Zuberi

Genuinely lol'd at some of this.

Smart, why hire professional business men/women who would 100% spot the fraud?

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"US regulators will soon propose requiring banks with as little as $100 billion in assets to issue enough long-term debt to cover capital losses if they ever failed." [Bloomberg (Aug 14, 2023)] and "U.S. bank regulator the Federal Deposit and Insurance Corporation (FDIC) will on Aug. 29 propose new rules ... [to] require banks of $100 billion or more in assets to issue long-term debt that could absorb bank losses before depositors and the FDIC's deposit insurance fund do". [Reuters (Aug 22, 2023)]

This may sound familiar because apes commented against the Federal Reserve & FDIC looking for bag holders by requiring large banking organizations to maintain long term debt (e.g., bonds) capable of absorbing losses in bankruptcy. [SuperStonk DD: "COMMENT AGAINST the FEDERAL RESERVE & FDIC proposal setting up retirees and pensions as Bag Holders!" (9 months ago)"]

Their search for bag holders isn't even theoretical. When Credit Suisse was failing, Credit Suisse issued special AT1 bonds to raise funds from investors that would intentionally be wiped out.

~~Zuberi @ lemmy.world~~

Zuberi @ lemmy.dbzer0.com

Zuberi @ lemm.ee

What Is Naked Shorting?

Naked shorting is the illegal practice of short-selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock or determine that it can be borrowed before they sell it short. So naked shorting refers to short pressure on a stock that may be larger than the tradable shares in the market.

Despite being made illegal after the 2008–09 financial crisis, naked shorting continues to happen because of loopholes in rules and discrepancies between paper and electronic trading systems.

• Naked shorting is the now-illegal practice of selling short shares that have not been affirmatively determined to exist.
• Ordinarily, traders must first borrow a stock or determine that it can be borrowed before they sell it short.
• Due to various loopholes in the rules, and discrepancies between paper and electronic trading systems, naked shorting continues to happen.
• Although controversial, some believe naked shorting plays an important and positive market role in price discovery.

Understanding Naked Shorting

Naked shorting takes place when investors sell shorts associated with shares that they do not possess and have not confirmed their ability to possess. If the trade associated with the short needs to take place in order to fulfill the obligations of the position, then the trade may fail to complete within the required clearing time because the seller does not actually have access to the shares. The technique has a very high risk level but has the potential to yield high rewards.

While no exact system of measurement exists, many systems point to the level of trades that fail to deliver from the seller to the buyer within the mandatory stock settlement period as evidence of naked shorting. Naked shorts are believed to represent a major portion of these failed trades. The Impact of Naked Shorting

Naked shorting can affect the liquidity of a particular security within the marketplace. When a particular share is not readily available, naked short selling allows a person to participate even though they are unable to actually obtain a share. If additional investors become interested in the shares associated with the shorting, this can cause an increase in liquidity associated with the shares as demand within the marketplace increases.

Naked shorting was a focus of regulatory changes in 2008, in part as a reaction to the piling on of shorts on failing financial giants Lehman Brothers and Bear Stearns.2

Regulations Regarding Naked Shorting

The Securities and Exchange Commission (SEC) banned the practice of naked short selling in the United States in 2008 after the financial crisis. The ban applies to naked shorting only and not to other short-selling activities.1 Other countries, like India, also ban naked short selling.3

Prior to this ban, the SEC amended Regulation SHO to limit possibilities for naked shorting by removing loopholes that existed for some brokers and dealers in 2007. Regulation SHO requires lists to be published that track stocks with unusually high trends in failing to deliver (FTD) shares.1 Naked Shorting as a Market Function

Some analysts point to the fact that naked shorting inadvertently might help markets stay in balance by allowing the negative sentiment to be reflected in certain stocks' prices. If a stock has a limited float and a large number of shares in friendly hands, then market signals can theoretically be delayed inevitably. Naked shorting forces a price drop even if shares aren't available, which can, in turn, result in some unloading of the actual shares to cut losses, allowing the market to find the right balance. Examples of Naked Shorting

Per SEC regulations, participants in naked short selling activities can be charged with a crime. In fact, in 2014, two Florida State University professors were charged with using a naked short selling strategy in more than 20 companies to earn more than $400,000 in revenue.4 In 2018, there was widespread speculation that naked shorting was endemic in the cannabis sector as shares were highly sought after and thus limited, but short interest continued to grow regardless.

The former head of JPMorgan Chase & Co.’s precious-metals desk and his top trader were sentenced to prison for spoofing, fraud and attempted market manipulation.

Michael Nowak, who ran gold and silver trading at the bank, and trader Gregg Smith were sentenced Tuesday in Chicago by US District Judge Edmond Chang. Nowak received a term of one year and one day while Smith was given two years, the stiffest sentence yet in a recent government crackdown on questionable trading practices.

