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FTR #772 Body Count II: (Collateralized “Death” Obligations)

Dave Emory’s entire life­time of work is avail­able on a flash drive that can be obtained here. [1] (The flash drive includes the anti-fascist books avail­able on this site.)

Listen: MP3

Side 1 [2]   Side 2 [3]

Since this broadcast was made, there have been a number of other suspicious deaths in the financial industry, set forth in this post. [4]

[5]Introduction: One of the surreal, almost hallucinatory financial instruments that were at the center of the 2008 financial collapse were CDO’s–collateralized debt obligations. As a number of legal investigations into mischief apparently committed by major financial institutions on a number of fronts have gained momentum, there has been a rash of suicides linked to the businesses under investigation. Both JP Morgan Chase and Deutsche Bank [6] have been the focal point of more than one of these investigations. Both have experienced the “suicides” of current or former executives within a very short period of time.

These suicides are occurring at a time in which the EU is attempting to shore up European banks after the financial meltdown. (Be sure to examine the comments on the linked post above, as they contain critical supplemental information.) The mortality rate among London based banking executives has been particularly high in recent years. We wonder if the high mortality rate, the ongoing capital troubles and legal investigations plaguing the firms may be related to these deaths. Are we looking at collateralized “death” obligations?

Program Highlights Include:

1. A former Deutsche Bank manager was found dead, an apparent suicide. “Ex-Deutsche Bank Man­ager Found Dead in Appar­ent Suicide” by Belinda Gold­smith and Thomas Atkins; Reuters; 1/28/2014. [7]

William Broeksmit, a for­mer senior man­ager at Deutsche Bank with close ties to co-Chief Exec­u­tive Anshu Jain, has been found dead at his home in Lon­don in what appears to have been a suicide. Jain and the bank’s other co-CEO Juer­gen Fitschen announced Broeksmit’s death in an inter­nal mail to Deutsche Bank employees. When asked about the death, London’s Met­ro­pol­i­tan Police issued a state­ment say­ing a 58-year-old man had been found hang­ing at a house in South Kens­ing­ton on Sun­day after­noon and been pro­nounced dead at the scene. Police declared the death non-suspicious. Broeksmit, a U.S. national, was an instru­men­tal founder of Deutsche’s invest­ment bank and one many bankers, includ­ing Jain, who joined Germany’s flag­ship lender from Mer­rill Lynch in the 1990s, when Deutsche launched plans to com­pete on Wall Street. Broeksmit was also a prin­ci­pal actor in Deutsche’s efforts to unwind its riskier posi­tions and to reduce the size of its bal­ance sheet in the wake of the global finan­cial crisis. His death comes at an uncom­fort­able junc­ture for Jain and Fitschen, whose reign has been dogged by poor results and legal trou­bles since they took over from Josef Ack­er­mann in 2012. … The two CEOs are expected to defend their reform record at the bank’s annual news con­fer­ence on Wednes­day. Last week, they revealed that lit­i­ga­tion and restruc­tur­ing costs had pushed Deutsche to a sur­prise loss in the fourth quar­ter of 2013.

CLOSEST ALLY

Broeksmit, who worked as head of risk and cap­i­tal opti­mi­sa­tion, was viewed as one of Jain’s clos­est allies and a key player in the bank’s attempts to recover fol­low­ing the finan­cial crisis. Jain sought to have Broeksmit join the man­age­ment board as head of risk man­age­ment in 2012. But in a major set­back for both men, Ger­man reg­u­la­tor Bafin blocked the appoint­ment, say­ing Broeksmit lacked expe­ri­ence lead­ing large teams. Bafin was not imme­di­ately avail­able for com­ment. The Bun­des­bank, which also over­sees Deutsche, declined to comment. Broeksmit worked along­side Jain at Mer­rill Lynch before join­ing Deutsche in 1996 as part of group of roughly 100 bankers who, along­side Edson Mitchell, formed the core of Deutsche’s new invest­ment bank­ing business. Mitchell, one the bank’s most pow­er­ful exec­u­tives, died in a plane crash in 2000.

