Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

For The Record  

FTR #823 Caution, Banksters at Work, Part 2 (Still More Collateralized “Death” Obligations)

Dave Emory’s entire life­time of work is avail­able on a flash dri­ve that can be obtained here. The new dri­ve is a 32-giga­byte dri­ve that is cur­rent as of the pro­grams and arti­cles post­ed by 10/02/2014. The new dri­ve (avail­able for a tax-deductible con­tri­bu­tion of $65.00 or more) con­tains FTR #812.  (The pre­vi­ous flash dri­ve was cur­rent through the end of May of 2012 and con­tained FTR #748.)

You can sub­scribe to e‑mail alerts from Spitfirelist.com HERE

You can sub­scribe to RSS feed from Spitfirelist.com HERE.

You can sub­scribe to the com­ments made on pro­grams and posts–an excel­lent source of infor­ma­tion in, and of, itself HERE.

Lis­ten: MP3

Side 1   Side 2

Intro­duc­tion: In FTR #‘s 772 and 792, we looked at a rash of sus­pi­cious deaths in the bank­ing indus­try, coin­cid­ing with a num­ber of inves­ti­ga­tions into mis­deeds by the insti­tu­tions at which many of the deceased had been employed.

This pro­gram updates that line of inquiry, sup­ple­ment­ing the pre­vi­ous broad­casts with dis­cus­sion of some new, sus­pi­cious “sui­cides,” as well as prob­lems loom­ing on the hori­zon of the glob­al finan­cial lan­scape.

Begin­ning with a Finan­cial Times sto­ry about a social psy­chol­o­gy exper­i­ment indi­cat­ing that the bank­ing pro­fes­sion inclines those who work in it toward dis­hon­esty, the broad­cast notes the deaths of Deutsche Bank’s Calogero Gam­bi­no and Citi­cor­p’s Shawn Miller, both sup­posed “sui­cides.”

Both Cit­i­group and Deutsche Bank are among the finan­cial insti­tu­tions under inves­ti­ga­tion for var­i­ous mis­deeds. Deutsche Bank is a tar­get of the New York Fed’s crit­i­cal eye at the moment.

Adding to anx­i­eties about the future of the finan­cial indus­try is the dab­bling by maj0r invest­ment banks in com­modi­ties. A Sen­ate inves­ti­ga­tion found that those insti­tu­tions’ expo­sure to fluc­tu­a­tions in the com­modites’ mar­kets placed them–and by exten­sion US–at risk.

Much of the pro­gram sets forth a sto­ry about a scary fluc­tu­a­tion in the mar­ket for U.S. Trea­sury bills, a finan­cial safe haven of choice in these per­ilous eco­nom­ic times. From the stand­point of sta­tis­ti­cal prob­a­bil­i­ty, the chances of such an event hap­pen­ing is rough­ly once in every 1.6 bil­lion years!

Pro­gram High­lights Include: Calogero Gam­bi­no’s pre­vi­ous work for the SEC; review of the death of Deutsche Bank’s William Broeksmit; com­par­i­son of the roles of Broeksmit and Gam­bi­no at Deutsche Bank; col­la­tion of the endeav­ors of some of the deceased bankers and activ­i­ties being inves­ti­gat­ed by var­i­ous reg­u­la­to­ry bod­ies; Cit­i­group’s Shawn Miller’s 911 calls pri­or to his “sui­cide;” Shawn Miller’s ani­mat­ed argu­ments with an uniden­ti­fied man pri­or to his “sui­cide;” rumi­na­tion about the pre­cip­i­tous decline in the price of oil and its pos­si­ble impact on invest­ment banks that have engaged in com­modi­ties spec­u­la­tion; dele­te­ri­ous effects of the invest­ment banks’ com­modi­ties invest­ing,

1. Worth con­sid­er­ing is the pos­si­bil­i­ty that the prob­lem is, in the most lit­er­al sense of the term, “sys­temic.”

“Bank­ing Makes You Less Hon­est, Research Finds” by Clive Cook­son; Finan­cial Times; 11/20/2014; p. 3.

Swiss researchers have come up with what they say is com­pelling sci­en­tif­ic evi­dence that bankers lie for finan­cial gain.

The team at the Uni­ver­si­ty of Zurich used game play­ing exper­i­ments to show “that the pre­vail­ing cul­ture in the bank­ing indus­try weak­ens and under­mines the hon­esty norm, imply­ing that mea­sures to reestab­lish an hon­est cul­ture are very impor­tant.”

The study, pub­lished in the jour­nal Nature, probes the psy­chol­o­gy behind what the researchers call ‘a dra­mat­ic loss of rep­u­ta­tion and a cri­sis of trust in the finan­cial sec­tor” as a result of rogue trad­ing, rigged inter­est rates such as Libor and tax eva­sion scan­dals. . . . . .

If every­one was com­plete­ly hon­est, the pro­por­tion of win­ning toss­es across each group would be 50 per cent. The con­trol group came close to this with 51.6 per­cent.

The treat­ment group, who had been primed by the pre­lim­i­nary ques­tions to think about bank­ing, report­ed 58.2 per cent win­ning tosses–a sta­tis­ti­cal­ly sig­nif­i­cant tilt towards dis­hon­esty; the pro­por­tion who cheat­ed was esti­mat­ed at 26 per cent. . . .

2a. Deutsche Bank is in hot water, accord­ing to the New York Fed.

“NY Fed Found Seri­ous Prob­lems at Deutsche Bank” by Katherin Jones and Arno Schuet­ze [Reuters.com]; Yahoo News; 7/23/2014.

The Fed­er­al Reserve Bank of New York has found seri­ous prob­lems in Deutsche Bank AG’s U.S. oper­a­tions, includ­ing shod­dy finan­cial report­ing, weak tech­nol­o­gy and inad­e­quate audit­ing and over­sight, peo­ple close to the mat­ter told Reuters.

In a let­ter to the Ger­man lender’s exec­u­tives last Decem­ber, a senior offi­cial with the New York Fed described finan­cial reports pro­duced by some of the bank’s U.S. divi­sions as “low qual­i­ty, inac­cu­rate and unre­li­able”, said one of the sources, who is famil­iar with the let­ter.

The New York Fed, as the U.S. cen­tral bank’s eyes and ears on Wall Street, direct­ly super­vis­es the biggest U.S. and for­eign banks, part­ly through embed­ded reg­u­la­tors who go to work each day inside the firms.

“The size and breadth of errors strong­ly sug­gest that the fir­m’s entire U.S. reg­u­la­to­ry report­ing struc­ture requires wide-rang­ing reme­di­al action,” said the let­ter, first report­ed by the Wall Street Jour­nal. (http://on.wsj.com/1r3VIn3)

The New York Fed declined to com­ment, cit­ing the con­fi­den­tial­i­ty of super­vi­so­ry activ­i­ties. The Euro­pean Cen­tral Bank and Ger­man finan­cial watch­dog Bafin declined to com­ment.

Deutsche said it was invest­ing 1 bil­lion euros ($1.4 bil­lion) to upgrade its inter­nal sys­tems, includ­ing the qual­i­ty of its report­ing, with about 1,300 peo­ple work­ing on the improve­ments. “We have been work­ing dili­gent­ly to fur­ther strength­en our sys­tems and con­trols,” a spokes­woman said.

The let­ter is nonethe­less a blow to Deutsche Bank co-Chief Exec­u­tives Juer­gen Fitschen and Anshu Jain, who have been seek­ing to trans­form the lender’s cor­po­rate cul­ture amid scan­dals, inves­ti­ga­tions and fines fol­low­ing the finan­cial cri­sis of 2008–2009.

While the New York State Depart­ment of Finan­cial Ser­vices is look­ing at Deutsche in rela­tion to issues includ­ing pos­si­ble forex manip­u­la­tion and Iran sanc­tions vio­la­tions, the New York Fed’s con­cerns are sep­a­rate and arose from rou­tine exam­i­na­tions by its staff, a source famil­iar with the mat­ter said. . . .

2b. Did Deutsche Bank’s difficulties–set forth above–have any­thing to do with the sui­cide of Calogero Gam­bi­no?

“Anoth­er Deutsche Banker and For­mer SEC Enforce­ment Attor­ney Com­mits Sui­cide” by Tyler Dur­den; zerohedge.com; 10/26/2014.

Back on Jan­u­ary 26, a 58-year-old for­mer senior exec­u­tive at Ger­man invest­ment bank behe­moth Deutsche Bank, William Broeksmit, was found dead after hang­ing him­self at his Lon­don home, and with that, set off an unprece­dent­ed series of banker sui­cides through­out the year which includ­ed for­mer Fed offi­cials and numer­ous JPMor­gan traders.

