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Gold Anti Trust Action Committee Urges SEC, CFTC To Probe Goldman Trading Program

Submitted by Tyler Durden on 07/07/2009 18:39 -0400

And so it develops. From the GATA press release:

Dear Friend of GATA and Gold:

GATA today urged the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission to investigate the Goldman Sachs Group Inc. computer trading program that, according to a federal prosecutor, the bank acknowledges can be used to manipulate markets.

GATA's complaint referred to the Bloomberg News story dispatched to you yesterday --

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_6d.tyNe1KQ)

-- reporting the arraignment in U.S. District Court in New York of a former Goldman Sachs employee accused of stealing the program. The prosecutor, Assistant U.S. Attorney Joseph Facciponti, was quoted as telling the court: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."

In letters to the SEC and CFTC, GATA wrote: "The assistant U.S. attorney's comment can be construed to suggest Goldman Sachs considers its own manipulation of markets to be fair, while such manipulation by others would be unfair. The court proceeding described in the Bloomberg News story would seem to impugn all markets in which Goldman Sachs trades."

GATA asked each commission "to investigate Goldman Sachs' trading program urgently and report its findings publicly."

The text of GATA's letters is appended.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

GOLD ANTI-TRUST ACTION COMMITTEE INC.
7 Villa Louisa Road, Manchester, Connecticut 06043-7541

July 7, 2009

Gary Gensler, Chairman
U.S. Commodity Futures Trading Commission
3 Lafayette Centre
1155 21st St., N.W.
Washington, D.C. 20581

Mary L. Schapiro, Chairman
U.S. Securities and Exchange Commission
100 F St. N.E.
Washington, D.C. 20549

Dear Chairman Gensler / Dear Chairman Schapiro:

I'm enclosing a copy of a report distributed July 6 by Bloomberg News Service about the U.S. government's prosecution of a former employee of Goldman Sachs Group Inc. involving the purported theft of a Goldman Sachs computer trading program. The report quotes Assistant U.S. Attorney Joseph Faccipointi as saying in U.S. District Court in New York City: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."

If the report quotes the assistant U.S. attorney correctly, and if he was characterizing Goldman Sachs' position correctly, then Goldman Sachs claims to have possession of a computer trading program that can manipulate markets. The assistant U.S. attorney's comment can be construed to suggest Goldman Sachs considers its own manipulation of markets to be fair, while such manipulation by others would be unfair.

The court proceeding described in the Bloomberg News story would seem to impugn all markets in which Goldman Sachs trades. On behalf of the Gold Anti-Trust Action Committee Inc., I ask your commission to investigate Goldman Sachs' trading program urgently and report its findings publicly.

Thanks for your consideration.

With good wishes.

CHRIS POWELL
Secretary/Treasurer

Hat Tip: Jeff

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Tue, 07/07/2009 - 20:33 | 5240 Anonymous

The 'fact finding commission' will probably go to Goldman Sachs lobby have a cup of coffee and type a report that says Goldman did nothing wrong. These assholes are not going to do anything worthwhile.

Wed, 07/08/2009 - 03:37 | 5319 Anonymous

I think by 'probe' they meant dinner and cocktails. The SEC is a joke. It's obvious to anyone paying attention.

Wed, 07/08/2009 - 07:48 | 5334 Anonymous

Over at Dealbreaker, "probe" would take on ominous
rectal connotations...

Thu, 12/24/2009 - 00:56 | 173478 Anonymous

i will agree with you
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Tue, 07/07/2009 - 20:42 | 5245 Anonymous

I have never heard of any serious action taken by SEC/CFTC/COMEX upon GATA's complaints.

Tue, 07/07/2009 - 20:50 | 5251 Anonymous

.......gradually inching towards a pre-revolutionary situation.......

Wed, 07/15/2009 - 12:15 | 7294 Anonymous

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Tue, 07/07/2009 - 21:10 | 5254 arnoldsimage

good evening my fat, stupid american friends... hahahahahaha... or should i say, my fat, stupid american pussies... hahahahahha... oh yes, yes you are... pussies, pussies, pussies... hahahahha... how many times must i tell you... you can blog your happy asses off as much as you want... you can write the sec??... wtf? ... hahahahahha... the sec? the sec?...HAHAHAHAHAHAHAHA... you motherfuckers are the most incredibly stupid bunch of bloggers in the fucking universe...hahahahahahha... there is only ONE thing these criminal cocksuckers understand... hahahahahahahaa ... and guess what... it's not your fucking blogs or any websites complaining 'bout all the injustices of goldman and such... they WILL understand a nice, thick rope... hahahahaha... yes, yes... i promise you get much done real soon with a nice thick rope... and there are many lamp posts near 85 broad... quit being pussies. hahahahaha

Tue, 07/07/2009 - 21:31 | 5257 My cognitive di...

