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Wall Street Banks Admit They Rigged CDS Prices Too
Back in June, we noted that a group of investors which included hedge funds, pension funds, university endowments, and others were looking to push forward with a lawsuit that alleged Wall Street had conspired to limit competition in the CDS market.
Of course the whole case was based on what amounts to tautological reasoning.
That is, everyone knows that Markit effectively monopolized the CDS market and because Markit was owned by Wall Street, it was self evident that big banks both monopolized and manipulated the market.
Amusingly, one of the firms that plaintiffs alleged was kept out of the credit default swap market as a result of Wall Street’s absolute stranglehold was Citadel. As we joked a few months back, this meant that by conspiring to keep the Fed’s plunge protection team shut out in 2008, Markit and Wall Street robbed the world of the chance to see what happens when VIX 90 meets HFT, meets CDS market making.
In any event, earlier this month, the Street agreed to settle for nearly $2 billion and today we learn that none other than JP Morgan - whose offshore, taxpayer sponsored hedge fund at CIO seems to have quite a bit of trouble trading CDX without losing billions - is set to bear the brunt of the pain. Here’s Bloomberg:
JPMorgan Chase & Co. is set to pay almost a third of a $1.86 billion settlement to resolve accusations that a dozen big banks conspired to limit competition in the credit-default swaps market, according to people briefed on terms of the deal.
JPMorgan is paying $595 million, with the lender’s portion of the accord largely based on the plaintiffs’ measure of market share, said the people, who asked not to be identified because the firms haven’t disclosed how they’re splitting costs. The settlement also enacts reforms making it easier for electronic-trading platforms to enter the CDS market, according to a statement Thursday from the attorneys for the plaintiffs, which include the Los Angeles County Employees Retirement Association.
Morgan Stanley, Barclays Plc and Goldman Sachs Group Inc. are paying about $230 million, $175 million and $164 million, respectively, the people said. Plaintiffs’ lawyersdisclosed the approximate size of the settlement in Manhattan federal court last month, saying they were still ironing out details. They updated the total in Thursday’s statement.
The accord averts a trial following years of litigation by hedge funds, pension funds, university endowments, small banks and other investors, who sued as a group. They alleged that global banks -- along with Markit Group Ltd., a market-information provider in which the banks owned stakes -- conspired to control the information about the multitrillion-dollar credit-default swap market in violation of U.S. antitrust laws.
So yes, even the marks for the financial weapons of mass destruction that helped to destroy the financial universe were (and probably still are) manipulated, meaning that you can't even bet against something without falling victim to big bank rigging.
Whether or not allowing other players (like Citadel) to enter the market will ultimately be a positive or a negative is anyone's guess, but the bottom line is that at the end of the day, there wasn't anything Wall Street didn't control.
Here is a system that ultimately allows banks to control the pricing for the instruments they use to bet against securities that they themselves create. This is just part and parcel of a never-ending paper wealth creation machine which generates billions in fiat money profits without creating anything in the way of tangible value and before it's all over, this financialization of the US economy will likely end up bringing the world to its knees unless someone, somewhere puts a stop to the madness.
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To be fair, setting the rules to benefit yourself is kinda the whole point of financial products.
Why the fine?
http://demonocracy.info/infographics/usa/derivatives/images/demonocracy-...
"$1.86 billion settlement to resolve accusations that a dozen big banks conspired to limit competition in the credit-default swaps market, according to people briefed on terms of the deal."
WOW, 1.8 billion... that ought to fucking teach those banks a lesson!
What a joke.
Are you totally captured by the Borg?
well Dope is in his handle, but hey Imuhnutjahb
Their real punishment is having to hire a Lew, Orzag or Geithner and pretend they matter
The wonders of self regulation. Not that external regulation would make any difference either.
Instead of jail, can we send them all to community college or better yet to Syria as paid journalists?
It is beyond belief how open this criminal project is. Absolutely astounds me. These mundane announcements of fines for continuing crimes. Like layers of an onion. But nobody cries but the "useless eaters".
WB? Did you see a few articles that showcased rental units in London and Japan where (in London) some poor sod was offered a shared bedroom for 500 pounds that amounted to a matress below stairs? Or the aged Japanese who are living like chickens in wire cages 2 ft. X 5 ft?
Astounds me the game plan that continues with not one apology or consequence.
Cheers.
http://www.globalresearch.ca/the-global-economic-crisis-the-great-depres...
And they make fun of cage flats in Mongkok
Better yet, make one of these "financial wizrds", Treasury Secretary ;-)
In 1985 we put 1000 + Banksters in jail.
This time at 1000X worse, we put......
......
....
NONE except for the guys who gave themselves in.
This will have longstanding repercussions into the future.
We are now openly run by criminals. They no longer even care about optics...
Unless they can make holiday decorations out of pine cones, they ain't going anywhere near a jail.
Continuing criminal enterprises. So who is surprised? These are PROFESSIONAL crooks.
Law and order? Only for the SERFS. Any wonder there is a break down from top to bottom?
Wall Street is the biggest racket ( second to the government, of course, but I think they are one and the same? ) going! China is taking lessons.
I NEEDS MAH SWAPS BITCHEZ!
.
.
.