Fol­low­ing a brief late sum­mer spell in which there was lit­tle if any news of bankers tak­ing their lives, as report­ed pre­vi­ous­ly, the banker sui­cides returned with a bang when none oth­er than the hedge fund part­ner of infa­mous for­mer IMF head Dominique Strauss-Khan, Thier­ry Leyne, a French-Israeli entre­pre­neur, was found dead after jump­ing off the 23rd floor of one of the Yoo tow­ers, a pres­ti­gious res­i­den­tial com­plex in Tel Aviv.

Just a few brief hours lat­er the WSJ report­ed that yet anoth­er Deutsche Bank vet­er­an has com­mit­ted sui­cide, and not just any­one but the bank’s asso­ciate gen­er­al coun­sel, 41 year old Calogero “Char­lie” Gam­bi­no, who was found on the morn­ing of Oct. 20, hav­ing also hung him­self by the neck from a stair­way ban­is­ter, which accord­ing to the New York Police Depart­ment was the cause of death. We assume that any rela­tion­ship to the famous Ital­ian fam­i­ly car­ry­ing that last name is pure­ly acci­den­tal. . . .

. . . . As a reminder, the oth­er Deutsche Bank-er who was found dead ear­li­er in the year, William Broeksmit, was involved in the bank’s risk func­tion and advised the fir­m’s senior lead­er­ship; he was “anx­ious about var­i­ous author­i­ties inves­ti­gat­ing areas of the bank where he worked,” accord­ing to writ­ten evi­dence from his psy­chol­o­gist, giv­en Tues­day at an inquest at Lon­don’s Roy­al Courts of Jus­tice. And now that an almost iden­ti­cal sui­cide by hang­ing has tak­en place at Europe’s most sys­tem­i­cal­ly impor­tant bank, and by a per­son who worked in a near­ly iden­ti­cal func­tion — to shield the bank from reg­u­la­tors and pros­e­cu­tors and cov­er up its alleged­ly ille­gal activ­i­ties with set­tle­ments and fines — is sure­ly bound to raise many ques­tions.

The WSJ reports that Mr. Gam­bi­no had been “close­ly involved in nego­ti­at­ing legal issues for Deutsche Bank, includ­ing the pro­longed probe into manip­u­la­tion of the Lon­don inter­bank offered rate, or Libor, and ongo­ing inves­ti­ga­tions into manip­u­la­tion of cur­ren­cies mar­kets, accord­ing to peo­ple famil­iar with his role at the bank.”

He pre­vi­ous­ly was an asso­ciate at a pri­vate law firm and a reg­u­la­to­ry enforce­ment lawyer from 1997 to 1999, accord­ing to his online LinkedIn pro­file and biogra­phies for con­fer­ences where he spoke. But most notably, as his LinkedIn pro­file below shows, like many oth­er Wall Street revolv­ing door reg­u­la­tors, he start­ed his career at the SEC itself where he worked from 1997 to 1999. . . .

. . . . Going back to the pre­vi­ous sui­cide by a DB exec­u­tive, the bank said at the time of the inquest that Mr. Broeksmit “was not under sus­pi­cion of wrong­do­ing in any mat­ter.” At the time of Mr. Broeksmit’s death, Deutsche Bank exec­u­tives sent a memo to bank staff say­ing Mr. Broeksmit “was con­sid­ered by many of his peers to be among the finest minds in the fields of risk and cap­i­tal man­age­ment.” Mr. Broeksmit had left a senior role at Deutsche Bank’s invest­ment bank in Feb­ru­ary 2013, but he remained an advis­er until the end of 2013. His most recent title was the invest­ment bank’s head of cap­i­tal and risk-opti­miza­tion, which includ­ed eval­u­at­ing risks relat­ed to com­pli­cat­ed trans­ac­tions.

A thread con­nect­ing Broeksmit to wrong­do­ing, how­ev­er, was uncov­ered ear­li­er this sum­mer when Wall Street on Parade ref­er­enced his name in rela­tion to the noto­ri­ous at the time strat­e­gy pro­vid­ed by Deutsche Bank and oth­ers to allow hedge funds to avoid pay­ing short-term cap­i­tal gains tax­es known as MAPS (see How RenTec Made More Than $34 Bil­lion In Prof­its Since 1998: “Fic­tion­al Deriv­a­tives”)

From Wall Street on Parade:

Broeksmit’s name first emerged in yesterday’s Sen­ate hear­ing as Sen­a­tor Carl Levin, Chair of the Sub­com­mit­tee, was ques­tion­ing Satish Ramakr­ish­na, the Glob­al Head of Risk and Pric­ing for Glob­al Prime Finance at Deutsche Bank Secu­ri­ties in New York. Ramakr­ish­na was down­play­ing his knowl­edge of con­ver­sa­tions about how the scheme was about chang­ing short term gains into long term gains, deny­ing that he had been privy to any con­ver­sa­tions on the mat­ter.

Levin than asked: “Did you ever have con­ver­sa­tions with a man named Broeksmit?” Ramakr­ish­na con­ced­ed that he had and that the fact that the scheme had a tax ben­e­fit had emerged in that con­ver­sa­tion. Ramakr­ish­na could hard­ly deny this as Levin had just released a Novem­ber 7, 2008 tran­script of a con­ver­sa­tion between Ramakr­ish­na and Broeksmit where the tax ben­e­fit had been acknowl­edged.

Anoth­er exhib­it released by Levin was an August 25, 2009 email from William Broeksmit to Anshu Jain, with a cc to Ramakr­ish­na, where Broeksmit went into copi­ous detail on exact­ly what the scheme, inter­nal­ly called MAPS, made pos­si­ble for the bank and for its client, the Renais­sance Tech­nolo­gies hedge fund. (See Email from William Broeksmit to Anshu Jain, Released by the U.S. Sen­ate Per­ma­nent Sub­com­mit­tee on Inves­ti­ga­tions.)

At one point in the two-page email, Broeksmit reveals the mas­sive risk the bank is tak­ing on, writ­ing: “Size of port­fo­lio tends to be between $8 and $12 bil­lion long and same amount of short. Max­i­mum allowed usage is $16 bil­lion x $16 bil­lion, though this has nev­er been approached.”

Broeksmit goes on to say that most of Deutsche’s mon­ey from the scheme “is actu­al­ly made by lend­ing them spe­cials that we have on inven­to­ry and they pay far above the reg­u­lar rates for that.”

It would appear that with just months until the reg­u­la­to­ry crack­down and Con­gres­sion­al kan­ga­roo cir­cus, Broeksmit knew what was about to pass and being deeply impli­cat­ed in such a scheme, pre­ferred to take the pain­less way out.

The ques­tion then is just what major reg­u­la­to­ry rev­e­la­tion is just over the hori­zon for Deutsche Bank if yet anoth­er banker had to take his life to avoid being cross-exam­ined by Con­gress under oath? For a hint we go back to anoth­er report, this time by the FT, which yes­ter­day not­ed that Deutsche Bank will set aside just under €1bn towards the numer­ous legal and reg­u­la­to­ry issues it faces in its third quar­ter results next week, the bank con­firmed on Fri­day.

In a state­ment made after the close of mar­kets, the Frank­furt-based lender said it expect­ed to pub­lish lit­i­ga­tion costs of €894m when it announces its results for the July-Sep­tem­ber peri­od on Octo­ber 29.

The extra cash will add to Deutsche’s already size­able lit­i­ga­tion pot, where the bank has yet to be fined in con­nec­tion with the Lon­don inter­bank rate-rig­ging scan­dal.

It is also fac­ing fines from US author­i­ties over alleged mort­gage-backed secu­ri­ties mis­selling and sanc­tions vio­la­tions, which have already seen rivals hit with heavy fines.

Deutsche has also warned that dam­age from glob­al inves­ti­ga­tions into whether traders attempt­ed to manip­u­late the for­eign-exchange mar­ket could have a mate­r­i­al impact on the bank.

The extra charge announced on Fri­day will bring Deutsche’s total lit­i­ga­tion reserves to €3.1bn. The bank also has an extra €3.2bn in so-called con­tin­gent lia­bil­i­ties for fines that are hard­er to esti­mate.

Clear­ly Deutsche Bank is slow­ly becom­ing Europe’s own JPMor­gan — a crim­i­nal bank whose past is final­ly catch­ing up to it, and where legal fine after legal fine are only now start­ing to slam the bank­ing behe­moth. We will find out just what the nature of the lat­est lit­i­ga­tion charge is next week when Deutsche Bank reports, but one thing is clear: in addi­tion to mort­gage, Libor and FX set­tle­ments, one should also add gold. Recall from around the time when the first DB banker hung him­self: it was then that Elke Koenig, the pres­i­dent of Ger­many’s top finan­cial reg­u­la­tor, Bafin, said that in addi­tion to cur­ren­cy rates, manip­u­la­tion of pre­cious met­als “is worse than the Libor-rig­ging scan­dal.”