2. A JP Morgan exec allegedly committed suicide at roughly the same time.

“UPDATE 3-JP Morgan IT Executive Plunges to Death at Bank’s London HQ” by Costas Pitas and Laura Noonan; Reuters; 1/28/2014. [8]

A JP Morgan tech executive fell to his death from the U.S. bank’s 33-storey tower in London’s Canary Wharf financial district on Tuesday in what British police said was a “non-suspicious” incident. Police were called to the glass skyscraper at 8:02 GMT, where a 39-year-old man was pronounced dead at the scene after hitting a lower 9th-floor roof. Witnesses said the body remained on the roof for several hours. London police said no arrests had been made and the incident was being treated as non-suspicious at this early stage. A source familiar with the matter confirmed the deceased was Gabriel Magee, a vice president with the JP Morgan’s corporate and investment bank technology arm, who had been an employee since 2004. . . . . . . . Though the details of Tuesday’s incident are still unclear, occasional suicides by people working in London’s big banks have provoked criticism of the demands placed on some financial services workers. A Bank of America exchange manager jumped in front of a train and another man jumped from a seventh-floor restaurant, both in 2012. A German-born intern at Bank of America died of epilepsy last year in London. . . .

3. The chief economist at Russell Investments was found dead, yet another alleged suicide.

“Rus­sell Invest­ments Chief Econ­o­mist Dueker Found Dead” by Zachary Tracer, Noah Buha­yar and Jeff Kearns; Bloomberg; 1/31/2014. [9]

Mike Dueker, the chief econ­o­mist at Rus­sell Invest­ments, was found dead at the side of a high­way that leads to the Tacoma Nar­rows Bridge in Wash­ing­ton state, accord­ing to the Pierce County Sheriff’s Depart­ment. He was 50. He may have jumped over a 4-foot (1.2-meter) fence before falling down a 40– to 50-foot embank­ment, Pierce County Detec­tive Ed Troyer said yes­ter­day. He said the death appeared to be a suicide.

Dueker was reported miss­ing on Jan. 29, and a group of friends had been search­ing for him along with law enforce­ment. Troyer said the econ­o­mist was hav­ing prob­lems at work, with­out elab­o­rat­ing. Dueker was in good stand­ing at Rus­sell, said Jen­nifer Tice, a com­pany spokes­woman. She declined to com­ment on Troyer’s state­ment about Dueker’s work issues. “We were deeply sad­dened to learn today of the death,” Tice said in an e-mail yes­ter­day. “He made valu­able con­tri­bu­tions that helped our clients and many of his fel­low associates.” Dueker worked at Seattle-based Rus­sell for five years, and devel­oped a business-cycle index that fore­cast eco­nomic per­for­mance.

 He was pre­vi­ously an assis­tant vice pres­i­dent and research econ­o­mist at the Fed­eral Reserve Bank of St. Louis. He pub­lished dozens of research papers over the past two decades, many on mon­e­tary pol­icy, accord­ing to the St. Louis Fed’s web­site, which ranks him among the top 5 per­cent of econ­o­mists by num­ber of works pub­lished. His most-cited work was a 1997 paper titled “Strength­en­ing the case for the yield curve as a pre­dic­tor of U.S. reces­sions,” pub­lished by the reserve bank while he was a researcher there.

Pol­icy Meetings

Dueker worked at the reserve bank from 1991 to 2008, start­ing as an entry level research econ­o­mist, then advanc­ing to senior econ­o­mist, research offi­cer, and assis­tant vice pres­i­dent, accord­ing to Laura Gir­resch, a spokeswoman. He helped the bank’s pres­i­dent pre­pare for Fed­eral Open Mar­ket Com­mit­tee pol­icy meet­ings and wrote and edited for eco­nomic pub­li­ca­tions, she said. Dueker served as edi­tor of the reserve bank’s research pub­li­ca­tion, Mon­e­tary Trends, and also was an asso­ciate edi­tor of the Jour­nal of Busi­ness and Eco­nomic Sta­tis­tics, Gir­resch said. “He was a val­ued col­league of mine dur­ing my entire tenure at the St. Louis Fed,” said William Poole, who was pres­i­dent of the reserve bank from 1998 to 2008. “Every­one respected his pro­fes­sional skills and good sense.” . . . .

4. A Wall Street Journal reporter disappeared at around the same time. This story notes that the deaths and disappearances are suspicious.

“A Rash of Deaths and a Miss­ing Reporter – With Ties to Wall Street Investigations” by Pam Martens; Wall Street Journal; 2/3/2014. [10]

In a span of four days last week, two cur­rent exec­u­tives and one recently retired top rank­ing exec­u­tive of major finan­cial firms were found dead. Both media and police have been quick to label the deaths as likely sui­cides. Miss­ing from the reports is the salient fact that all three of the finan­cial firms the exec­u­tives worked for are under inves­ti­ga­tion for poten­tially seri­ous finan­cial fraud.