Wow! That must be some wicked gateway.

Tue, 07/07/2009 - 21:35 | 5259 Dayton Ohio

have some patience, some style, some form. arnold.

let tyler shep the herd toward 85 B-road.

in due time the criminal cocksuckers will go down.

Wed, 07/08/2009 - 14:05 | 5396 Anonymous

broadway via 1537 paper st

Wed, 07/08/2009 - 03:04 | 5315 kapillar

Arnold. Please return to the middle ages and consider joining an order that required silence and prayer from its members.

Wed, 07/08/2009 - 05:21 | 5324 Shaza (not verified)

Arnold.

Robespierre springs to mind upon reading your comment:

" Terror is only justice: prompt, severe and inflexible; it is then an emanation of virtue; it is less a distinct principle than a natural consequence of the general principle of democracy, applied to the most pressing wants of the country.

Maximilien Robespierre "

Tue, 07/07/2009 - 21:18 | 5256 Anonymous

Ah HA! So that's how the Fed is manipulating gold prices... With this conspiracy unmasked the price of gold is going to rise to $3k-$5k an ounce!

GATA is a little koo-koo.

Tue, 07/07/2009 - 21:31 | 5258 dnarby

While GATA might be doing this for the wrong reasons, it is the right thing to do.

Goldman is screwed. Either their proggy actually does manipulate markets, and they have admitted to breaking the law, or it doesn't, which means the proggy really isn't that special after all, so no reason to prosecute Ivan.

If this goes to the wall, they could use this as a reason to investigate the other investment banks, and take these away from all of them (or intentionally increase their latency times so these programs can't work anymore (they need a low-latency connection)).

If they take it away from Goldman, then they will (ironically) become an ally in taking it away from all of the IB's, because they wouldn't want these other banks to have an unfair advantage..! Ha ha ha haa haaa!

Thu, 07/09/2009 - 11:38 | 5555 Anonymous

'so no reason to prosecute Ivan.'
Why Ivan? Ivan had nothing to do with that, it was Serge

Tue, 07/07/2009 - 22:01 | 5264 ardano

WSJ just posted a story with the headline, "Oil 'Speculators' Under Fire."

http://online.wsj.com/article/SB124700398437207969.html#mod=testMod

The jist of the story highlights efforts by some key Senators/Members to define speculators and speculation in energy futures markets. The Journal already carried a story regarding CFTC action on this issue and an op/ed piece. Of course most readers here are of the opinion that the only thing wrong with the energy futures markets comes from manipulation by a few sainted players and not from evil speculators.

What surprises me is how much dumb money is invested in long-only indexes, which of course make no sense when applied to commodities futures. The very fact that, according to the article, some $300B is invested in this manner means that someone, (GS,) is hedging this, front running it and leveraging it.

But, hey let's get those evil speculators...

Wed, 07/08/2009 - 00:23 | 5289 gookempucky

Truly the press will gloss over any and all truth-so
as the spec's are blamed the big crooks try and slither away. This country gobbles 20 mbpd while the price is driven by the "inventory numbers" is by far the biggest joke on the planet-a mb up or down doesnt even get the USA 2 hours of driving time-now thats funny shit. SPR will give USA about
38-42 days and that is what the CFTC should be investigating as rumours have circulated that our sweet oil SPR inventories are being siphoned off to pay IOUs. I would imagine GS has quite a number of tankers just setting and waiting for the right manipulation err moment to offload.
Personnaly I can't wait till these guys eat KA KA.

Tue, 07/07/2009 - 22:18 | 5265 Bubby BankenStein

Great reporting Tyler!

Additional exposure of these complaints in forums like Zero Hedge will contribute to getting issues adjudicated.

Thank you.

Tue, 07/07/2009 - 22:30 | 5268 pancho

well seeing as how the SEC probably couldn't make heads or tales of the code they won't even bother. They'll look at it, start to cry, hit the delete key, state "no wrong doing."