It remains to be seen if Calogero’s death was also relat­ed to pre­cious met­als rig­ging although it cer­tain­ly would not be sur­pris­ing. What is sur­pris­ing, is that slow­ly things are start­ing to fall apart at the one bank which as we won’t tire of high­light­ing, has a big­ger pyra­mid of notion­al deriv­a­tives on its bal­ance sheet than even JPMor­gan, amount­ing to 20 times more than the GDP of Ger­many itself, and where if any inter­nal inves­ti­ga­tion ever goes to the very top, then Europe itself, and thus the world, would be in jeop­ardy.

3. Add the name of Cit­i­group banker Shawn Miller to the list of col­lat­er­al­ized “death” oblig­a­tions.

“Banker, 42, Slashed His Own Throat in Man­hat­tan Bath­tub Dur­ing Drug-and-Booze-Filled Ben­der: Sources” by Tina Moore, Roc­co Paras­can­dola and Bill Hutchin­son; New York Dai­ly News; 11/19/2014.

 The death of a Cit­i­group banker found with his throat slashed in his posh Man­hat­tan pad was being inves­ti­gat­ed Wednes­day as an appar­ent sui­cide, sources told the Dai­ly News.

Shawn Miller’s body was found Tues­day after­noon in the bath­tub of his Green­wich St. apart­ment in Low­er Man­hat­tan, his throat slashed ear-to-ear.

Cops ini­tial­ly sus­pect­ed foul play, say­ing ear­li­er that no weapon was found in the apart­ment and that Miller, 42, was caught on sur­veil­lance video argu­ing with a male com­pan­ion in the building’s ele­va­tor.

When crime scene inves­ti­ga­tors moved Miller’s body, they dis­cov­ered a knife under him, lead­ing them to believe he slashed his own throat and col­lapsed into the tub on top of the weapon, sources said.

Detec­tives now sus­pect Miller killed him­self after going on a booze- and drug-fueled ben­der since at least Mon­day with a stranger he hooked up with through the clas­si­fied adver­tis­ing web­site Backpage.com, the sources said.

Police found evi­dence of alco­hol and drug use in the apart­ment, includ­ing what appeared to be crys­tal meth, sources said.

The man who Miller was argu­ing with in the ele­va­tor appar­ent­ly left the banker’s apart­ment late Sun­day or ear­ly Mon­day, sources. Miller called down to the lob­by and asked the door­man not to allow the man back into the build­ing, accord­ing to sources.

Detec­tives found no evi­dence the man returned to the build­ing and there was no sign of a break-in or strug­gle in Miller’s apart­ment, sources said.

Shawn Miller’s body was found Tues­day after­noon in the bath­tub of his Green­wich St. apart­ment in Low­er Man­hat­tan.

Records showed that at least two 911 calls were made from Miller’s apart­ment since Mon­day. The caller, believed to be Miller, com­plained about some­one out­side his build­ing stalk­ing him, sources said.

The body was found at 3:11 p.m. Tues­day after Miller’s boyfriend called and plead­ed with the building’s door­man to check on Miller’s wel­fare, sources said.

Cit­i­group con­firmed Miller’s death in a state­ment. Miller was man­ag­ing direc­tor of envi­ron­men­tal and social risk man­age­ment and had worked for the finan­cial ser­vices firm since 2004.

“We are deeply sad­dened by this news and our thoughts are with Shawn’s fam­i­ly at this time,” the Cit­i­group state­ment reads.

Miller’s LinkedIn pro­file described him as “a thought leader and pio­neer in sus­tain­able finance focused on cre­at­ing change and build­ing sus­tain­able busi­ness through col­lab­o­ra­tion, engage­ment and part­ner­ship with oth­ers.”

He was a 1995 grad­u­ate the Maxwell School of Cit­i­zen­ship and Pub­lic Affairs at Syra­cuse Uni­ver­si­ty.

4. Spec­u­la­tion in com­modi­ties by major bank­ing insti­tu­tions places the finan­cial sys­tem at risk.

“US Blasts Banks’ Com­modi­ties Deals” by Gina Chon; Finan­cial Times; 11/20/2014; p. 13. 

 Gold­man Sachs, JP Mor­gan and Mor­gan Stan­ley exposed them­selves to cat­a­stroph­ic finan­cial risks, envi­ron­men­tal dis­as­ters and poten­tial mar­ket manip­u­la­tion by invest­ing in oil, met­als and pow­er plant busi­ness­es, accord­ing to a sen­ate report.

The find­ings of the two-year probe by the Sen­ate inves­ti­ga­tions sub­com­mit­tee said that the banks’ involve­ment in the phys­i­cal com­modi­ties put them in the same vul­ner­a­ble posi­tion as BP, which has been hit with sev­er­al law­suits and bil­lions of dol­lars in fines because of the 2010 Gulf of Mex­i­co oil spill.

“Imag­ine if BP had been a bank,” said sen­a­tor John McCain, the senior Repub­li­can on the sub­com­mit­tee. “The lia­bil­i­ty from the oil spill would have led to its fail­ure, lead­ing to anoth­er tax­pay­er bailout.”

A 2012 Fed­er­al Reserve review found four finan­cial groups, includ­ing the three in the sub­com­mit­tee report, had short­falls of up to $15bn to cov­er “extreme loss sce­nar­ios,” the report said, the Fed is con­sid­er­ing restrict­ing banks’ phys­i­cal com­mod­i­ty activ­i­ties.

The report also says the banks’ own­er­ship or invest­ments in phys­i­cal com­mod­i­ty busi­ness­es gave them inside knowl­edge that allowed them to finan­cial­ly ben­e­fit through mar­ket manip­u­la­tion or unfair trad­ing advan­tages. . . .

5. 

“Anato­my of a Mar­ket Melt­down“by Tra­cy Alloway and Michael MacKen­zie; Finan­cial Times; 11/18/2014; p. 7.

The Sharp fall in Trea­sury bond yields on Octo­ber 15 has drawn com­par­isons to the ‘flash crash’ in stocks. Reg­u­la­tors and investors are ask­ing if the world’s finan­cial safe haven needs to be shored up.

 

Leg­end has it that a young man once asked the financier J Pier­pont Mor­gan what the stock mar­ket was going to do. “It will fluc­tu­ate,” Mr. Pier­pont is said to have replied.

Had the young man asked Mr. Pier­pont about today’s US Trea­sury mar­ket – where the US gov­ern­ment sells tril­lions of dol­lars worth of bonds to a wide range of investors – he may have received a very dif­fer­ent response.

For decades, the US Trea­sury mar­ket has been a bedrock of glob­al finance. While stock mar­kets are prone to sud­den price swings, such episodes in the vast and eas­i­ly-trans­act­ed world of Trea­suries have been far rar­er – giv­ing the mar­ket an excep­tion­al rep­u­ta­tion for order­ly trad­ing.

That rep­u­ta­tion took a big hit last month.

On Octo­ber 15, the yield on the bench­mark 10-year US gov­ern­ment bond, which moves inverse­ly to price, plunged 33 basis points to 1.86 per cent before ris­ing to set­tle at 2.13 per cent. While that may not seem like much, ana­lysts say the move was sev­en stan­dard devi­a­tions away from its intra­day norm – mean­ing it might be expect­ed to occur once every 1.6bn years.

For sev­er­al min­utes, Wall Street stood still as traders watched their screens in dis­be­lief.  Elec­tron­ic pric­ing machines, which now play a big­ger role than ever in the trad­ing of Trea­suries, were halt­ed and orders can­celled by ner­vous deal­ers as prices see-sawed.

The events have sparked a finan­cial “who­dunit” as investors, traders and reg­u­la­tors seek to under­stand what hap­pened – and to deter­mine whether Octo­ber 15 was a unique event or a har­bin­ger of fur­ther per­ilous trad­ing con­di­tions to come.

“We’re all look­ing for a chief rea­son because clients want to under­stand the impe­tus behind mar­ket volatil­i­ty,’ says Reg­gie Brown, head of exchange-trad­ed fund trad­ing at Can­tor Fitzger­ald.

Among US reg­u­la­tors’ con­cerns is whether a tougher reg­u­la­to­ry cli­mate for big banks, cou­pled with the inex­orable rise of elec­tron­ic trad­ing, has fun­da­men­tal­ly altered how the $12.4tn gov­ern­ment bond mar­ket func­tions. The answer has pro­found con­se­quences for the con­duct of Fed­er­al Reserve pol­i­cy and how the US funds its nation­al debt.

For the Fed, the resilience of the Trea­sury mar­ket will be a con­sid­er­a­tion as it begins to raise inter­est rates. Ana­lysts say the risk of a high­ly volatile mar­ket reac­tion sug­gests the cen­tral bank will move in mea­sured steps when it begins to raise bor­row­ing costs, which many expect to begin next year.

One wor­ry is that the US Trea­sury mar­ket might have suf­fered a pro­nounced loss of sup­port for prices – or “liq­uid­i­ty” in finan­cial par­lance – due to changes that have swept over Wall Street includ­ing the rise of com­put­er-dri­ven trad­ing.  Some draw par­al­lels with the “flash crash” that hit stock mar­kets in May 2010, which even­tu­al­ly spurred efforts to reform the wider equi­ty mar­ket.

