Behind The Scenes: Did A Goldmanite Lose Their Job Over The SEC Investigation? And Just How/Why Did Goldman Purchase C-BASS For Pennies On The Dollar?Submitted by Tyler Durden on 04/20/2010 - 18:13
Some terrific investigative reporting by Matt Goldstein at Reuters discloses that while Lloyd Blankfein is aggressively defending Tourre, claiming the Frenchman did nothing wrong despite earlier reports that he was deregistered by the FSA, and the Telegraph now chiming in he has now in fact been barred in a major setback for Goldman's defense, another Goldman employee who was part of the 18-month SEC investigation, mysteriously departed in June of 2009. The person in question: Gail Kreitman, a 1991 Wharton grad, who had previously worked at Merrill (1997-2003) and Lehman (2003-2006) according to her Finra records, before finally landing at Goldman for a three year stint as a "GS&Co. Sales Rep." Gail had been identified previously in the initial Goldman Wells response, and was named as a person whose sworn testimony may have been the catalyst for the SEC's case against Goldman Sachs. Where the plot really thickens is a cursory glance at the bio of her husband, Jeffrey Toll, who according to Bloomberg is a Co-Founder of now-defunct C-BASS (Credit-Based Asset Servicing and Securitization) a company formed with initial funding by mortgage insurers MTIG and Radian. For those unfamiliar, "C-BASS was a leading issuer, servicer, and investor specializing in credit-sensitive residential mortgage assets. These assets included performing subprime and Alt A, nonperforming, reperforming, second lien and small commercial loans, as well as subordinated and mezzanine RMBS with prime, subprime, Alt A and high LTV collateral" and that "It currently is liquidating its existing portfolio and returning the cash proceeds received to its lenders and investors." One wonders just what Ms. Kreitman did to merit the severance of her ties with Goldman, and whether C-BASS was in any way involved, or whether it had any dealings with Goldman's now infamous mortgage group, ala ACA?
The April 19 Consumer Comfort Index number dropped back to -50, a 2010 low, just 4 points from its all-time low in 24 years of weekly polls, -54 in January 2009 and December 2008. 92% of those polled said the national economy’s in bad shape. The silver lining: "just 30 percent say it’s getting even worse, down from recent highs of 36 percent in January and 43 percent last September, much less a towering 82 percent as the economy fell into the abyss in October 2008." 25% said the economy’s getting better, while a little more than 4 in 10 say it’s staying the same: truly abysmal numbers when once look away from the wine and ambrosia flowing at the altar of Steve Jobs.
Gasparino And Chanos Discuss Lehman, Touch On Every Goldman Client's Lack Of Willingness To Short The SquidSubmitted by Tyler Durden on 04/20/2010 - 16:36
Charlie Gasparino led an informative discussion with Jim Chanos earlier, in which in addition to the trademark topic of China, the two had a rather poignant tete-a-tete on Lehman, Goldman, pervasive financial fraud, state and local finances, i.e., the muni implosion (the stuff that keeps Chanos most up at night), on shorting US debt, on the Volcker rule and, lastly, on China. While for the most part the interview is boilerplate, what caught our attention is Chanos' reluctance to express his feelings toward Goldman in a monetary fashion: he refuses to short anyone he does business with. Indeed, this is the mentality shared by many. However, while Chanos may or may not be sincere in his reasons, most others would refuse to short Goldman primarily as a result of such activity showing up immediately on Goldman's very own Redi. And the last thing a prime broker account, and client of a monopolist wishes, is to be perceived as a rogue. It also explains why Goldman has been calling up alumni and tell them to be good. This is also one more reason to immediately commence Goldman monopoly proceedings with the ultimate intent of breaking up the organization which is certainly big enough to benefit its employees and shareholders, but far too big to either fail, or to survive in the long run.