Wed, 07/08/2009 - 06:58 | 5330 Anonymous

The SEC only needs to cut a deal with the software engineer who stands accused.

Tue, 07/07/2009 - 22:46 | 5269 Miles Kendig

And the hits must keep on ronning...

Tue, 07/07/2009 - 22:53 | 5270 PenGun

Indeed the press is bound, with chains, to gloss all this over. Spreading the news widely is useful.

"And the beat goes on"

Tue, 07/07/2009 - 23:54 | 5279 Anonymous

No way the SEC looks into this.

Tue, 07/07/2009 - 23:56 | 5281 agrotera

This looks like a little light in a very dark tunnel. I am jumping for joy to read the brave words! BRAVO Chris Powell and of course, thank you for this news Marla and Tyler et al!

Wed, 07/08/2009 - 00:06 | 5285 My cognitive di...

Overstating the obvious gets you nowhere...but it shows you're trying.

Wed, 07/08/2009 - 00:09 | 5286 FischerBlack

Actually, having GATA on board with demands for transparency doesn't exactly bolster the case. The regulators have been ignoring Chris Powell for a decade

Wed, 07/08/2009 - 00:26 | 5290 Anonymous

im here from CR

you guys are on it

keep up the good work

mock turtle

Wed, 07/08/2009 - 01:08 | 5299 Anonymous

Whoop! -Francis
Goldman, Morgan Stanley Threatened by CFTC Speculator Review

By Margot Habiby

July 8 (Bloomberg) -- Goldman Sachs Group Inc. and Morgan Stanley may never have the same leeway in commodities as they did when oil reached a record $147 a barrel last year.

The Commodities Futures Trading Commission will consider greater regulation of oil, gas and other energy markets at hearings this month. It plans to review exemptions to trading limits that since the 1990s allowed Goldman and Morgan to build multibillion-dollar ventures in futures, swaps and over-the- counter markets.

http://www.bloomberg.com/apps/news?pid=20601103&sid=ayXuybgAlx2U

Wed, 07/08/2009 - 07:01 | 5331 Anonymous

Goldman is moving on to trade carbon credits. These credits are designed to blow up because the supply side of supply/demand will create an inflexible supply when the cap is incremented down.

Wed, 07/08/2009 - 12:51 | 5383 Anonymous

Me reckon two fings: One, Goldman has shorted oil and is now front running a falling market. The SEC announcement is part of crashing the oil price. Two, there will never be a shortage of carbon credits: the bastards will hsort sell it and make heaps on Phantom credits, just like they are on phantom stocks, and not unlike the banks makeing good money on credits created from thin air.

Wed, 07/08/2009 - 13:04 | 5385 Anonymous

PS. Remember: GS and cronies are not introducing carbon trading to save the environment, but to make money. Ergo: they will do all manner of crooked things in, and with, the market to make money. Biggest scam ever. At least with gold, you can stand for delivery (until the SEC changes the goal poast in mid game again), and at least in principle create a short squeeze.

Wed, 07/08/2009 - 02:34 | 5309 ShankyS

$2mn fine and no admission of guilt. Same old story. do you actually think anyone will ever have to acmit to doing anything wrong? Sad.

Wed, 07/08/2009 - 02:43 | 5310 Anonymous

TD, the Sith Lord (Grandma Goldman) has targeted Zero Hedge and is trying to shut it down, checkout zerohedge.net. BTW, America's financial system is made up of crooks and has been since it's beginning, time to shut them down and start over. How? Stop paying these bastards and let them wrought in HELL...

Wed, 07/08/2009 - 05:33 | 5325 Tyler Durden

If someone wants to spend the time to make spoof sites of Zerohedge, more power to them. We love the free publicity. Also, I could not have come up with a better instruction manual - the kid that wrote it is pretty good. When he gets fired he/she should join Zero Hedge.

Wed, 07/08/2009 - 21:30 | 5471 spud

With less than 200 hits to his main message, he already waffled and instead reposted my 18 bullet point comments. Riding on someone elses coattail with the domain, and now baited into my content instead of his. Thanks for the complement!

wannabe? hater? c'mon zh.net can't Joe Sixpack be just as outlandish as you? Could he really believe I think he creates domains for ad revenue? lol

Tyler, I always thought that my first post about you and your content would be on your site. I wanted to call TheInsider a pansy. I wanted to respond to the Gen-X comment. This was too precious to pass up however, and so he can have my financial blog posting cherry, it was good for a laugh.