James Angel, asso­ciate pro­fes­sor at George­town Uni­ver­si­ty, says the US Trea­sury mar­ket should be reg­u­lat­ed in a dif­fer­ent way now that it has embraced elec­tron­ic trad­ing.

“When peo­ple use com­put­ers to pro­vide prices across mar­kets it [liq­uid­i­ty] can be with­drawn in a heart­beat,” he says.  “How much mar­ket liq­uid­i­ty real­ly exists under this type of mar­ket struc­ture and what changes should be made are the ques­tions for reg­u­la­tors.”

Unlike oth­er bond mar­kets, US Trea­suries are viewed as being open for busi­ness for the entire glob­al trad­ing day.  They also enjoy safe-haven sta­tus dur­ing times of ten­sion.  The immense size of the mar­ket means investors can eas­i­ly express oppos­ing views about the direc­tion of inter­est rates by buy­ing or sell­ing the gov­ern­ment debt.

Any indi­ca­tion that the mar­ket can sud­den­ly shut down with lit­tle warn­ing rais­es trou­bling ques­tions about how the nature of trad­ing has changed in recent years.  Elec­tron­ic sys­tems are more vis­i­ble to the whole mar­ket, so trades tend to be small­er than those that take place in pri­vate tele­phone con­ver­sa­tions between deal­ers and investors.

A recent gath­er­ing of US Trea­sury offi­cials and key rep­re­sen­ta­tives of deal­ers and investors, known as the Trea­sury Bor­row­ing Advi­so­ry com­mit­tee, held in a Wash­ing­ton hotel, revealed “a wide vari­ety of views regard­ing the poten­tial dri­vers of the intra­day volatil­i­ty” on Octo­ber 15.  Mem­bers of the TBAC include JPMor­gan Chase, RBS, Mor­gan Stan­ley, Black­Rock, Pim­co, Citadel, Bre­van Howard and oth­er major play­ers in the Trea­sury mar­ket.

A num­ber of US reg­u­la­to­ry agen­cies are look­ing at last month’s Trea­sury mar­ket may­hem. An offi­cial at the Fed­er­al Reserve Bank of New York told the Finan­cial Times: “In the course of our nor­mal mar­ket mon­i­tor­ing we reg­u­lar­ly explore and assess mar­ket devel­op­ments.”

Tim­o­thy Mas­sad, chair­man of the US Com­mod­i­ty Futures Trad­ing Com­mis­sion, which reg­u­lates inter­est rate futures trad­ing at the Chica­go Mer­can­tile Exchange, said that the agency’s ini­tial view was that the mar­ket had func­tioned rea­son­ably well giv­en the high num­ber of trades.

“Let me just add, that’s based on our pre­lim­i­nary look.  New evi­dence might come to our atten­tion that sug­gests oth­er­wise.”

When dawn broke on a grey Octo­ber 15 in New York, traders and investors had plen­ty of rea­sons to be ner­vous.  Con­cerns over the spread of Ebo­la and weak­en­ing eco­nom­ic activ­i­ty in Europe and Chi­na were weigh­ing heav­i­ly – help­ing to push bond yields low­er as investors sought the refuge of US trea­suries.

The scup­per­ing of AbbVie’s L32bn [pounds] deal to acquire Shire left many big hedge funds nurs­ing heavy equi­ty loss­es and may have con­tributed to the rapid repo­si­tion­ing that would even­tu­al­ly engulf mar­kets.

When US retail sales for Sep­tem­ber flashed across news screens at 8:30am and con­firmed the first month­ly decline since Jan­u­ary, con­cern mount­ed among investors that the US econ­o­my could well be soft­en­ing.  For investors who had posi­tioned them­selves for a strength­en­ing econ­o­my that would pro­pel the Fed to raise inter­est rates before 2017, it was a painful rever­sal of sen­ti­ment.  Many had placed record bets on inter­est rates mov­ing high­er via futures con­tracts lis­ten on the CME.

With many hedge funds and mon­ey man­agers already suf­fer­ing a poor year, their off­side wagers on inter­est rates and oth­er fail­ing trades now required emer­gency action.  What sub­se­quent­ly unfold­ed, accord­ing to traders, was a series of mas­sive posi­tions being liq­ui­dat­ed and dumped onto the mar­ket.

One hedge fund man­ag­er recalls being bewil­dered by sub­se­quent events:  “What on earth was charg­ing through the mar­ket to want vol­ume at such a price and why, in response to that cat­a­lyst, did the elec­tron­ic mar­ket­place just take any and all liq­uid­i­ty away?”

By 8:45am, liq­uid­i­ty began notice­ably dete­ri­o­rat­ing, and the process accel­er­at­ed after 9:30am, accord­ing to data from Nanex, a mar­ket research firm.  By 9:33am, the yield on the 10-year Trea­sury had sliced through the crit­i­cal 2 per cent lev­el, caus­ing many who had bet on ris­ing yields final­ly to capit­u­late and close out their neg­a­tive bets by buy­ing back US gov­ern­ment debt and var­i­ous inter­est rate futures con­tracts.

In Sep­tem­ber, hedge funds had estab­lished a record net “short” posi­tion in inter­est rate futures accord­ing to CFTC week­ly data.  Between the end of Sep­tem­ber and the week end­ing Octo­ber 21, this big bet shrunk from 1.27m con­tracts to just 217,000 reflect­ing more than $1tn of notion­al expo­sure being cut.

“The ele­phant tried to squeeze through the key­hole,” says John Brady, man­ag­ing direc­tor at RJ O’Brien, a futures bro­ker in Chica­go.

Eric Hun­sad­er, Nanex chief exec­u­tive, says the scale of the shift in US Trea­sury prices may have prompt­ed the “mar­ket-mak­ers” who usu­al­ly sup­port trad­ing of the debt to retreat: “The speed of the move was abnor­mal and trad­ing sys­tems lack his­tor­i­cal data for such episodes that can pro­vide them with some guid­ance.”

When the day drew to a close near­ly $1tn worth of cash Trea­suries had changed hands, illus­trat­ing the inten­si­ty of the rush for the exit.  Such huge vol­umes also show liq­uid­i­ty was avail­able, but was pos­si­bly dif­fi­cult to obtain at prices deemed rea­son­able by investors on the day and amid rapid­ly fluc­tu­at­ing mar­kets.

The head of trad­ing at a major deal­er-bank says: “Once volatil­i­ty shows up, you don’t want to make a mis­take in a fast mar­ket and so you always see deal­ers pull back from pro­vid­ing prices.’

Com­pound­ing such pres­sures are changes that have trans­formed Wall Street since the finan­cial cri­sis, with the big banks who once dom­i­nat­ed Trea­sury trad­ing now under tougher bal­ance sheet con­straints thanks to reg­u­la­tion and new­found aver­sion to risk.

This trend has encour­aged greater elec­tron­ic trad­ing and a migra­tion of expe­ri­enced traders fro deal­ers to hedge funds and asset man­agers, leav­ing a younger gen­er­a­tion of traders man­ning Trea­sury desks at big banks.  Many of these have nev­er expe­ri­enced the gung-ho pre-cri­sis days when banks were more will­ing to make bets on the mar­ket.

“The appetite to take on a posi­tion is low­er than it was pre-new reg­u­la­tion,’ says Greg Gure­vich, man­ag­ing part­ner at Mar­itime Cap­i­tal Part­ners, adding that com­pen­sa­tion struc­tures “do not reward the trad­er to take risk that may ulti­mate­ly cost the trad­er his or her job”.

The two main elec­tron­ic trad­ing venues for US Trea­suries are run by Nasdaq’s eSpeed and Icap’s Bro­kerTec. In recent years these plat­forms have opened up to a range of bro­ker-deal­ers and high-fre­quen­cy traders.  These firms do not under­write US Trea­sury debt sales and are often viewed as oppor­tunis­tic – pro­vid­ing prices when they spot a quick prof­it and then retreat­ing when trad­ing turns tricky.

Cus­tomer orders are now trans­act­ed and almost instan­ta­neous­ly hedged, or off­set, by com­put­er sys­tems – a type of automa­tion that works well when trad­ing is order­ly but rapid­ly breaks down when the sit­u­a­tion changes.  At such moments, turn­ing off the machines becomes a neces­si­ty.   This con­tributed to the down­draft in liq­uid­i­ty on Octo­ber 15.

“Deal­er-banks don’t real­ly posi­tion in bonds,’ said one head trad­er at a large US bank.  “They basi­cal­ly act as a pass-through to places like Bro­kerTec and eSpeed or match off their client flow.  The mar­ket-mak­ers in this new mar­ket are not oblig­at­ed to be there when everyone’s sell­ing.”