Both men were convicted at a trial last year. Smith, 59, was described as “the most prolific spoofer that the government has prosecuted to date” while Nowak, 49, has been called “the boss” behind the scheme.

In imposing sentence, the judge said Smith and Nowak clearly knew what they were doing was wrong.

“This is a serious offense that you committed,” Chang said to Nowak. “What happened here was the equivalent of putting out lies — and many lies — into the market. Market integrity is a crucial component to the financial markets. These lies moved the market. It’s not like they had zero impact.”

Read More: JPMorgan Gold Traders Found Guilty After Long Spoofing Trial

The prison sentences were intended to “send a message” that market manipulation will be punished, the judge said. “I’m trying to deter all forms of financial fraud in the market,” he said.

Chang ordered Nowak to start his sentence on Oct. 23 and Smith on Jan. 15. Lawyers for both men said they planned to appeal their convictions.

Smith and Nowak “used their positions as some of the most powerful traders in the worldwide precious metals markets to engage in an egregious effort to manipulate prices for their benefit,” Acting US Assistant Attorney General Nicole M. Argentieri said in a statement, adding the Justice Department was committed to holding “accountable those who engage in fraud and manipulation that undermines the investing public’s trust in the integrity of our commodities markets.”

Prosecutors had initially sought sentencesof six years for Smith and five years for Nowak, but on Tuesday said they were revising those down to around two years. Both men’s lawyers argued that they should be spared jail because neither gained personally from the spoofing.

The JPMorgan case is part of a crackdown by federal prosecutors on illegal spoofing, where traders place bogus orders to move prices up or down and then quickly cancel them before they can be executed. Smith and Nowak used the technique to manipulate gold and silver prices from 2008 to 2016.

Convictions for Smith, Nowak and a third trader who was found guilty in November, Christopher Jordan, capped a string of wins by prosecutors in spoofing cases targeting some of Wall Street’s biggest banks, including Bank of America Corp., Deutsche Bank AG and Morgan Stanley. Two former Deutsche Bank and two former Bank of America traders previously each received one-year sentences.

JPMorgan, the largest US bank, agreed in 2020 to pay $920 million to settle the Justice Department’s allegations against it — by far the biggest fine by any financial institution accused of market manipulation since the 2008 global financial crisis.

Read More: Spoofing Is a Silly Name for Serious Market Rigging: QuickTake

Prosecutors charged several members of the team Nowak led at JPMorgan. Three of them pleaded guilty and testified against Nowak and Smith. The witnesses described how Nowak and Smith routinely placed huge buy and sell orders they never intended to execute — part of their strategy to push prices in the direction that would profit the bank.

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Gregg Smith was found guilty of market manipulation last year
Smith was the chief trader on JPMorgan’s precious-metals desk

The former head of JPMorgan Chase & Co.’s precious-metals desk and his top trader were sentenced to prison for spoofing, fraud and attempted market manipulation.

Michael Nowak, who ran gold and silver trading at the bank, and trader Gregg Smith were sentenced Tuesday in Chicago by US District Judge Edmond Chang. Nowak received a term of one year and one day while Smith was given two years, the stiffest sentence yet in a recent government crackdown on questionable trading practices. Michael Nowak, center, arrives at federal court in Chicago on July 8, 2022. Photographer: Cheney Orr/Bloomberg

Both men were convicted at a trial last year. Smith, 59, was described as “the most prolific spoofer that the government has prosecuted to date” while Nowak, 49, has been called “the boss” behind the scheme.

In imposing sentence, the judge said Smith and Nowak clearly knew what they were doing was wrong.

“This is a serious offense that you committed,” Chang said to Nowak. “What happened here was the equivalent of putting out lies — and many lies — into the market. Market integrity is a crucial component to the financial markets. These lies moved the market. It’s not like they had zero impact.”

Read More: JPMorgan Gold Traders Found Guilty After Long Spoofing Trial

The prison sentences were intended to “send a message” that market manipulation will be punished, the judge said. “I’m trying to deter all forms of financial fraud in the market,” he said.

Chang ordered Nowak to start his sentence on Oct. 23 and Smith on Jan. 15. Lawyers for both men said they planned to appeal their convictions.

Smith and Nowak “used their positions as some of the most powerful traders in the worldwide precious metals markets to engage in an egregious effort to manipulate prices for their benefit,” Acting US Assistant Attorney General Nicole M. Argentieri said in a statement, adding the Justice Department was committed to holding “accountable those who engage in fraud and manipulation that undermines the investing public’s trust in the integrity of our commodities markets.” Gregg Smith exits federal court in Chicago on July 8, 2022. Photographer: Cheney Orr/Bloomberg

Prosecutors had initially sought sentencesof six years for Smith and five years for Nowak, but on Tuesday said they were revising those down to around two years. Both men’s lawyers argued that they should be spared jail because neither gained personally from the spoofing.