I will now go back to lurking. Please just keep doing exactly what you are doing, you have my blessings, and a safe return home.

Wed, 07/08/2009 - 02:46 | 5311 Anonymous

GATA has been campaigning long and hard on manipulation and suppression of Gold prices by the markets. I support GATA and all they are trying to achieve. Despite indisputable evidence the game continues. Last year for example look at JP Morgans Gold derivatives position from Q2 to Q3 last year which jumped $15 billion. Stopping manipulation would allow even more dollars to be soaked up by soaring gold prices to stop a run on the dollar and trapping the repatriation of the dollar in gold. Maybe that could be good thing for main street. At the moment large funds including those from GS buy forward un-mined ounces and sell these on through the paper market. The cost of mining is increasing and therefore the price must go up. In the meantime the funds buy forward an ever decreasing margin on options and in order not to make a loss on current gold which maybe they have paid someone to take on lease even though they don't physically have it they need to suppress the price. The gold bubble will burst but it will explode the price. I recall a new market was created for gold in November, can't remember what it's called, can anyone help there? . Supposedly for physical only trading but you can choose to fractionally take risk on by offering multiples of physical held for sale. I would suggest maybe the powers to be know the game is up on the paper market. I'm just waiting for a day when people demand delivery of their physical gold. And when they do, all hell will break loose as they is simply not enough to go round. By far.

Wed, 07/08/2009 - 13:09 | 5386 Anonymous

Ah, let us dream on. Yes, that will be the day to behold. the mystery is: why aren't those with serious money behind them stand for delivery? Why? Why? Why? And if they are not doing it now, in the midst of this crisis, why would they do it later?

Wed, 07/08/2009 - 03:01 | 5314 hedgnome

Now who at the SEC, or what federal prosecutor would have the balls to even mention such a thing under their breath.

Not going to happen.

Wed, 07/08/2009 - 04:08 | 5322 Anonymous

Jerry Rubin, one of the Chicago Seven tried for inciting a riot outside the Democratic National Convention in 1968 in a protest against the war in Vietnam, once said:

"The power to define the situation is the ultimate power."

Wed, 07/08/2009 - 10:42 | 5362 Anonymous

Here is a link to Rob McEwen (Goldcorp, US Gold etc) talking about the gold market. Part two is particularly good:

http://www.youtube.com/view_play_list?p=B56E258514BF9250

Wed, 07/08/2009 - 10:53 | 5364 Anonymous

Some truth in advertising.

http://www.youtube.com/watch?v=rq0Ez7DZSnI

Thu, 07/09/2009 - 01:02 | 5493 Anonymous

Gary Gensler spent 18 years at Goldman Sachs. I'm sure he'll get right on it. /s

Fri, 07/10/2009 - 04:39 | 5861 Anonymous

Gee, these guys MANIPULATE MARKETS? Nahhh, couldn't be!!!
Considering the way the financial sector just held up the entire country at gunpoint, it doesn't surprise me.

Article: http://www.econocataclysm.com/next-stop-hyperinflation/

Fri, 07/10/2009 - 12:14 | 5940 daveM

Fortunate we are that Tyler spends the time to research and discuss these issues.......

Fri, 07/10/2009 - 15:07 | 6002 Anonymous

Could this "market manipulation" meme be a sophisticated example of disinformation ??? *** This guy Aleynikov is an expert at networks, particularly at getting bridges and switches to do his bidding. Co-located with NYSE, the GS server would be within the critical 30-meter distance for a copper wire high speed connection -- enabling an FC-AL end-run to get a mirror of incoming NYSE Execusion Report packets. *** GS has super-high access privileges. Getting access wouldn't be that hard anyway -- not in the same physical shop. *** Frontrunning on their own customer data is one thing. Grabbing off NYSE incoming data -- that sounds more like RICO to me. *** Aleynikov had a STORM system that had to use switch resources and RPCs for its installation and operation. Exactly the tickets for crawling and then setting up extra mirror copies of the targets.

Sat, 07/11/2009 - 21:34 | 6397 Anonymous

maybe the sec might fine them $600,000 when they made billions - and where do the fines go - not back to the people duped out of their money of course

SEC is ineffective at best.

Wed, 07/15/2009 - 12:16 | 7295 Anonymous

I have read through this article, I do not understand what it meant ah

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