The wor­ry is that even the high­ly depend­able US Trea­sury mar­ket may suf­fer from sud­den droughts in liq­uid­i­ty because big banks have been barred from “pro­pri­etary” trad­ing.  The “prop traders” could take the oth­er side of huge cus­tomer demand to buy or sell bonds.

“If the Street – for bal­ance sheet, risk appetite and reg­u­la­to­ry rea­sons – can’t pro­vide a speed bump between buy­ers and sell­ers such as hedge funds and asset man­agers, then the Trea­sury mar­ket will expe­ri­ence a lot more jumps in trad­ing,” says one trad­er.

As the mar­ket becomes increas­ing­ly dri­ven by elec­tron­ic trad­ing, more rules may be required to help deal with sud­den vio­lent swings, sim­i­lar to the adop­tion of cir­cuit break­ers in stock mar­kets.

Prof Angel says: “The Trea­sury mar­ket is a free­wheel­ing world where trad­ing is not for­mal­ized like that of an exchange and where the use of cir­cuit break­ers can help steady activ­i­ty.”  These kind of curbs mat­ter for mar­kets that increas­ing­ly trade elec­tron­i­cal­ly and also influ­ence oth­er finan­cial areas, such as deriv­a­tives and futures.

A broad­er con­se­quence of last month’s tur­moil may be that Fed rate ris­es will be more like­ly to take the form of a series of slow steps, rather than big moves that run the risk of spark­ing tur­moil in the bond mar­kets, accord­ing to ana­lysts.

For the US Trea­sury, which is respon­si­ble for mak­ing sure bud­get deficits and matur­ing debt are refi­nanced smooth­ly, fur­ther episodes of tur­moil could well impair the market’s abil­i­ty to under­write gov­ern­ment debt effi­cient­ly, says Michael Clo­her­ty, ana­lyst at RBC Cap­i­tal Mar­kets.

Mr. Clo­her­ty says the US Trea­sury mar­ket has altered struc­tural­ly and lacks the depth to absorb eas­i­ly sur­pris­es in Fed pol­i­cy and changes in mar­ket sen­ti­ment.  This trend has gath­ered pace as the cen­tral bank has become a major own­er of Trea­sury debt through its emer­gency bond-buy­ing pro­gramme, fur­ther lim­it­ing liq­uid­i­ty.

He adds that any sign that the Trea­sury market’s liq­uid­i­ty has declined would cast a shad­ow over investor con­fi­dence – and may ulti­mate­ly raise the cost of sell­ing gov­ern­ment debt.

Says Mr. Clo­her­ty: “Investors know they can trade large amounts of Trea­suries and any ero­sion of con­fi­dence in the market’s liq­uid­i­ty has long-term con­se­quences.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discussion

14 comments for “FTR #823 Caution, Banksters at Work, Part 2 (Still More Collateralized “Death” Obligations)”

  1. Shawn Miller’s LinkedIn account is inter­est­ing. He seems to have been the Direc­tor of Envi­ron­men­tal and Social Risk Man­age­ment, A major envi­ron­men­tal­ist with Inter­na­tion­al finance cor­po­ra­tion (He co-wrote an IFC pub­li­ca­tion encour­ag­ing “pub­lic con­sul­ta­tion” and worked to estab­lish ties to envi­ron­men­tal and human rights groups), and one of the major play­ers in Equa­tor Prin­ci­ples Asso­ci­a­tion, pen­ning the “do’s and don’ts” of the finan­cial industry(they’ve even writ­ten a lit­tle eulo­gy for him on their website)http://www.equator-principles.com/index.php/all-news-media/ep-association-news/387 . His clien­tele are also inter­est­ing — “Azer­bai­jan, Geor­gia and Turkey to Ugan­da, Tan­za­nia, Togo and Bangladesh.” We know from the police that Mr Miller was gay, would fre­quent male chat rooms, and a meet­ing with one of these indi­vid­u­als may have result­ed in his death, but this adds a new angle when we look back at his record and con­nect him to Ugan­da and the “kill-all-the-gays” law that saw cit­i­group and Bar­clays threat­en­ing to pull out of the coun­try if the law was passed. we know from the linkedin that miller was “A thought leader and pio­neer in sus­tain­able finance focused on cre­at­ing change and build­ing sus­tain­able busi­ness through col­lab­o­ra­tion, engage­ment and part­ner­ship with oth­ers”, and we know that he was in charge of “a wide vari­ety of indus­try sec­tors (oil and gas, min­ing, infra­struc­ture, pow­er, cement, renew­able ener­gy”. Miller had his hands deep not only in the affairs of Africa, but appeared to also have keen inter­est in sus­tain­abil­i­ty and account­abil­i­ty — two things that banks and indus­try in Africa don’t want to hear about. Now, look at what Bloomberg has post­ed “Cit­i­group Exec­u­tive Prob­a­bly Killed Him­self, Police Say” http://www.bloomberg.com/news/2014–11-19/citigroup-s-risk-management-executive-shawn-miller-found-dead.html Note, it’s pret­ty run of the mill report­ing until we get to this: After ini­tial reports that he had been mur­dered due to no weapon being found, “A weapon was found in the apart­ment, Speech­ley said. He said he couldn’t con­firm a report in the New York Dai­ly News, cit­ing uniden­ti­fied peo­ple, that a knife was found under Miller’s body after it was moved.” That does­n’t sound like a sui­cide.

    Posted by Nimo | December 5, 2014, 3:13 pm
  2. “While the OCC refused to pro­vide this infor­ma­tion, Mil­lan was among a lim­it­ed group out­side of Fed­er­al reg­u­la­tors who was in a posi­tion to have broad data on the death ben­e­fit claims being sub­mit­ted by mul­ti­ple banks”. Yes, the keep­er of Wall Street’s high-val­ue “dead banker” insur­ance pol­i­cy secrets was just stabbed to death:

    Wall Street on Parade
    Slain Mass­Mu­tu­al Exec­u­tive Held Wall Street “Trade Secrets”

    By Pam Martens and Russ Martens: Decem­ber 8, 2014

    On Thurs­day, Novem­ber 20, 2014, the body of 54-year old Melis­sa Mil­lan, a divorced moth­er of two school-age chil­dren, was found at approx­i­mate­ly 8 p.m. along a jog­ging path run­ning par­al­lel to Iron Horse Boule­vard in Sims­bury, Con­necti­cut. A motorist had spot­ted the body and called the police.

    Accord­ing to the coroner’s report, it was deter­mined that Millan’s death was attrib­ut­able to a stab wound to the chest with an “edged weapon.” Police ruled the death a homi­cide, a rar­i­ty for this town where res­i­dents feel safe enough to rou­tine­ly jog by them­selves on the same path used by Mil­lan.

    Infor­ma­tion has now emerged that Mil­lan had access to high­ly sen­si­tive data on bank prof­its result­ing from the col­lec­tion of life insur­ance pro­ceeds from her insur­ance com­pa­ny employ­er on the death of bank work­ers – data that a Fed­er­al reg­u­la­tor of banks has char­ac­ter­ized as “trade secrets.”

    Mil­lan was a Senior Vice Pres­i­dent with Mass­a­chu­setts Mutu­al Life Insur­ance Com­pa­ny (Mass­Mu­tu­al) head­quar­tered in Spring­field, Mass­a­chu­setts and a mem­ber of its 39-mem­ber Senior Man­age­ment team accord­ing to the company’s 2013 annu­al report. Mil­lan had been with the com­pa­ny since 2001.

    Accord­ing to Millan’s LinkedIn pro­file, her work involved the “Gen­er­al man­age­ment of BOLI” and Exec­u­tive Group Life, as well as dis­abil­i­ty insur­ance busi­ness­es and “expan­sion into work­site and vol­un­tary ben­e­fits mar­ket.”

    BOLI is short­hand for Bank-Owned Life Insur­ance, a con­tro­ver­sial prac­tice where banks pur­chase bulk life insur­ance on the lives of their work­ers. The death ben­e­fit pays to the bank instead of to the fam­i­ly of the deceased. Accord­ing to indus­try pub­li­ca­tions, Mass­Mu­tu­al is con­sid­ered one of the top ten sell­ers of BOLI in the Unit­ed States. Its annu­al reports in recent years have indi­cat­ed that growth in this area was a sig­nif­i­cant con­trib­u­tor to its rev­enue growth.

    Banks as well as oth­er types of cor­po­ra­tions enjoy major tax ben­e­fits through the use of this type of insur­ance. The cash buildup in the poli­cies con­tribute to annu­al earn­ings on a tax-free basis while the death ben­e­fit is received free of Fed­er­al income tax when the employ­ee even­tu­al­ly dies. Even if the work­er is no longer employed at the bank, it can still col­lect the death ben­e­fit. Banks own­ing BOLI rou­tine­ly con­duct “death sweeps” of pub­lic records using for­mer employ­ees’ Social Secu­ri­ty num­bers to deter­mine if a for­mer employ­ee has died. It then sub­mits a claim request for pay­ment of the death ben­e­fit to the insur­ance com­pa­ny.