"this financialization of the US economy will likely end up bringing the world to its knees unless someone, somewhere puts a stop to the madness. "
Well, if the Pentagon and the State Dept. cannot bring the world to its knees, then Wall Street will just have to step up.
That's the plan, bring the world to its knees so the .01% can get a hummer. I hope the world bites.
Rigging? Oh no not THAT. Who could possibly think of doing something like that?
So everything is rigged, fixed, and manipulated except for the precious metals. The banks are hands off this market.
If you don't believe me go to Martin Armstrongs blog site for affirmation.
Yeah, but was it Legal?
Float-On by the Floaters.
Timberrrrrrrrrrrrrrrrrrrrrrr
I despise this entire fucking pathetic system.
WMD's- exploding fake titties - invade JPM and seek out those Weapons. Been gone a while; did Jamie recover from that throat cancer?
THATS OK, WHY WOULD THEY NOT CONTINUE TO RIG ALL TYPES OF DIFFERENT ''MARKETS'' WHEN ABSOLUTELY NOTHING HAPPENS TO THEM WHEN THEY DO SO?
ITS A FUCKING JOKE, EVERY FUCKING PERSON WHO WORKS IN THESE FUCKING BANKS NEEDS TO BE PUT IN THE SLAMMER AND NEVER LET OUT.
I REALLY FUCKING WISH SOMEONE WOULD DO SOMETHING ABOUT THIS SHIT, ITS SO GOD DAMN FRUSTRATING ALREADY.
Right ... let's just get this out in the open. They rigged everything to defraud the entire population of the world. They have committed treason in so many countries that they will need to be executed at least a 100 times to pay for their crimes.
But the toadies are afraid of them because they would not be able to have the GI Joe with the Kung Foo Grip if it was not for the bankers.
Now Satan is willing to sacrifice the bankers so that he can get total control of the world. The bankers signed their contract in blood and have agreed to be sacrificed.
Nomi Prins-Federal Reserve Transition to Destruction
http://www.youtube.com/watch?v=AFMinapKlTA (26:51)
How many more Markets are left that they rigged and how much more moula will the Feds squeeze out of these basturds?
It's time to unleash the Kraken, warp core breach and drop the bomb on Wall St...
"Push the button Max."
So the question is, what isn't rigged?
PM's of course! Geeeez!
Maybe its time to start making a few of these bastards pay for their deeds? Oh my god, I lost my head for a minute, forgot they run the courts too.
White house cufflinks, tells the whole story.
Gold Rigging: Banks Investigated
http://www.youtube.com/watch?v=u1GJKslQNDM (4:17)
CDS should be killed.
created by a guy named 'larry fink' aka. mr. blackrock and another namelss smo in the 80's
blackrock evovled during the lehman crisis. dimon [jpm] and diamond [barclays] were at each others throats for lehman's n. american trading house. barclays won, so they had to dumped their ETF business as part of the deal. and guess what? it fell [conveniently] into the rat`fink's lap.
jamie dimon and fink are doing just fine today but the wasp`bob diamond lost his job.
the irony
"Six Degrees of Phil Gramm" ... and the murder of 'Steagall-Glass Act' in broad daylight?!?
without further commentary,..this is and was the 'straw-that-broke-america's back'
http://news.muckety.com/2010/01/08/six-degrees-of-phil-gramm/23671?link
Note: connections to Vice Chairman of CITI Group, Lewis B. Kaden and this scumbag Jim A. Leach, co-sponsor along with Thomas J. Bliley Jr.
lastly-- Gramm-Leach-Bliley Act (GLBA) was passed with both GOP and Dem's overwhelmingly and signed into law by slick willy. 'late Nov/1999' (106th infamous Congress)
I thought Markit smelled like a rat scam. Who is majority owner? Children of the Roth?
"Here is a system that ultimately allows banks to control the pricing for the instruments they use to bet against securities that they themselves create."
And yet, somehow they still managed to fuck up and need bailouts to keep from losing their ass and going bankrupt.
And here I thought Gartman was a lousy trader.
Noooooooooooo!
Say it's not true!!
thats a tax write off is'nt it
Make 500 Billion, get fined 1.86 Billion. Cost of doing business, lining the pockets of scumbag politicians, and giving regulators high paying jobs after their turn looking the other way.
I need another dose of Fuckitol!
Layman's dictionary...
Rigging...the act of banks organizing something in a structured way in order to produce a particular result..usually results in fines which are less than the profits from such activity. .. a standard banking practice usually found in the US in New York City ... location Wall Street. Warning...only the best and brightest should attempt this activity. Possible huge financial gains. Jail time minimal.
Whaaaat?! I am shell-shocked, dude.
one of the good things about markit for cds though was you could tell when the street was massivelly offsides on curve trades. years ago now when i was trading i remember more than one occassion where the front end of curves were marked way too steep.. telling me there was no stonach for increase in jtd risk. lifted every offering i could find in short dates which wound up being very profitable. as i recall, we bought a lot from rbs, whom we nicknamed 'really bad sale'.
Why isn't the new personal liability, self-proclaimed normal-citizen-view-of-justice-enforcing Department of Justice involved here? Is this just one of the probable dozens upon dozens of things that have been wrapped up through negotiation before the new kick ass for justice and accountability Dept of Justice philosophy kicked in? I mean, the cool sounding soundbites from last week or whatever?