had a lot of leftover questions from the last town hall. … Continue reading →

By Pam Martens and Russ Martens: February 3, 2023 ~ Charlie Munger is the 99-year old billionaire who graduated magna cum laude from Harvard Law and has been the close business partner of legendary investor, Warren Buffett, at Berkshire Hathaway for more than four decades. For years now, both Munger and Buffett have been outspoken about the dangerous scam called cryptocurrencies. Yesterday, the Wall Street Journal gave Munger space for a 393-word OpEd in which he urges the U.S. to ban crypto as China has done (and a lot of other countries). Unfortunately, those 393 words are competing with years of a nonstop barrage of hyped promises from right-wing Republicans in Congress who are happy to take big political donations from the crypto cabal; big public relations and marketing firms padding their bottom lines with what effectively amounts to money from defrauded crypto customers; K-Street lobbyists also on the dole to … Continue reading →

By Pam Martens and Russ Martens: February 2, 2023 ~ A showdown in the Delaware bankruptcy proceedings for Sam Bankman-Fried’s collapsed crypto exchange, FTX, before presiding Judge John Dorsey is scheduled for next Monday morning at 9:30. (You can listen to the hearing live at this link. Just turn on your speakers and click on the box with the flag.) The battle lines have been drawn for the showdown – but not in the manner that Big Law firm, Sullivan & Cromwell, had hoped. The U.S. Trustee, who represents the U.S. Department of Justice in bankruptcy cases, has been asking Judge Dorsey to agree to the appointment of an independent examiner in the case since December 1. And over the past two months, the deeply conflicted Sullivan & Cromwell law firm has been aggressively opposing the U.S. Trustee’s pursuit of an independent examiner. Yesterday, a Joinder was filed by the securities … Continue reading →

By Pam Martens and Russ Martens: February 1, 2023 ~ Five pages of a deeply sensitive document that is both embarrassing and potentially a legal threat to people in positions of power vanished yesterday from public viewing in the criminal case against former crypto-kingpin Sam Bankman-Fried. The document is a letter written by five federal prosecutors in the U.S. Attorney’s Office for the Southern District of New York. The courthouse where the five pages vanished from view is where the case is being heard: the U.S. District Court for the Southern District of New York. According to personnel in the Press Office and Records Management Office of that District Court that we spoke to yesterday, all six pages of the document had been filed electronically on Monday, January 30, and all six pages of the document were able to be viewed in the court’s ECF system (Electronic Case Files) according to … Continue reading →

By Pam Martens and Russ Martens: January 31, 2023 ~ The 144-year old law firm, Sullivan & Cromwell, which previously prided itself on being the go-to law firm for Wall Street, decided a few years back to get deep in the swamp with all things crypto. That dicey decision is now playing out in negative headlines that are dragging down the reputation of the 900-attorney law firm. Adding to questions swirling around its past legal representation of now indicted crypto kingpin, Sam Bankman-Fried, as well as his bankrupt crypto exchange, FTX, and his hedge fund, Alameda Research, is the fact that a growing number of Sullivan & Cromwell’s other crypto clients are also in various stages of distress. Notwithstanding that reality, the presiding judge in the FTX bankruptcy proceedings, John Dorsey, signed an order on January 20 naming Sullivan & Cromwell the lead counsel in the FTX bankruptcy case. But long … Continue reading →

By Pam Martens and Russ Martens: January 30, 2023 ~ According to a Yale School of Management study, in 2013 JPMorgan Chase had 1,339 hedge fund clients. As of July of last year, that number had soared to 4,281 according to the annual Convergence Inc. study. While Goldman Sachs and Morgan Stanley topped the total number of hedge fund clients (with 5,150 and 4,964, respectively) JPMorgan Chase ranked number one in terms of hedge fund Assets Under Advisement (AUA). (See Convergence Inc. study linked above.) There’s a big problem here that federal bank regulators are choosing to ignore at the peril of the U.S. financial system. JPMorgan Chase, unlike Goldman Sachs and Morgan Stanley, is the largest federally insured, taxpayer backstopped, depository bank in the United States with more than $2.47 trillion in deposits as of June 30, 2022. Unfortunately, as a result of the repeal of the Glass-Steagall Act in … Continue reading →

By Pam Martens and Russ Martens: January 27, 2023 ~ A battle between Big Law firm Sullivan & Cromwell and the U.S. Trustee (who represents the U.S. Department of Justice in the bankruptcy proceedings) is heating up for a hearing scheduled for February 6. The hearing will take arguments for and against why Sullivan & Cromwell should not be allowed to investigate its own past conduct in the serial frauds that prosecutors have alleged occurred at Sam Bankman-Fried’s crypto companies. Since the FTX bankruptcy filing on November 11, Sullivan & Cromwell has been functioning as lead counsel for the bankruptcy estate and was officially appointed to that position by the court on January 20, despite what looks like fatal conflicts to a growing number of observers. Both Sullivan & Cromwell and the U.S. Trustee have filed interrogatories to take discovery from each other prior to the hearing, according to court documents. … Continue reading →