    Four of Wall Street’s largest banks are the largest own­ers of BOLI accord­ing to Decem­ber 31, 2013 data from the Fed­er­al Finan­cial Insti­tu­tions Exam­i­na­tion Coun­cil (FFIEC), hold­ing a com­bined total of $68.1 bil­lion. The four banks’ indi­vid­ual BOLI assets are as fol­lows as of the end of last year:

    Bank of Amer­i­ca $22.7 bil­lion

    Wells Far­go 18.7 bil­lion

    JPMor­gan Chase 17.9 bil­lion

    Cit­i­group 8.8 bil­lion

    The BOLI assets, how­ev­er, sup­port a far greater amount of life insur­ance cov­er­age in force on the work­ers’ lives – poten­tial­ly as much as a ten to one ratio – mean­ing that just these four banks could be hold­ing $681 bil­lion on the lives of their cur­rent and past employ­ees.

    Since details on the num­ber of work­ers insured and the annu­al amounts that big Wall Street banks report as prof­its on the death of their cur­rent and for­mer work­ers are close­ly guard­ed secrets, in March of this year Wall Street On Parade wrote to the reg­u­la­tor of nation­al banks, the Office of the Comp­trol­ler of the Cur­ren­cy (OCC), ask­ing for BOLI infor­ma­tion under the Free­dom of Infor­ma­tion Act.

    Because JPMor­gan Chase has expe­ri­enced a num­ber of trag­ic deaths among young work­ers in their 30s this year, we asked the OCC for the num­ber of deaths from 2008 through March 21, 2014 on which JPMor­gan Chase col­lect­ed death ben­e­fits; the total face amount of BOLI life insur­ance in force at JPMor­gan; the total num­ber of for­mer and cur­rent employ­ees of JPMor­gan Chase who are insured under these poli­cies; and any peer stud­ies show­ing the same data com­par­ing JPMor­gan Chase with Bank of Amer­i­ca, Wells Far­go and Cit­i­group.

    The OCC respond­ed to our request on April 18, 2014, advis­ing that they did have doc­u­ments respon­sive to our request but that all doc­u­ments were going to be with­held because they were “priv­i­leged or con­tains trade secrets, or com­mer­cial or finan­cial infor­ma­tion, fur­nished in con­fi­dence, that relates to the busi­ness, per­son­al, or finan­cial affairs of any per­son,” or relate to “a record con­tained in or relat­ed to an exam­i­na­tion.” (See OCC Response to Wall Street On Parade’s Request for Banker Death Infor­ma­tion).

    It is note­wor­thy that JPMor­gan Chase, Bank of Amer­i­ca, Wells Far­go and Cit­i­group are all pub­licly trad­ed com­pa­nies with share­hold­ers. Under secu­ri­ties law, share­hold­ers have a right to mate­r­i­al infor­ma­tion on how the com­pa­ny is mak­ing its prof­its. An investor who wants to own the shares of a well-run bank whose busi­ness mod­el is to make pru­dent loans to busi­ness­es or loans to respon­si­ble retail cus­tomers, should have a right to know how much of a bank’s prof­its are com­ing from the unseem­ly prac­tice of col­lect­ing death ben­e­fits on its work­ers.

    While the OCC refused to pro­vide this infor­ma­tion, Mil­lan was among a lim­it­ed group out­side of Fed­er­al reg­u­la­tors who was in a posi­tion to have broad data on the death ben­e­fit claims being sub­mit­ted by mul­ti­ple banks. Hav­ing data across mul­ti­ple banks could have facil­i­tat­ed the type of peer review stud­ies we had request­ed from the OCC – trade secrets that Wall Street does not want to allow into the sun­shine.

    ...

    On Decem­ber 4, Sims­bury Police Chief Peter Ingvert­sen held a press con­fer­ence to pro­vide the press and pub­lic with updates on the case. He said friends, fam­i­ly and co-work­ers have been inter­viewed and that the pub­lic has come for­ward with infor­ma­tion.

    A reporter at the press con­fer­ence indi­cat­ed that she had spo­ken with sources and learned that Mil­lan had not been robbed nor was it a sex­u­al assault. She asked the police chief if he had oth­er rea­sons to believe it was not a ran­dom crime. Police Chief Ingvert­sen said it had not yet been deter­mined if this was or was not a ran­dom crime.

    ...

    Posted by Pterrafractyl | December 8, 2014, 12:21 pm
  3. http://news.yahoo.com/u‑hedge-fund-founder-thomas-gilbert-shot-dead-025633565–sector.html

    The son of a hedge fund founder who was shot to death in his New York apart­ment over the week­end was ques­tioned on Mon­day in con­nec­tion with the inci­dent, police said.

    Thomas Gilbert, 70, founder of the Wain­scott Cap­i­tal Part­ners Fund, was found shot once in the head Sun­day after­noon in the bed­room of his Man­hat­tan apart­ment, police said.

    His son was being ques­tioned but there was no word on whether any charges had been filed as of Mon­day after­noon, police said.

    The son was iden­ti­fied in local media as 30-year-old Thomas Gilbert Jr.

    Police said a .40-cal­iber hand­gun was recov­ered at the scene of the shoot­ing, on Man­hat­tan’s afflu­ent East Side.

    The elder Gilbert, a grad­u­ate of Prince­ton Uni­ver­si­ty and Har­vard Busi­ness School, found­ed Wain­scott in 2011 and was the fund’s chief invest­ment offi­cer, accord­ing to a pro­file on its web­site.

    Gilbert also was a co-founder of Syzy­gy Ther­a­peu­tics, a pri­vate equi­ty biotech asset acqui­si­tion fund that he left to form Wain­scott, the pro­file said.

    Wain­scott returned 10.48 per­cent in the first 11 months of 2014, lag­ging the S&P 500’s rough­ly 12 per­cent gain and far short of its 43.92 per­cent return in 2013, accord­ing to a source with access to the fund’s per­for­mance fig­ures.

    Posted by Tiffany Sunderson | January 5, 2015, 4:36 pm
  4. Worth not­ing...

    CBS News
    Body of miss­ing AIG exec­u­tive Omar Meza found in pond
    By Crimesider Staff CBS News
    Jan­u­ary 16, 2015, 12:45 PM

    PALM DESERT, Calif. — The body of miss­ing AIG exec­u­tive Omar Meza was found float­ing in a pond near the 18th hole of the J.W. Mar­riott Desert Springs Resort on Thurs­day after­noon, reports CBS affil­i­ate KESQ.

    Dive teams and search dogs with the River­side Coun­ty Sher­if­f’s Depart­ment scoured ponds and searched the grounds at the resort for sev­er­al days after the 33-year-old vice-pres­i­dent for AIG Finan­cial Dis­trib­u­tors was last seen there on Jan­u­ary 8 at about 11 p.m.

    ..

    Meza was report­ed­ly in town for a work con­fer­ence. His wife said he trav­els to the area every oth­er month for work and knows the area well, but that he may have be suf­fer­ing from long-term effects of a seri­ous car crash in 2014.

    KESQ reports that cowork­ers said they last saw Meza leav­ing an Indi­an Wells restau­rant Thurs­day night. Meza told an Uber car ser­vice dri­ver he want­ed to go to the Mar­riott on Cook Street.

    “We spoke on the phone. He was going to be head­ing to his hotel room,” said his wife Diane.

    He was actu­al­ly stay­ing at a small­er Mar­riott Res­i­dence Inn on Cook Street, but he got dropped off at the wrong hotel.

    Diane Meza said she spoke to her hus­band around 11:20 p.m. on Jan. 8, as he left that night’s din­ner with col­leagues; he said he would call her when he returned to his room but nev­er did.

    Meza was report­ed miss­ing after he failed to show up for meet­ings on Fri­day Jan. 9. Police found Meza­’s jack­et fold­ed neat­ly on J.W.‘s golf course, and his wal­let.

    Posted by Pterrafractyl | January 16, 2015, 11:43 am
  5. “Anoth­er New York-area JPMor­gan Chase employ­ee is dead in an appar­ent mur­der-sui­cide, but experts cau­tioned against call­ing it a trend”:

    CNBC
    Sec­ond appar­ent mur­der-sui­cide hits JPMor­gan
    Lawrence Delev­ingne | @ldelevingne
    Tues­day, 10 Feb 2015 | 2:01 PM ET

    Anoth­er New York-area JPMor­gan Chase employ­ee is dead in an appar­ent mur­der-sui­cide, but experts cau­tioned against call­ing it a trend.

    The bod­ies of Michael and Iran Pars Tabacchi—newlywed par­ents of a young boy—were dis­cov­ered Fri­day in Closter, New Jer­sey. Iran, the wife, was stabbed once and stran­gled. The hus­band, Michael, died of a self-inflict­ed knife wound, accord­ing to Bergen Coun­ty pros­e­cu­tor John Molinel­li. The cou­ple’s tod­dler was not harmed.

