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Another JPMorganite Busted For "Bandits' Club" Market Manipulation

Tyler Durden's picture




 

A few days ago many were shocked when JPM disclosed for the first time that in less than four years, or since 2010, Jamie Dimon's den of alleged criminals has reserved a mindblowing $28 billion toward legal expenses.

In light of recent developments, investors may just want to round that number to a good, clean $30 billion, because as the WSJ just revealed, yet another JPMorgan market manipulator has emerged in a seemingly endless line of people whose shortcut to success at 270 Park Avenue has been to manipulate assorted markets, be it Libor, Credit Derivatives, Electricity, Aluminum, or Equities. We can now add FX to that, following news that one Richard "Dick" Usher, until 2010 at RBS, and since then JPM's London-based head of G10 spot trading, has been implicated in the infamous RBS FX London closing fax manipulation chat sessions. "The group of traders in the chat rooms was known by various monikers including "The Bandits' Club," and "The Cartel," the people said."

As a reminder, "the investigation of possible manipulation of foreign-exchange markets got underway over the summer when the U.K.'s Financial Conduct Authority opened an inquiry in response to concerns voiced by industry officials. This month, the Swiss markets regulator, Finma, said it was conducting its own inquiry in concert with other regulators, and that "multiple banks around the world are potentially implicated." In the U.S., the Federal Bureau of Investigation has begun a criminal investigation into possible rigging of currency markets, people familiar with the matter said last week.... RBS started digging through its records to look into potential foreign-exchange manipulation by its traders around the same time that the FCA began its inquiry, according to a person familiar with RBS's actions. The FCA declined to comment."

So where does Usher fit in?

RBS, based in Edinburgh, unearthed materials that indicated that Mr. Usher participated in the electronic chat room with colleagues at other banks, this person said. RBS, following its policy of alerting regulators when it finds signs of potential misconduct by employees, handed over those chat records involving Mr. Usher to the FCA, this person said. It isn't clear what portion of the documents provided to the FCA related to Mr. Usher.

 

People familiar with the matter say one area investigators are looking at is the practice of currency "fixes," daily snapshots of prices for currencies that are used by money managers and others for valuing portfolios, among other purposes. The fixes—the most popular is at 4 p.m. London time—are computed based on market activity during a brief window.

The rest of the story is known, and was already covered previously, most recently in "Are FX Markets "Rigged" At The London Closing Fix?" And now we know that at least one current (and likely many more) JPM employee was actively engaged in riggind and manipulating yet another market. Was he doing it in the past three years since he came on board Jamie Dimon's Litigitanic? That is for the regulators to reveal, although we are confident that there is nothing in the regulatory rulebook that JPM can't "fix" with another $1-2 billion fine.

As for Dick Usher's recent quoted exploits, here he is in an October 2012 FT article:

“People have turned from euro speculation to dollar speculation since QE3 but that’s not working out as they hoped – people aren’t getting bang for their bucks,” says Richard Usher, JPMorgan’s head of spot forex trading in London.

Dick sounds confused. Well Dick, all "people" need to get more "bang for their buck" is to rig markets just a little more. After all, if "people" get caught, all "they" will have to do is pay a modest wristslap amounting to 5-10% of all the profits from any illegal trades that added that extra "bang."  That, and fortifying the "fortress balance sheets" of their allegedly criminal employers, will make them model employees in no time.

P.S. it goes without saying that retail investors just can't wait to get back inside this perfectly efficient, unmanipulated, fair, honest and regulated market, in which the same standard are used for everyone: small trader and big. Why else would Eugene "Efficient Market Hypothesis" Fama win the Nobel Prize earlier today?

 

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Mon, 10/14/2013 - 17:17 | 4053995 World of Debt
World of Debt's picture

Bunch of crooks -- all of them. See Hialrious Music Video "WORLD OF DEBT":

http://www.youtube.com/watch?v=99xsqxzJnXs

Mon, 10/14/2013 - 17:19 | 4054008 ACP
ACP's picture

Just another "Dick" in Jamie's portfolio of penii.

Mon, 10/14/2013 - 17:34 | 4054023 Rainman
Rainman's picture

Sad....JPM must be infested with rogue traders...hey, when you a megamarket maker you wipe your ass with 30 bil.