The deaths began on Sun­day, Jan­u­ary 26. Lon­don police reported that William Broeksmit, a top exec­u­tive at Deutsche Bank who had retired in 2013, had been found hanged in his home in the South Kens­ing­ton sec­tion of Lon­don. The day after Broeksmit was pro­nounced dead, Eric Ben-Artzi, a for­mer risk ana­lyst turned whistle­blower at Deutsche Bank, was sched­uled to speak at Auburn Uni­ver­sity in Alabama on his alle­ga­tions that Deutsche had hid $12 bil­lion in losses dur­ing the finan­cial cri­sis with the knowl­edge of senior exec­u­tives. Two other whistle­blow­ers have brought sim­i­lar charges against Deutsche Bank.

Deutsche Bank is also under inves­ti­ga­tion by global reg­u­la­tors for poten­tially rig­ging the for­eign exchange mar­kets – an action sim­i­lar to the charges it set­tled in 2013 over its traders’ involve­ment in the rig­ging of the inter­est rate bench­mark, Libor.

Just two days after Broeksmit’s death, on Tues­day, Jan­u­ary 28, a 39-year old Amer­i­can, Gabriel Magee, a Vice Pres­i­dent at JPMor­gan in Lon­don, plunged to his death from the roof of the 33-story Euro­pean head­quar­ters of JPMor­gan in Canary Wharf. Accord­ing to Magee’s LinkedIn pro­file, he was involved in “Tech­ni­cal archi­tec­ture over­sight for plan­ning, devel­op­ment, and oper­a­tion of sys­tems for fixed income secu­ri­ties and inter­est rate derivatives.”

Magee’s par­ents, Bill and Nell Magee, are not buy­ing the offi­cial story accord­ing to press reports and are plan­ning to travel from the United States to Lon­don to get at the truth. One of their key issues, which should also trou­ble the police, is how an employee obtains access to the rooftop of one of the mostly highly secure build­ings in London. Nell Magee was quoted in the Lon­don Evening Stan­dard say­ing her son was “a happy per­son who was happy with his life.” His friends are equally mys­ti­fied, stat­ing he was in a happy, long-term rela­tion­ship with a girlfriend.

JPMor­gan is under the same global inves­ti­ga­tion for poten­tial involve­ment in rig­ging for­eign exchange rates as is Deutsche Bank. The firm is also said to be under an inves­ti­ga­tion by the U.S. Senate’s Per­ma­nent Sub­com­mit­tee on Inves­ti­ga­tions for its involve­ment in poten­tial mis­con­duct in phys­i­cal com­modi­ties mar­kets in the U.S. and London.

One day after Magee’s death, on Wednes­day, Jan­u­ary 29, 2014, 50-year old Michael (Mike) Dueker, the Chief Econ­o­mist at Rus­sell Invest­ments, is said to have died from a 50-foot fall from a high­way ramp down an embank­ment in Wash­ing­ton state. Again, sui­cide is being pre­sented by media as the likely cause. (Do peo­ple hold­ing Ph.D.s really attempt sui­cide by jump­ing 50 feet?) … Accord­ing to a report in The New York Times in Novem­ber of last year, Rus­sell Invest­ments was one of a num­ber of firms that received sub­poe­nas from New York State reg­u­la­tors who are prob­ing the poten­tial for pay-to-play schemes involv­ing pen­sion funds based in New York. No alle­ga­tions of wrong­do­ing have been made against Rus­sell Invest­ments in the matter.

The case of David Bird, the oil mar­kets reporter who had worked at the Wall Street Jour­nal for 20 years and van­ished with­out a trace on the after­noon of Jan­u­ary 11, has this in com­mon with the other three tragedies: his work involves a com­modi­ties mar­ket – oil – which is under inves­ti­ga­tion by the U.S. Senate’s Per­ma­nent Sub­com­mit­tee on Inves­ti­ga­tions [15] for pos­si­ble manip­u­la­tion. The FBI is involved in the Bird investigation.

Bird left his Long Hill, New Jer­sey home on that Sat­ur­day [16], telling his wife he was going for a walk. An inten­tional dis­ap­pear­ance is incom­pat­i­ble with the fact that he left the house wear­ing a bright red jacket and with­out his life-sustaining med­i­cine he was required to take daily as a result of a liver trans­plant. Despite a con­tin­u­ous search since his dis­ap­pear­ance by hun­dreds of vol­un­teers, local law enforce­ment and the FBI, Bird has not been located.