Dow Jones Files Suit Against Briefing.com For Misappropriation Of Content, Copying Of Hundreds Of ArticlesSubmitted by Tyler Durden on 04/20/2010 - 15:50
*DOW JONES FILES SUIT VS BRIEFING.COM
*DOW JONES TO TAKE ACTION TO STOP MISAPPROPRIATION OF CONTENT
*DOW JONES SAYS BRIEFING.COM COPIED SUBSTANTIAL OF 100 ARTICLES
*DOW JONES SAYS BRIEFING.COM DIDN'T RELY ON OWN SOURCES, EFFORTS
*DOW JONES SAYS BRIEFING.COM REPUBLISHED OVER 70 HEADLINES
Closed Door Meeting Discloses The Obvious: "Greece No Longer Able To Borrow From The Markets Nor The Banks"Submitted by Tyler Durden on 04/20/2010 - 15:31
Headlines from www.bankingnews.gr. Looks like its IMF-go time. The same source states that the "market situation will be aggravated by Greece's usage of the bailout mechanism 10-12 days from today."
Even as the GOP has gotten some harsh words for having its two SEC commissioners side with Goldman in the recent vote to press charges against the squid, Darrell Issa has decided to turn the tables, and is demanding all correspondence between the Syndicate Encouraging Corruption and "White House aides, Democratic Party committee officials, or members of Congress or their aides" Politico reports. The reason - Issa is asserting that Friday’s fraud filing against Goldman Sachs raises “serious questions about the Commission’s independence and impartiality.” On the other hand, letting rampant corruption run amok and unobstructed on Wall Street with or without any form of regulatory framework (as worthless and totally corrupt as Dodd's bill is) does not seem like such fair exchange to us.
The (in)famous Greg Lippmann is gone. The question is why? Is Deustche Bank about to report the next Wells receipt? Of course not: Goldman did not do so even though it held it for 9 months.
Criminal Charges Next? Barofsky To Coordinate With DOJ To See If US Taxpayers Were Victims Of Goldman FraudSubmitted by Tyler Durden on 04/20/2010 - 14:42
Earlier we disclosed that finally someone with more than just 4 neurons is going to pursue Goldman; Reuters now confirms that indeed Neil Barofsky is on the case, and, unlike the SEC, may collaborate with the Department of Justice "to see if there are cases of fraud and if AIG and as a result, the American taxpayers, were victims of similar types of fraud." Should he find fraud, and let's not forget that Goldman bought protection on all parties that bought Abacus exposure from it, with a special place in its heart saved for AIG, whose bailout by the US kinda makes all claims that Goldman lost money on its Abacus exposure moot: can someone finally ask Blankfein or Viniar or whoever, how much money Goldman made on its CDS over AIG's exposure in all Goldman underwritten and AIG purchased CDOs? Be it on a total or pro-rata basis. Anyway, we are tempted to believe there may yet be hope that some justice could after all be served: the SigTarp, whose $40 million budget to date, has uncovered more dirt on the US financial system, than the SEC has in its entire history, with its $1 billion a year moneyhole. What is also notable, is Barofsky's disclosure that he is considering an audit of the role of BlackRock in TARP. Dear SIGTARP, while you are doing that, please also investigate why the Federal Reserve is actively managing its Maiden Lane portfolio, presumably via BlackRock, and whether BlackRock is also advising the Fed on managing its $2.5 trillion SOMA holdings, which as was discussed yesterday has a DV01 of $1.5 billion, and is the biggest ticking time bomb at the heart of the US banking system, and just how much any such off-balance sheet hedging costs the US taxpayer.
A special squad of North Korean soldiers was behind last month's deadly sinking of a South Korean frigate, this according to human rights activist Choi Sung-yong, who cited a North Korean military officer. The claim could not be verified because Choi promised the source not to reveal his identity. In Seoul, South Korea’s Joint Chiefs of Staff said, they could not confirm the allegation. The 1,200-tonne Cheonan was blown apart by an explosion on 26 March 26 as it conducted a routine patrolling mission in South Korea’s western waters near the tense maritime border with North Korea. Fifty-eight sailors were rescued, but at least 38 died and eight are still missing.