Mon, 10/14/2013 - 17:49 | 4054066 Peter Pan
Peter Pan's picture

These activities ill not cease until the traders are jailed and the penalties exceed the profits made.

Mon, 10/14/2013 - 18:06 | 4054116 Muppet Pimp
Muppet Pimp's picture

If this story is true, maybe we should get rid of the fed and hire JPM to be the bank of the US.  They could set the price of our commodities wherever we want is being alleged, no? 

Mon, 10/14/2013 - 17:18 | 4053996 Jethro
Jethro's picture

HAHAHAHA, "Dick" Usher......

Mon, 10/14/2013 - 17:17 | 4053999 schoolsout
schoolsout's picture

Erin Burnette says there is nothing to see here...move along, now.

Mon, 10/14/2013 - 18:10 | 4054133 JonNadler
JonNadler's picture

being the name of the guy is Dick Usher maybe she does know this time

Mon, 10/14/2013 - 17:19 | 4054000 lolmao500
lolmao500's picture

Enron were pickers!

Don't worry the rating agencies will bring the fraudster to reality right?

S&P says Yellen nomination near-to-intermediate term positive

MWAHAHAHAHAHAHAHAHAHA
US Senator Barrasso says Senate Republicans will meet tomorrow at 11 EDT

Bend over.

Mon, 10/14/2013 - 17:30 | 4054032 nmewn
nmewn's picture

Ben Dover, Ben Dover...he's a partner in a law firm isn't he?

Mon, 10/14/2013 - 17:20 | 4054001 B2u
B2u's picture

The Fall of the House of Usher?

Mon, 10/14/2013 - 17:22 | 4054010 Jethro
Jethro's picture

Golf clap and an up arrow for you kind sir.

Mon, 10/14/2013 - 17:19 | 4054006 Dubaibanker
Dubaibanker's picture

What's wrong with manipulation? Everybody does it! I am shocked...shocked I tell you that a banker was caught doing manipulation.......Question is: Will Dick go to jail?

Mon, 10/14/2013 - 17:26 | 4054015 Devotional
Devotional's picture

Richard 8===D Usher

Mon, 10/14/2013 - 17:27 | 4054021 max2205
max2205's picture

Dick Cheney
Dick bove
Dick Corzine
dick Dimon
Dick bush
Dick Barry

There is a trend here

Mon, 10/14/2013 - 22:55 | 4054820 Kiwi Pete
Kiwi Pete's picture

And the Granddaddy of them all...Dick "TrickyDicky" Nixon.

Mon, 10/14/2013 - 17:26 | 4054025 Teddy Tenpole
Teddy Tenpole's picture

 

 

We're fortunate that the gold and silver markets have remained above this sort of thing.

Mon, 10/14/2013 - 17:49 | 4054070 Peter Pan
Peter Pan's picture

And the Chinese are loving it.

Mon, 10/14/2013 - 17:28 | 4054028 LetThemEatRand
LetThemEatRand's picture

And another opportunity for JPM to pay a fine that is tiny compared to the profit they derived, while admitting no wrongdoing.  Just us.

Mon, 10/14/2013 - 17:40 | 4054056 nmewn
nmewn's picture

Thats right, Just Us.

Mon, 10/14/2013 - 17:30 | 4054031 LawyerScum
LawyerScum's picture

Reading about these criminals on a daily basis really does make your gut hurt. 

Mon, 10/14/2013 - 19:06 | 4054242 El Vaquero
El Vaquero's picture

It should make your ass hurt.  They're raping this country.

Mon, 10/14/2013 - 17:32 | 4054036 ebworthen
ebworthen's picture

He might have to give up the $200 lunches and not buy that new 750i BMW.

No jail time or criminal prosecution of course, unless he draws the dreaded 1/100,000 "make an example out of him" DOJ lottery card so CNBC and Bloomberg have a video clip of the perp walk they can play over and over to give an appearance of rule-of-law.

Mon, 10/14/2013 - 17:42 | 4054057 RiverRoad
RiverRoad's picture

28 billion.....just the silly little cost of doing business these days.

Mon, 10/14/2013 - 19:06 | 4054103 Peter Pan
Peter Pan's picture

This figure is obscene when one considers that te cost of the food stamp program in 2012 was around $74 billion and that JPM also makes money from this program of over $5 billion per year.

So in effect the food stamp program basically funds their legal costs on a yearly basis.