    Michael, 27, was a back-office employ­ee in the bank’s asset cus­tody unit, accord­ing to his LinkedIn pro­file. He worked for JPMor­gan since 2009.

    “I am very good and cre­ative with data manip­u­la­tion and report­ing and can lever­age my busi­ness knowl­edge to pro­vide senior man­agers what is need­ed before asked to do so,” his pro­file states.

    The Tabac­chi sui­cide isn’t the only one by a JPMor­gan employ­ee late­ly, as NJ.com not­ed recent­ly. Anoth­er mur­der-sui­cide occurred in near­by Jef­fer­son Town­ship in July, when police said Julian Knott shot his wife Ali­ta before killing him­self. In Feb­ru­ary 2014, the New York Post not­ed three oth­er mys­te­ri­ous deaths of JPMor­gan bankers over just three weeks.

    But experts cau­tioned that the deaths weren’t part of an obvi­ous trend, even if parts of work­ing on Wall Street make employ­ees more prone to sui­cide.

    “A few sim­i­lar tragedies does­n’t nec­es­sar­i­ly make them sta­tis­ti­cal­ly sig­nif­i­cant for JPMor­gan. Ugly events get played up in the media par­tial­ly because the pub­lic likes to hate on bankers,” said Denise Shull, a psy­cho­log­i­cal con­sul­tant to invest­ment pro­fes­sion­als at The ReThink Group in New York.

    “Still, that dis­dain for those who work on Wall Street can’t help peo­ple suf­fer­ing from oth­er psy­cho­log­i­cal stres­sors,” Shull added. “It’s high­ly unlike­ly to be the cause but being a soci­etal tar­get could sure­ly con­tribute to the feel­ings of hope­less­ness that in turn push peo­ple over the men­tal edge.”

    A spokesman for JPMor­gan declined to com­ment. The bank has 260,000 employ­ees world­wide, accord­ing to its web­site.

    ...

    Alexan­dra Michel, who teach­es at the Uni­ver­si­ty of Penn­syl­va­ni­a’s Grad­u­ate School of Edu­ca­tion, said bank employ­ees are much more like­ly to become depressed after four or five years of intense work. She also said back-office employ­ees some­times had an infe­ri­or­i­ty com­plex because their hard work did not earn the same pow­er and pres­tige as front-office work­ers, such as invest­ment bankers.

    “In the back office you work at lot and you don’t have sta­tus,” Michel said. “We know from research that a lack of sta­tus induces help­less­ness and exac­er­bates stress.”

    Michael San­toro, a pro­fes­sor of busi­ness ethics at Rut­gers Busi­ness School, cau­tioned against draw­ing any con­clu­sions from the lat­est sui­cide.

    “We have no way of know­ing what is behind this and what role if any his work­ing at a bank had to do with what hap­pened,” San­toro said.

    Note these two points:

    ...
    “A few sim­i­lar tragedies does­n’t nec­es­sar­i­ly make them sta­tis­ti­cal­ly sig­nif­i­cant for JPMor­gan. Ugly events get played up in the media par­tial­ly because the pub­lic likes to hate on bankers,” said Denise Shull, a psy­cho­log­i­cal con­sul­tant to invest­ment pro­fes­sion­als at The ReThink Group in New York.

    Still, that dis­dain for those who work on Wall Street can’t help peo­ple suf­fer­ing from oth­er psy­cho­log­i­cal stres­sors,” Shull added. “It’s high­ly unlike­ly to be the cause but being a soci­etal tar­get could sure­ly con­tribute to the feel­ings of hope­less­ness that in turn push peo­ple over the men­tal edge.

    ...

    Alexan­dra Michel, who teach­es at the Uni­ver­si­ty of Penn­syl­va­ni­a’s Grad­u­ate School of Edu­ca­tion, said bank employ­ees are much more like­ly to become depressed after four or five years of intense work. She also said back-office employ­ees some­times had an infe­ri­or­i­ty com­plex because their hard work did not earn the same pow­er and pres­tige as front-office work­ers, such as invest­ment bankers.

    “In the back office you work at lot and you don’t have sta­tus,” Michel said. “We know from research that a lack of sta­tus induces help­less­ness and exac­er­bates stress.”

    ...

    Assum­ing this real­ly was a mur­der-sui­cide (note the guy stabbed him­self to death), since none of that anti-bankster ire is direct­ed at the over­worked back-office work­ers with no real pow­er, would a pub­lic edu­ca­tion cam­paign that makes it clear that all that ire is direct­ed at their boss­es help cut down that the untime­ly deaths? It would be like an “It gets bet­ter” cam­paign, but for back-office bankers! Although, since it does­n’t actu­al­ly “get bet­ter” the longer they stay in the busi­ness, that could be a prob­lem. Maybe Wall Street should­n’t be so psy­cho instead.

    Posted by Pterrafractyl | February 12, 2015, 4:04 pm
  6. This isn’t exact­ly finance relat­ed (although it does involve a state audi­tor), but note that the Mis­souri GOP just expe­ri­enced a “WTF”-style untime­ly death of its own:
    “Just 13 min­utes before police got an emer­gency call from his home, Schwe­ich had a phone con­ver­sa­tion with The Asso­ci­at­ed Press about his plans to go pub­lic that after­noon with alle­ga­tions that the head of the Mis­souri Repub­li­can Par­ty had made anti-Semit­ic com­ments about him.” And then he shot him­self. Appar­ent­ly:

    Mis­souri Can­di­date for Gov­er­nor Dies of ‘Appar­ent Sui­cide’
    Asso­ci­at­ed Press
    First pub­lished Feb­ru­ary 26th 2015, 9:58 pm

    Mis­souri Audi­tor Tom Schwe­ich, who had recent­ly launched a Repub­li­can cam­paign for gov­er­nor, fatal­ly shot him­self Thurs­day in what police described as an “appar­ent sui­cide” — just min­utes after invit­ing reporters to his sub­ur­ban St. Louis home for an inter­view.

    Schwe­ich’s death stunned many of Mis­souri’s top elect­ed offi­cials, who described him as a “bril­liant” and “devot­ed” pub­lic ser­vant with an “unblem­ished record” in office. Just 13 min­utes before police got an emer­gency call from his home, Schwe­ich had a phone con­ver­sa­tion with The Asso­ci­at­ed Press about his plans to go pub­lic that after­noon with alle­ga­tions that the head of the Mis­souri Repub­li­can Par­ty had made anti-Semit­ic com­ments about him.

    The state GOP chair­man denied doing so in an inter­view lat­er Thurs­day. Chair­man John Han­cock said “it’s plau­si­ble that I would have told some­body that Tom was Jew­ish because I thought he was, but I would­n’t have said it in a deroga­to­ry or demean­ing fash­ion.”

    Schwe­ich, 54, had Jew­ish ances­try but attend­ed an Epis­co­pal church. Spokesman Spence Jack­son said his boss had recent­ly appeared upset about the com­ments peo­ple were sup­pos­ed­ly mak­ing about his reli­gious faith and about a recent radio ad describ­ing Schwe­ich as “a weak can­di­date for gov­er­nor” who “could be eas­i­ly con­fused for the deputy sher­iff of May­ber­ry” and could “be manip­u­lat­ed.”

    ...

    Schwe­ich had been in office since Jan­u­ary 2011 and had eas­i­ly won elec­tion in Novem­ber to a sec­ond, four-year term. He announced last month that he would seek the Repub­li­can nom­i­na­tion for gov­er­nor. Mur­phy told NBC sta­tion KSDK that he did­n’t believe Schwe­ich was under any type of inves­ti­ga­tion.

    Posted by Pterrafractyl | February 26, 2015, 9:19 pm
  7. More on the “appar­ent sui­cide” of Tom Schwe­ich: The audio of a voice­mail he left to the St. Louis Post-Dis­patch has been released. The voice­mail record­ing was made sev­en min­utes before he was found by his wife shot in the head. She report­ed­ly heard him mak­ing phone calls and then heard a gun shot and called 9/11. There’s a lot more on his back­ground in the arti­cle, includ­ing his rep­u­ta­tion has an anti-cor­rup­tion cru­sad­er and how crack­ing down on cor­rup­tion in the state cap­i­tal was the sig­na­ture theme of his guber­na­to­r­i­al cam­paign:

    St. Louis Post-Dis­patch
    Audi­tor Schwe­ich had called seek­ing an inter­view just before his death
    2/27/2015
    By Kevin McDer­mott, Vir­ginia Young

    ST. LOUIS • Tom Schwe­ich, Missouri’s Repub­li­can state audi­tor and a lead­ing con­tender for the governor’s office in next year’s elec­tion, died Thurs­day after appar­ent­ly shoot­ing him­self in his Clay­ton home.

