Meet Martin "The Hammer" Mallett, chief currencies dealer at the Bank of England in 2007, and, as WSJ reports, recipient of emails that were part of an alleged campaign to rig benchmark interest rates, according to evidence presented in a London trial Wednesday. Remarkably, as we have detailed extensively, the emails were sent out with daily suggestions for where a variety of banks should set Libor. Mallett was later fired for what the central bank described as "serious misconduct," although the bank said his departure wasn’t directly related to the currencies-rigging investigation.
- Developed-Country Growth Slows, OECD Says (WSJ)
- Charter Agrees to Buy Time Warner Cable for About $55 Billion (BBG)
- Dollar hits one-month high as periphery woes weigh on Europe (Reuters)
- IMF Says Yuan No Longer Undervalued Amid Reserve-Status Push (BBG)
- Hanergy secured $200m loan ahead of solar group stock tumble (FT)
- Congressional Inaction Threatens NSA Spy Program (WSJ)
- Germany sees progress on Greece, EU officials to confer on Thursday (Reuters)
- Hayes ‘motivated by greed’, prosecutor says in Libor case (FT)
- Whistleblowers Find SEC Rewards Slow and Scarce (WSJ)
"It is troubling enough to consistently grant waivers for criminal misconduct. It is an order of magnitude more troubling to refuse to enforce our own explicit requirements for such waivers. This type of recidivism and repeated criminal misconduct should lead to revocations of prior waivers, not the granting of a whole new set of waivers. We have the tools, and with the tools the responsibility, to empower those at the top of these institutions to create meaningful cultural shifts, yet we refuse to use them. I am concerned that the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic."
It was about two years ago when we summarized all the known and confirmed rigged markets. Since then things have gone from bad to worse for believers in fair and efficient markets, with not only countless more banks now admitting they rigged Libor and FX. It all culminated with yesterday's settlement in which five of the world's biggest banks, including JPM, Citi and Barclays, agreed to plead guilty in a currency-rigging probe. And, to Bloomberg's dismay, the public yawned.
As the live webcast from US AG Loretta Lynch indicates, moments ago the DOJ announced five global banks including Citi, J.P. Morgan, Barclays, RBS would plead guilty to criminal charges to conspiring to manipulate FX Prices, and would pay some $5.6 billion in combined penalties to resolve a long running U.S. investigation into whether traders at the banks colluded to move foreign currency rates in directions to benefit their own positions.
UBS will pay $545 million, plead guilty to one count of wire fraud, and go on DoJ "probation" for three years for its role in forex manipulation. The market's assessment of how things turned out for the bank: "It couldn't have been better."
Futures Flat With Greece In Spotlight; UBS Reveals Rigging Settlement; Inventory Surge Grows Japan GDPSubmitted by Tyler Durden on 05/20/2015 06:00 -0500
The only remarkable macroeconomic news overnight was out of Japan where we got the Q1 GDP print of 2.4% coming in well above consensus of 1.6%, and higher than the 1.1% in Q4. Did it not snow in Japan this winter? Does Japan already used double, and maybe triple, "seasonally-adjusted" data? We don't know, but we do know that both Japan and Europe have grown far faster than the US in the first quarter.
- The fake: Avon-Offer Hoax Shows It’s Easy to Put One Over on SEC’s Edgar (BBG)
- And the real: US buyout group TPG snaps up UK discounter Poundworld (FT)
- El Niño near-certain to last through summer: U.S. climate center (Reuters)
- Oil Sands Land Becomes Alberta’s Hot Real Estate as Oil Rebounds (BBG)
- SEC a stumbling block in banks' forex guilty pleas: sources (Reuters)
- Pimco’s Stocks Chief Maisonneuve to Leave as Funds Closed (BBG)
- Bank of America’s Woes Test ‘Fixer’ CEO (WSJ)
- Puerto Rico Governor, Lawmakers Agree on Revenue Proposal (BBG)
Was that it for the "reflation" aka Bund-rout trade? One look at German bonds this morning and the sharp, panic selloffs seen in recent days are completely gone making one wonder if the ECB is done selling Bunds the CTAs who were riding the momentum train have all been squeezed out of their long positions and now the trend back to -0.20% can resume only to be followed by another abrupt 6-sigma move as the ECB once again sells inventory to buy itself more monetization runway. As a reminder, the ECB has to buy debt until September 2016 and it won't be able to if the 30-Year Bund is at -0.20% in a few months (or weeks).
"UBS officials are confounded by the outcome, some of the people familiar with the negotiations said. The bank believes it provided early cooperation which helped prosecutors break open the foreign-exchange investigations and, as a result, was promised immunity by the antitrust division of the Justice Department."
"Mark Dearlove, a Barclays Plc executive who was involved in the manipulation of the London interbank offered rate, was named as the U.K. lender’s head of markets for Asia-Pacific," Bloomberg reported earlier today, proving once again that not only do those involved in rigging, fixing, and otherwise manipulating every benchmark rate and market on the planet not go to prison, they in fact get promoted.
- Obama, McConnell missteps undercut trade pact in U.S. Senate (Reuters)
- Bears Beware: Rout Puts Investors on Wrong Side of Central Banks (BBG)
- U.S. Set to Rip Up UBS Libor Accord, Seek Conviction (BBG)
- Greece’s Creditors Said to Seek EU3 Billion in Budget Cuts (BBG)
- Amtrak train derails in Philadelphia, killing at least five (Reuters)
- Oil glut worsens as OPEC market-share battle just beginning (Reuters)
- China Stimulus Aims at Restructuring Trillions in Local-Government Debt (WSJ)
Following yesterday's turbulent bond trading session, where the volatility after the worst Bid to Cover in a Japanese bond auction since 2009 spread to Europe and sent Bund yields soaring again, in the process "turmoiling" equities, today's session has been a peaceful slumber barely interrupted by "better than expected" Italian and a German Bund auction, both of which concluded without a hitch, and without the now traditional "technical" failure when selling German paper. Perhaps that was to be expected considering the surge in the closing yield from 0.13% to 0.65%. Not hurting the bid for 10Y US Treasury was yesterday's report that Japan had bought a whopping $23 billion in US Treasurys in March, the most in 4 years so to all those shorting Tsys - you are now once again fighting the Bank of Japan.
The Justice Department looks set to extract "unprecedented" guilty pleas from some of Wall Street's largest banks in connection with their role in rigging FX markets. Nevertheless, fears of triggering an "Arthur Andersen effect" will ensure that once again, TBTF institutions will suffer no material consequences.
CITIGROUP SAYS DOJ DECLINED TO PROSECUTE ON LIBOR RIGGING