To top it all off these billions in legals then feed another group of leeches in society.....lawyers or as my father woukd say why do they mispell the word lawyers when it should be spelt as l-i-a-r-s?

Mon, 10/14/2013 - 19:05 | 4054237 CPL
CPL's picture

Holy fuck that's a lot of bread just for court fees and legal beagles.  Something else going on there for sure.  You can smell it a mile away with an expense report that big.  One legal team can't be worth the same as an industry or a country's GDP. 

Plus that much cash, you'd see it some where.  Where is it?  It's 28 billion dollars.  That buys a lot of stuff, buildings or party hats.

Mon, 10/14/2013 - 19:33 | 4054300 Jam Akin
Jam Akin's picture

Might shock some folks to hear it but I've heard tell that some firms use those legal reserves to manipulate uh, excuse me, ahem "manage" quarterly earnings...

Mon, 10/14/2013 - 17:44 | 4054062 Itch
Itch's picture

30 billion? Take the GDP of these countries and add them together; Tuvalu, San Marino, Kiribati, Marshall Islands, Palau, Seychelles,  São Tomé and Príncipe, Central African Republic, Micronesia, Tonga, Dominica, Comoros, Samoa, U.S. Virgin Islands, Saint Vincent and the Grenadines, Saint Kitts and Nevis, Vanuatu, Grenada, Somalia, Guinea-Bissau, Gambia, Solomon Islands, Cayman Islands, Antigua and Barbuda, Saint Lucia, Djibouti, Greenland, Timor-Leste, Belize, Liberia, Bhutan, Cape Verde,   the Faroe Islands and the Maldives. And you still wont cover JPM Legal fees...that's hard to understand, and people wonder why others "believe" in conspiracy. Make me understand how these people are not demented parasites of utterly no use to society other than to rape it? 

Mon, 10/14/2013 - 17:45 | 4054064 orangedrinkandchips
orangedrinkandchips's picture

Risk vs. Return. Of course it's gotta pay 10x the fine or it's not worth it....

 

Even a dumb ass won't rob a jewelry store if it was low quality shit!

 

who the fuck woulndn't do it? 

Mon, 10/14/2013 - 17:54 | 4054084 MyBrothersKeeper
MyBrothersKeeper's picture

Don't confuse naivity with complicity. This has been going on for a long time, yet nobody gets prosecuted except the "rogue traders".  But, as most on here know, that is nothing more than a smokescreen being put up by the primary people profiting: bankers, politicians, major corps with a wink wink by revolving door banker/regulators.....and swallowed by the MSM.

A good question no matter what the debate is: fraud, corruption, debt ceilings etc is who is profiting most.  Here is a hint: it's the same people.

Here is a nice little article by Janet Tavakoli (deriviative/debt expert) on how somone is likely making a lot of money in the US debt CDS market with just the talk of a potential default.  Note that short term treasury default odds are now over 5% which would put corporate bonds into "junk" status.  Once the money has been made, those responsible for helping them make the money will be rewarded and an 11th hour deal will be made.  And once again, none of the real structural issues will have been addressed. Here is the article link: http://www.tavakolistructuredfinance.com/2013/10/credit-derivatives-us-treasuries/

Mon, 10/14/2013 - 18:31 | 4054179 29.5 hours
29.5 hours's picture

 

Chat room scam, eh? How esoteric. What an original mind Usher has. I guess that is why he deserved the obscene bucks.

"RBS, following its policy of alerting regulators when it finds signs of potential misconduct by employees, handed over those chat records"

Yes. RBS doing its civic duty. Dimon must have burned them recently.

 

 

Mon, 10/14/2013 - 18:44 | 4054205 WallowaMountainMan
WallowaMountainMan's picture

"reserved a mindblowing $28 billion toward legal expenses."

 

heck that's less then 3% of a trillion....

 

:)

Mon, 10/14/2013 - 18:46 | 4054210 Smartie37
Smartie37's picture

Jamie Die man, wouldja please?

The world would be a better place without your prosperity-sucking corruption.......just an opinion

Mon, 10/14/2013 - 19:09 | 4054249 TaperProof
TaperProof's picture

Everything is manipulated, not gold and silver though, nobody has any reason to manipulate precious metals. 