Goldman spent about 28 hours on Monday repeating over and over how neither it nor anyone else has done anything wrong. Which is why we are scratching our heads at the news just reported by the WSJ that Goldman decided to deregister Tourre with the London FSA. Sure, there is an explanation: "A Goldman spokeswoman said the company decided to de-register Mr. Tourre with the Financial Services Authority because the London-based employee is on indefinite paid leave, and therefore won't be interacting with Goldman's clients." That sounds about as credible as Irene "Cash Cow" Aldrdige's defense of the ethics of HFT.
American Banking News investigates the reason for the recent massive surge in financial stocks, to a big extent predicated by the government's desire to push Citi stock price over the $5 critical threshold "participation" barrier. As ABN notes: "The reason behind wanting the share price to go beyond $5 is in relationship to institutional investors, who in many cases are prohibited from investing in any stock under $5 a share. For example, pension funds and mutual funds are some of those I’m referring to here." Nothing surprising there. However, the scathing critique that follows, based on nothing but the truth and exposing the government's endless stock market manipulation gimmicks, deserves a broader audience.
Why are all the big banks suing their employees for stealing their "complicated" HFT market manipulation codes? Here is the basic framework of every HFT algo these days, transcribed from Hex:
- 10. If volume non-existent, then buy everything
- 20. If flashing indicates big dumb money block order coming, use dark pool to front run in sub-penny increments
- 30. If stock trades between $1 and $5 trade churn with best algo buddy to generate millions in liquidity rebates
- 40. If 30 True and churning is in place slowly raise bid/offer range to create impression market rising
- 50. If big brokers see 40 and create feedback loop with ETF buying pushing prices even higher tap self on algo shoulder
- 60. If 40 and 50 True dump everything in last 5 minutes of trade in dark pool, reconciliation will occur after market close, end day 100% cash
- 70. If seller appears, drop everything and go to binary Hampton.
Here is a chart of last three days of ES volume. The "surge" in volume as Pisani observes, is a victory for the bulls.
"While on the subject of gold manipulation, last month I referred to the cartel's specific modus operandi on those days when its members choose to take gold lower. However, this is only one of their ploys. Another page in their playbook relates to keeping enthusiasm in the gold sector as subdued as possible. Gold is seldom, if ever, allowed to rise more than two percent on a given day. If strong buying propels gold higher, massive selling inevitably appears when it has risen two percent and continues until gold is stopped dead in its tracks. The next day, to ensure that there is no follow-through fervor, any further upside is capped at a one percent gain. Following that, gold is held in check until the long speculators who propelled the original rise lose patience. At that point, the cartel looks for an opportunity to clean them out. I realize this sounds pretty Machiavellian but I can only point to the trading patterns as confirmation." John Embry of Sprott Asset Management
ICI reports that the depletion of money market flows, which as we have pointed out have seen outflows of over $300 billion year to date, is finally starting to force retail capitulation into domestic equities: the week of April 7 saw domestic equity mutual fund inflows of $1.9 billion, reversing the outflows of the past two weeks. At this point total domestic fund outflows for 2010 have dropped to only ($1.8) billion, which surely "justifies" the spike in the S&P from January 1. The implication is that, as we have pointed out repeatedly, the only marginal buying of US-based stocks continues to be executed primarily by Primary Dealers. We will update on Lipper/AMG data as soon as it is available.
Apologies for the lack of color for the past 24 hours. We pick up first with a quick update on equities following our call on Friday: Equity markets did rebound to test out the break-out level between 1,198 and 1,203. Tactical players or people interested in initiating short positions for the longer run but with a tight cost of entry should look at selling the market here, with above 1,207, to play 1,180 first, and then a drop that if we believe our signal from last Monday on the Vix should be a least 5%. It is probably also a good level to reload on long VIX and volatility positions with an excellent risk reward. - Nic Lenoir