By Pam Martens and Russ Martens: April 21, 2021 ~ On Tuesday, March 30, Senator Elizabeth Warren provided the following statement to CNBC regarding the blowup of the Archegos Capital Management hedge fund. “Archegos’ meltdown had all the makings of a dangerous situation — largely unregulated hedge fund, opaque derivatives, trading in private dark pools, high leverage, and a trader who wriggled out of the SEC’s enforcement.” All of the elements of that statement were well known at that point, except one. No one in mainstream media at that time, or since, was talking about Wall Street’s Dark Pools in connection with the implosion of Archegos. (Dark Pools are opaque, thinly regulated trading platforms that function much like private stock exchanges operating inside the biggest banks on Wall Street. Through some twisted reasoning by the SEC, the banks are even allowed to trade shares of their own bank’s stock.) Warren is … Continue reading →

By Pam Martens and Russ Martens: April 20, 2021 ~ Donald Turnbull, a former Global Head of Precious Metals Trading at JPMorgan Chase, has filed a doozy of a federal lawsuit against the bank. Turnbull worked on the same JPMorgan Chase precious metals desk that was deemed to be a racketeering enterprise by the U.S. Department of Justice when it handed down indictments in 2019. This was the first time that veterans on Wall Street could recall employees of a major Wall Street bank being charged under the Racketeer Influenced and Corrupt Organizations Act or RICO statute, which is typically reserved for organized crime. JPMorgan Chase, the largest bank in the United States, has the further unprecedented distinction for a U.S. bank of being charged with five felony counts by the Department of Justice in a six-year span of time, running from 2014 to 2020. The bank admitted to all of … Continue reading →

By Pam Martens and Russ Martens: April 19, 2021 ~ We’ve been closely monitoring the Senate Banking and House Financial Services Committees for the past 15 years. We can think of no other time when the Committees issued a joint statement to announce they were hauling the most powerful men on Wall Street to testify, without offering a scintilla of information on the topic of the hearing. The press statement simply indicated that the Senate Banking Committee would hold its hearing on Wednesday, May 26 at 10 a.m. and the House Financial Services Committee would hold its hearing the following day on Thursday, May 27 at 12 noon. The announcement indicated that the following CEOs are scheduled to testify: Jamie Dimon of JPMorgan Chase; David Solomon of Goldman Sachs; Jane Fraser of Citigroup; James Gorman of Morgan Stanley; Brian Moynihan of Bank of America; and Charles Scharf of Wells Fargo. The … Continue reading →

By Pam Martens and Russ Martens: April 16, 2021 ~ On April 1 we wrote the following about the sorrowful state of the listing standards at the New York Stock Exchange: “We rarely make predictions but we’re going to make one with confidence today. The New York Stock Exchange’s efforts to capture more market share of the IPO business by listing highly questionable Chinese companies and blank-check companies (SPACs) with no prior business history is going to inevitably blow up and cause long-term reputational damage to an institution that is indelibly linked to U.S. markets.” Just 15 days later, more evidence is emerging that the New York Stock Exchange is going to experience the kind of reputational damage done to the Nasdaq stock exchange during the dot.com pump and dump era, which generated trillions of dollars in losses to investors when it blew up in 2000. Yesterday, the hedge fund Scorpion … Continue reading →

By Pam Martens and Russ Martens: April 14, 2021 ~ Bernard (Bernie) Madoff, mastermind of the largest Ponzi scheme in history, died this morning at the Federal Medical Center in Butner, North Carolina. He was serving a 150-year prison sentence. Madoff would have been 83 on April 29. A source told the Associated Press that Madoff had died of natural causes. Madoff ran his scheme undetected by regulators and law enforcement for more than four decades until he began to run out of money to meet client redemption requests during the financial crash of 2008 and confessed to his sons. The sons turned him in to the FBI. The case became a national scandal that tarnished both the reputation of the SEC as well as JPMorgan Chase. The public learned that Harry Markopolos, a financial expert, had been sending detailed written reports to the SEC for years (in 2000, 2001, 2005, … Continue reading →