/sarc

Mon, 10/14/2013 - 19:21 | 4054272 optimator
optimator's picture

How many little slaps on the hand will they tolerate?  till the slapper tires, as long as they're make the big bucks of course.  Just a small cost of doing business.

Mon, 10/14/2013 - 20:48 | 4054468 MiltonFriedmans...
MiltonFriedmansNightmare's picture

Jamie da man. EBT Kingpin. Don't even dare think of messin with him, cause I do believe the FSA has his back,.

Mon, 10/14/2013 - 19:53 | 4054333 Cacete de Ouro
Cacete de Ouro's picture

Eh... Fama meant EMH : Efficient Manipulation Hypothesis

Diversification works across asset classes and within asset classes: Don't just manipulate one asset, manipulate them all

Risk and Return are related: Regulators, it's just a small risk (don't look), and there will be a nice return for you..

Asset prices are unpredictable in the short term: Of course. What do you expect when a bunch of traders are rushing to go down to the pub? It's every instant messenger for himself...

Mon, 10/14/2013 - 20:30 | 4054415 jonjon831983
jonjon831983's picture

I wonder how many analysts have been banging the table with JPM as a buy.

Mon, 10/14/2013 - 21:28 | 4054573 Downtoolong
Downtoolong's picture

They’re all guilty, and starting to realize that the first in line to confess will be the first to get back in the game.

Gary Gensler would concur but, you know, he’s shut down right now, which means he’s working just a little bit harder to stop this shit than he usually does.

Mon, 10/14/2013 - 21:42 | 4054600 BabyBen
BabyBen's picture

Ben just order "Printers Full Steam ahead"....we can't allow Jamie to run out of money!

Mon, 10/14/2013 - 21:44 | 4054616 BabyBen
BabyBen's picture

So is this how they make billions a month with no down trading days....They Cheat? 

 

But they said they hired the smartest and was that hard work and top down analysis. What they meant is they hire the sleaziest who cheated the most! 

Mon, 10/14/2013 - 22:10 | 4054684 falga
falga's picture

These are the people we bailed out with that 750 billion+ in 2008. We expected grateful banker and we got bandit bankers doing their old tricks. Would have been better to give that money out directly to consumers as a progressive reduction in mortgages. Bankers didn't deserve the help...we should have let GS and JPM collapse.

Mon, 10/14/2013 - 23:40 | 4054921 WTF_247
WTF_247's picture

Its all part of the dog and pony show.  There were almost no indictments in 2008,09,10,11,12 unless it was outrageous and public already.

From the start those in power already laid out the game.  Liablities.  What they would eventually cop to.  How much it would cost.  The Fed is in on the ground floor with all of it, including the delay.  Make sure it actually costs them nothing.  Make sure in the meantime they gain a lot in exchange for growing the power of govt.

The delay is to give the Fed time to hand govt money over to them to keep them around.  If they have 10B in exposure, the Fed gives it to them.  If they have 30, that happens -- all of it covertly and over time through QE X. Meanwhile because stocks go up you have the media on your side but not questioning almost anything.

Delay indictments for 3-4 years but not so long that the population really thinks there is no accountability.  Bring it to the brink and they trickle 1 or 2 things.  Get them excited then back off again.  Fine them a large amount but not that much.  Downplay the fine, upplay "fairness".  In the meantime those who did wrong knew 3-4 years ahead of time what they were going to get in trouble for, how much it would cost and then that the Fed would bankroll it all.

They are all actors in a game.  The govt needs these guys to survive, these guys keep elected officials that do their bidding in office. 

The big joke is on the broad US.  None will understand what has been done until it collapses.  Even then they will have very little idea that the whole thing was planned from the start.  Fleece the many to benefit the few -- but the few argue that they are the only reason the many have anything at all.

Tue, 10/15/2013 - 00:16 | 4054978 traditionalfunds
traditionalfunds's picture

From "Dan Pearce" comment on the Bloomberg version of the story. "Pearce," an RBS forex trader states: Richard usher was extremely dodgy. He had the backing of the equally dodgey roger hawes (global head at the time) and Chris peters. usher used to trade PA before the bank had huge fixes - WMR and ECB fix. Bent all the rules known. PA appears to mean price action trading. WMR Reuters data. ECB Euro Central Bank. Claiming he was trading based on PA may have given Usher "cover" to make the odd trades that were actually the manipulative trades now under scrutiny.

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