When a series of tragic events involv­ing one indus­try occur within an 18-day time­frame, the sta­tis­ti­cal prob­a­bil­ity of these events being ran­dom is remote. Accord­ing to a num­ber of media reports, JPMor­gan is con­duct­ing an inter­nal inves­ti­ga­tion of the death of Gabriel Magee. Given that JPMor­gan, Deutsche Bank and Rus­sell Invest­ments are sub­jects them­selves of inves­ti­ga­tions, a more seri­ous, inde­pen­dent look at these deaths is called for.

5a. The day this program was recorded, another financial services executive was found dead, allegedly having committed suicide by shooting himself with a nail gun!

“4th Finan­cial Ser­vices Exec­u­tive Found Dead; ‘From Self-Inflicted Nail-Gun Wounds'” by Tyler Dur­den; zerohedge.com; 02/07/2014. [11]

The ugly rash of finan­cial ser­vices exec­u­tive sui­cides appears to have spread once again. Fol­low­ing the jump­ing deaths of 2 Lon­don bankers and a former-Fed econ­o­mist in the US, The Den­ver Post reports Richard Tal­ley, founder and CEO of Amer­i­can Title, was found dead in his home from self-inflicted wounds — from a nail-gun.

Talley’s com­pany was under inves­ti­ga­tion from insur­ance regulators. Via The Den­ver Post [17], Richard Tal­ley, 57, and the com­pany he founded in 2001 were under inves­ti­ga­tion by state insur­ance reg­u­la­tors at the time of his death late Tues­day, an agency spokesman con­firmed Thursday. It was unclear how long the inves­ti­ga­tion had been ongo­ing or its pri­mary focus. A coroner’s spokes­woman Thurs­day said Tal­ley was found in his garage by a fam­ily mem­ber who called author­i­ties. They said Tal­ley died from seven or eight self-inflicted wounds from a nail gun fired into his torso and head.

Also unclear is whether Talley’s sui­cide was related to the inves­ti­ga­tion by the Col­orado Divi­sion of Insur­ance, which reg­u­lates title com­pa­nies.

5b. More about the background of the late, unfortunate Mr. Talley:

“Under Inves­ti­ga­tion, Amer­i­can Title CEO Dead in Grisly Sui­cide” by David Migoya; The Den­ver Post; 2/7/2014 [17].

Before com­ing to Col­orado, Tal­ley was a for­mer regional finan­cial offi­cer at Drexel Burn­ham Lam­bert in Chicago, where he met his wife, Cheryl, a vice pres­i­dent at the com­pany. The two mar­ried in 1989.

Tal­ley had formed a num­ber of com­pa­nies, some now defunct, accord­ing to the Col­orado sec­re­tary of state’s office. Among them: Amer­i­can Escrow, Clear Title, Clear Creek Finan­cial Hold­ings, Swift Basin, Sumar, Amer­i­can Real Estate Ser­vices, and the Amer­i­can Alliance of Real Estate Professionals. . . .

6. Former Deutsche Bank chief Josef Ackermann resigned his position with the Zurich Insurance Group following the “suicide” of a key executive of that firm.

“Zurich Chair­man Josef Ack­er­mann Quits over Sui­cide Claims” by Alis­tair Osborne; The Telegraph [UK]; 8/29/2013. [12]

Josef Ack­er­mann, the for­mer chief exec­u­tive of Deutsche Bank, said he was resign­ing because he did not want to “dam­age” the rep­u­ta­tion of the Swiss insurer already reel­ing from the death of Pierre Wauthier.Mr Wau­thier, 53, who was mar­ried with two chil­dren, was found dead at his home in lake­front sub­urb of Zug out­side Zurich. On Tues­day police said he appeared to have taken his own life. In a brief state­ment, Mr Ack­er­mann, 65, said: “The unex­pected death of Pierre Wau­thier has deeply shocked me. I have rea­sons to believe that the fam­ily is of the opin­ion that I should take my share of respon­si­bil­ity, as unfounded as any alle­ga­tions might be.”

His enig­matic remarks, which the insurer declined to clar­ify, sent shock­waves through the finan­cial com­mu­nity as reports sug­gested that Mr Ackermann’s attempt to “shake up” the insurer had put Mr Wau­thier under insuf­fer­able pressure. His widow, Fabi­enne Wau­thier, was also said to have accused Zurich’s man­age­ment of dri­ving her hus­band “into a cor­ner” and that Mr Ackermann’s “tough man­age­ment style” had been a key fac­tor in his death, accord­ing to a Swiss news website.