By Pam Martens and Russ Martens: April 14, 2021 ~ Today is the 85th Day of the Joe Biden Presidency and his nominee to Chair the Securities and Exchange Commission, Gary Gensler, has yet to be confirmed by the full Senate. Apparently, the moneyed interests that control the corporate wing of the Republican party have put Senator Pat Toomey in charge of attempting to derail the nomination. A full Senate vote will take place on Gensler at 11:45 a.m. today, but that vote will be limited to Gensler serving out the balance of the term of Trump’s former SEC Chair Jay Clayton, which expires in – wait for it – 52 days. The Senate Banking Committee had cleared Gensler to not only fill Clayton’s remaining term but had also cleared his reappointment for a five-year term ending on June 5, 2026. That five-year term will not be voted on by the … Continue reading →

By Pam Martens and Russ Martens: April 13, 2021 ~ When Jerome Powell, the Chairman of the Federal Reserve, appeared for an interview this past Sunday night on the CBS investigative program, 60 Minutes, he asserted complete ignorance of the amount of margin debt currently being used to inflate the stock market to one new historic high after another. The exchange between Powell and 60 Minutes host, Scott Pelley, went as follows: Pelley: “The securities industry has reported that $814 billion has been borrowed by people investing in the stock market, borrowed against their portfolios. That’s a 49 percent increase over last year. “And the last time it grew that much was in 2007, before the Great Recession. And the time it grew that much before that was 1999, just before the dot com implosion. At what point does the Federal Reserve start to rein in this speculative bidding up of … Continue reading →

By Pam Martens and Russ Martens: April 12, 2021 ~ The CBS “investigative” program, 60 Minutes, gave Wall Street a pass again last night. This time around 60 Minutes’ host Scott Pelley interviewed Federal Reserve Chairman Jerome Powell. The Fed, and by extension, Powell, are in charge of supervising the holding companies of the mega banks on Wall Street, including those involved just two weeks ago in loaning out their balance sheets to the tune of tens of billions of dollars to a hedge fund run by a man previously charged with insider trading and stock price manipulations. The man is Sung Kook (Bill) Hwang and the hedge fund is Archegos Capital Management. (Fed-supervised mega banks loaning out their balance sheets to hedge funds for nefarious purposes was previously exposed in 2014 in an in-depth report and hearing by the U.S. Senate’s Permanent Subcommittee on Investigations. The practice has clearly metastasized … Continue reading →

By Pam Martens and Russ Martens: April 9, 2021 ~ Yesterday, Senator Sherrod Brown, the Chair of the Senate Banking Committee, released the content of letters he had sent to Goldman Sachs, Morgan Stanley, Credit Suisse and Nomura regarding their interactions with Archegos Capital Management. Archegos is the hedge fund styled as a “family office,” that is making headlines around the world for blowing itself up within a week’s time while inflicting billions of dollars of losses on what are supposed to be heavily supervised global banks. The letters to Goldman Sachs, Morgan Stanley and Nomura were addressed to their CEOs while the letter to Credit Suisse went to its General Counsel. All four of the letters contained the same ten questions, with only minor variations. Questions five, six and seven of Brown’s letter open some very thorny subjects that could have serious legal ramifications for the banks involved. Question five … Continue reading →

By Pam Martens and Russ Martens: April 7, 2021 ~ It has become clear from the ongoing drip, drip, drip of new revelations of what was going on behind the scenes of hedge fund Archegos Capital Management, its wealthy owner, Sung Kook (Bill) Hwang, and Wall Street’s global banks, that the public has seen just the first act in what is certain to be a far more complex drama. A summary of the basics of what the public has been told thus far sheds light on why the full Archegos story has yet to be revealed. According to major media reports, Archegos was obtaining leverage of more than 6 times the cash it was putting up as collateral to buy stocks that were held in accounts at a handful of Wall Street’s largest banks. Through a privately negotiated derivatives contract, the banks claimed to technically own the stocks but the hedge … Continue reading →