The JPMorgan case is part of a crackdown by federal prosecutors on illegal spoofing, where traders place bogus orders to move prices up or down and then quickly cancel them before they can be executed. Smith and Nowak used the technique to manipulate gold and silver prices from 2008 to 2016.

Convictions for Smith, Nowak and a third trader who was found guilty in November, Christopher Jordan, capped a string of wins by prosecutors in spoofing cases targeting some of Wall Street’s biggest banks, including Bank of America Corp., Deutsche Bank AG and Morgan Stanley. Two former Deutsche Bank and two former Bank of America traders previously each received one-year sentences.

JPMorgan, the largest US bank, agreed in 2020 to pay $920 million to settle the Justice Department’s allegations against it — by far the biggest fine by any financial institution accused of market manipulation since the 2008 global financial crisis.

Read More: Spoofing Is a Silly Name for Serious Market Rigging: QuickTake

Prosecutors charged several members of the team Nowak led at JPMorgan. Three of them pleaded guilty and testified against Nowak and Smith. The witnesses described how Nowak and Smith routinely placed huge buy and sell orders they never intended to execute — part of their strategy to push prices in the direction that would profit the bank.

Christiaan Trunz, a former Smith protege and one of the traders who pleaded guilty and cooperated, told jurors that he learned to spoof by watching Nowak and Smith for years. When Trunz came under scrutiny for his own spoof trades, he said Nowak coached him to lie to compliance officials and later counseled him against pleading guilty as prosecutors were preparing criminal charges against top executives on the trading desk.

Trunz testified that Smith was so fast at placing and canceling bogus orders that his colleagues would joke that he needed to put ice on his fingers to cool them down.

“This was an open strategy on the desk,” said Trunz, who sat next to Smith and watched him click his computer mouse rapidly to place and cancel trades. “It wasn’t hidden.”

Read More: JPMorgan Trader Spoofed So Fast He Should Ice His Fingers

Spoofing was common in the commodity world, where traders would place a buy or sell offer they never intended to execute — hoping to manipulate prices in the direction they wanted to make a profit. The practice became illegal after passage of the 2010 Dodd-Frank Act, which included several banking and market reforms in the wake of the financial crisis.

At trial, Smith’s lawyer said his client’s orders were legitimate, and that there were other explanations to buy and sell precious metals contracts at the same time on behalf of customers.

The case is US v. Smith et al, 19-cr-00669, US District Court, Northern District of Illinois (Chicago).

cross-posted from: https://lemmy.dbzer0.com/post/2935413

Gaming market expected to breach $500B by 2030.

cross-posted from: https://lemmy.dbzer0.com/post/2935925

U.S. prosecutors have just unloaded a massive amount of discovery documents, according to lawyers for former FTX CEO Sam-Bankman Fried on Aug. 25.

In the relevant court filing, lawyers broadly objected to the government’s intention of opening access to discovery materials — that is, evidence and legal information — while Bankman-Fried is held at the Metropolitan Detention Center, Brooklyn (MDC).

Lawyers emphasized that the amount of information at play is an issue, stating:

“We further object to the Government’s production, just yesterday, of an additional 4 million pages of discovery. The Government cannot be allowed to dump millions of pages on the defense less than six weeks before trial.”

Elsewhere in the filing, lawyers said that discovery information amounts to terabytes worth of data to date, adding that millions of additional pages are forthcoming.

Bankman-Fried’s lawyers also complained that the government has no plan to deliver the discovery documents to their client at MDC despite his rapidly approaching trial date. As such, lawyers urged the court to provide Bankman-Fried with internet access. They stated that current plans, which allow Bankman-Fried to meet with lawyers twice a week, are not sufficient to accomplish the data review that is needed. “No substitute”

Lawyers argued that there is “no substitute” for Bankman-Fried’s work on the case, asserting that their client has extensive knowledge of companies involved in events and is uniquely capable of locating relevant documents “quickly and efficiently.” Though Bankman-Fried has been provided with a laptop, lawyers said that this device has limited internet access and does not allow him to collaborate with lawyers or access his previous work.

Bankman-Fried’s lawyers further noted that their client previously compiled specific data into a spreadsheet with millions of cells. They said that he spent between 80 and 100 hours per week reviewing discovery prior to his imprisonment.

In light of the situation, lawyers urged for Bankman-Fried’s temporary release, which would allow the former FTX CEO to work with the defense and access the internet five days per week in a dedicated courthouse working space.

Lawyers have pressed for those release conditions since at least Aug. 18.

Note that on that morning, just $2.2B ECP caused Robinhood's imminent default and spurred a 9+ Hour | 3 Part Congressional Hearing its liquidity.

That morning in January of 2021, there were 6 companies that got waivers. Of the $9.7B, Robinhood represented only $2.2B, there is $7.5B left between 5 companies.

Be your own bank.