One for­mer col­league of Mr Wau­thier was quoted say­ing: “Pierre was under a lot of pres­sure because there was a lot more pres­sure from above on the share price, this was an open secret. Wau­thier had effec­tively reached his career ambi­tions, CFO was his dream.” . . . .

7. Following an announcement by the Argentine government concerning foreign exchange tallies held by that country’s banks, a very suspicious fire occurred in a storage facility.

“Argentine Banking System Archives Destroyed By Deadly Fire” by Tyler Durden; zerohedge.com; 2/5/2014. [13]

While we are sure it is a very sad coincidence, on the day when Argentina decrees limits on the FX positions banks can hold and the Argentine Central Bank’s reserves accounting is questioned publically, a massive fire – killing 9 people – has destroyed a warehouse archiving banking system documents.

As The Washington Post reports, the fire at the Iron Mountain warehouse (which purportedly had multiple protections against fire, including advanced systems that can detect and quench flames without damaging important documents) took hours to control and the sprawling building appeared to be ruined. The cause of the fire wasn’t immediately clear – though we suggest smelling Fernandez’ hands… We noted yesterday that there are major questions over Argentina’s reserve honesty…

While first print is preliminary and subject to revision, the size of recent discrepancies have no precedent. This suggest that the government may be attempting to manage expectations by temporarily fudging the “estimate ” of reserve numbers (first print) while not compromising “actual” final reported numbers.

If this is so, it is a dangerous game to play and one likely to back-fire. During a balance of payments crisis – as Argentina is undergoing – such manipulation of official statistics (and one so critical for market sentiment) is detrimental to the needed confidence building around the transition in the FX regime.

And today the government decrees limits on FX holdings for the banks… Argentina’s central bank published resolution late yesterday on website limiting fx position for banks to 30% of assets. Banks will have to limit fx futures contracts to 10% of assets: resolution Banks must comply with resolution by April 30 And then this happens…

Via WaPo, Nine first-responders were killed, seven others injured and two were missing as they battled a fire of unknown origin that destroyed an archive of bank documents in Argentina’s capital on Wednesday. The fire at the Iron Mountain warehouse took hours to control… The destroyed archives included documents stored for Argentina’s banking industry, said Buenos Aires security minister Guillermo Montenegro.

The cause of the fire wasn’t immediately clear. Boston-based Iron Mountain manages, stores and protects information for more than 156,000 companies and organizations in 36 countries. Its Argentina subsidiary advertises that its facilities have multiple protections against fire, including advanced systems that can detect and quench flames without damaging important documents. . . . “There are cameras in the area, and these videos will be added to the judicial investigation, to clear up the motive of the fire and collapse,” Montenegro told the Diarios y Noticias agency.

7. New York State is beginning its own investigation into the manipulation of the Foreign Exchange market–a $5 trillion a day operation.

“New York’s Top Financial Regulator Investigates Currency Trading” by Chad Bray; The New York Times; 2/5/2014. [18]

The business of trading currencies is in a state of flux as top executives leave and traders are suspended or fired in the face of investigations into potential manipulation of the $5 trillion-a-day foreign exchange market. The latest regulator to start an inquiry into whether more than a dozen banks manipulated the price of foreign currencies is New York State’s top financial regulator, Benjamin M. Lawsky. . . .

8. Another bitcoin exchange has halted trading, plunging the digital currency in value. Just wait until the bitcoiners start killing each other to steal each others’ bitcoins. This supposed panacea to the world’s financial ills is already exhibiting all of the established financial world’s ills, and some that the mainstream fiscal community has thus far avoided. The bitcoiners may need their own digital currency to kill each other, perhaps named “hitcoin.”

 “Bitcoin Value Plunges as Mt. Vox Exchange Halts Activity” by Carter Dougherty; bloomberg.com; 2/7/2014. [14]

Bitcoin plunged more than 8 percent today after a Tokyo-based exchange halted withdrawals of the digital currency, citing technical malfunction. Mt. Gox, a popular exchange for dollar-based trades, said in a blog post it needed to “temporarily pause on all withdrawal requests to obtain a clear technical view of the currency processes.” It promised an “update” — not a reopening — on Monday, Feb. 10, Japan time. . . .