    The sud­den death of the sec­ond-term audi­tor shocked and sad­dened the state’s polit­i­cal estab­lish­ment and roiled the race for gov­er­nor bare­ly a month after it began.

    “What we know at this point sug­gests an appar­ent sui­cide,” Clay­ton Police Chief Kevin Mur­phy told reporters in a news con­fer­ence Thurs­day after­noon. He said there was “noth­ing to sup­port any­thing oth­er than that at this point,” and said Schwe­ich died from a sin­gle gun­shot wound.

    Mur­phy said he didn’t know whether Schwe­ich left a note. The chief said an autop­sy and inves­ti­ga­tion are pend­ing.

    Ear­li­er in the day, a police source told the Post-Dis­patch that Schweich’s wife was in anoth­er room of their house when she heard her hus­band mak­ing phone calls, fol­lowed by a gun­shot. Schwe­ich had been shot in the head, the source said.

    A 911 call was made from Schweich’s home at 9:48 a.m., sev­en min­utes after Schwe­ich had left a voice­mail request­ing an inter­view with a Post-Dis­patch reporter.

    Schwe­ich was tak­en to Barnes-Jew­ish Hos­pi­tal where he was pro­nounced dead, Mur­phy said.

    The Post-Dis­patch inter­view, which was also to include an Asso­ci­at­ed Press reporter, was set at his Clay­ton home for lat­er in the day.

    The sub­ject of the inter­view, accord­ing to Schweich’s com­ments to the Post-Dispatch’s edi­to­r­i­al page edi­tor, was Schweich’s belief that a top state GOP offi­cial had spread false infor­ma­tion about him.

    Lis­ten: The voice­mail left for the Post-Dis­patch

    ‘SO MUCH TALENT’

    Schwe­ich, 54, had a cadre of men­tors and sup­port­ers in his guber­na­to­r­i­al run that includ­ed for­mer U.S. Sens. John Dan­forth and Jim Tal­ent, both Mis­souri Repub­li­cans, and friend and wealthy cam­paign con­trib­u­tor Sam Fox, the for­mer U.S. ambas­sador to Bel­gium.

    “I was nev­er so sur­prised in my entire life to find out this hap­pened,” Fox told the Post-Dis­patch Thurs­day. “This guy was bril­liant. This guy was unique. He had so much tal­ent.”

    Fox said he had sched­uled a fundrais­er at his house for Schwe­ich. “He was rais­ing mon­ey,” Fox said. “The mon­ey was pour­ing in.”

    He said Schwe­ich had not expressed any signs of per­son­al or pro­fes­sion­al tur­moil.

    “None what­so­ev­er,” Fox said. “Not to me nor to any friends that I’m aware.”

    Schwe­ich was re-elect­ed last Novem­ber to a sec­ond term as audi­tor. Under the Mis­souri con­sti­tu­tion, the gov­er­nor has the pow­er to fill vacan­cies of statewide offi­cers.

    Schwe­ich announced last month that he would seek the Repub­li­can nom­i­na­tion for gov­er­nor in 2016 — a race that had already fos­tered unusu­al­ly bit­ter in-par­ty con­flict despite the pri­ma­ry being more than a year away.

    Schwe­ich, known for his inten­si­ty and ambi­tion, had posi­tioned him­self in the guber­na­to­r­i­al cam­paign as a tena­cious crime-fight­ing reformer, based on his aggres­sive audits of pub­lic offi­cials through­out Mis­souri.

    Last week­end, at the Mis­souri GOP’s annu­al Rea­gan-Lin­coln Days con­ven­tion in Kansas City, he cheer­ful­ly joked with reporters as he scooped ice cream for con­ven­tion­eers. He also gave an impas­sioned, rous­ing speech that whipped up the hun­dreds of atten­dees and prompt­ed anoth­er offi­cial on stage to joke that Schwe­ich had had too much cof­fee.

    When Schwe­ich announced his guber­na­to­r­i­al cam­paign, he promised to attack cor­rup­tion in the state Capi­tol. He said his main Repub­li­can pri­ma­ry oppo­nent, for­mer Mis­souri House Speak­er Cather­ine Han­away, was “bought and paid for” by megadonor Rex Sin­que­field because Han­away had received about $1 mil­lion in polit­i­cal dona­tions from Sin­que­field.

    Schweich’s crit­ics struck back. Last week, a polit­i­cal action com­mit­tee called Cit­i­zens for Fair­ness in Mis­souri aired a radio ad say­ing that Schwe­ich could be “eas­i­ly con­fused for the deputy sher­iff of May­ber­ry.” The ad, which mim­ic­ked the voice of the main char­ac­ter from the dark polit­i­cal dra­ma “House of Cards,” called Schwe­ich a weak can­di­date whom Democ­rats would “squash like a bug” if he won the GOP nom­i­na­tion.

    Ear­li­er this week, for­mer Navy SEAL Eric Gre­it­ens con­firmed he was con­sid­er­ing jump­ing into the Repub­li­can pri­ma­ry as well.

    On Tues­day morn­ing, Schwe­ich con­fid­ed in Post-Dis­patch Edi­to­r­i­al Page Edi­tor Tony Mes­sen­ger that he believed that John Han­cock, the new­ly elect­ed chair­man of the Mis­souri Repub­li­can Par­ty, had spread dis­in­for­ma­tion about Schweich’s reli­gion. That top­ic was what Schwe­ich want­ed to dis­cuss with reporters for the Post-Dis­patch and the Asso­ci­at­ed Press Thurs­day.

    In sev­er­al con­ver­sa­tions via text and phone in the days lead­ing up to Thurs­day morn­ing, Schwe­ich told Mes­sen­ger that Han­cock men­tioned to peo­ple in pass­ing that Schwe­ich was Jew­ish. Schwe­ich wasn’t Jew­ish. He was a mem­ber of the Church of St. Michael & St. George, an Epis­co­pal con­gre­ga­tion in Clay­ton.

    Schwe­ich told Mes­sen­ger he believed the men­tions of his faith her­itage were intend­ed to harm him polit­i­cal­ly in a guber­na­to­r­i­al pri­ma­ry in which many Repub­li­can vot­ers are evan­gel­i­cal Chris­tians. He said his grand­fa­ther was Jew­ish, and that he was “very proud of his con­nec­tion to the Jew­ish faith.”

    “He said his grand­fa­ther taught him to nev­er allow any anti-Semi­tism go unpun­ished, no mat­ter how slight,” Mes­sen­ger said a writ­ten state­ment.

    Schwe­ich told Mes­sen­ger that he attempt­ed to ask Sen. Roy Blunt to inter­vene but was unable to speak with him. Schwe­ich said he had lunch with Blunt’s son, lob­by­ist Andy Blunt, accord­ing to Messenger’s account.

    Blunt’s spokes­woman, Amber Marc­hand, said the sen­a­tor was very sad­dened by the loss. She con­firmed the two spoke on sev­er­al occa­sions the week­end pri­or but did not dis­close the details of those pri­vate dis­cus­sions.

    Karen Aroesty, region­al direc­tor of the Anti-Defama­tion League, said Schwe­ich had con­tact­ed her, as well, ear­li­er in the week con­cern­ing alleged anti-Semi­tism. She said she was wait­ing for Schwe­ich to com­ment pub­licly on the issue before decid­ing whether to issue a state­ment.

    “My under­stand­ing from the con­ver­sa­tion was that that was going to be the focus, but I don’t know any more than that,” Aroesty said.

    Han­cock said Thurs­day that he may have said to some­one last year that Schwe­ich was Jew­ish, “but I cer­tain­ly would not have said it in a deroga­to­ry man­ner.”

    “I have been a pub­lic fig­ure for near­ly 30 years,” Han­cock said. “No one has ever accused me of big­otry in any shape, man­ner or form.”

    Han­cock said he did not have a “spe­cif­ic rec­ol­lec­tion of telling any­body that Schwe­ich was Jew­ish,” but he may have used it as a descrip­tion, sim­i­lar to say­ing, “I’m Pres­by­ter­ian and some­body else is Catholic.” Han­cock said that at the time, he thought Schwe­ich was Jew­ish.

    Han­cock said he and Schwe­ich dis­cussed the mat­ter on the tele­phone last Novem­ber. “He told me he was aware I had made anti-Semit­ic remarks and I told him it was not true,” Han­cock said.

    This week, Han­cock said he heard that Schwe­ich intend­ed to hold a news con­fer­ence in Jef­fer­son City to accuse Han­cock of mak­ing an anti-Semit­ic remark to a spe­cif­ic per­son. Han­cock said that rumored inci­dent — which he declined to detail — was “demon­stra­bly untrue.”

    “To set the record straight,” Han­cock said, he and his wife trav­eled to Jef­fer­son City on Tues­day to attend the news con­fer­ence, which they had expect­ed to take place that after­noon. That news con­fer­ence nev­er took place.

    “This whole thing doesn’t make any sense,” Han­cock said. “Three months of alle­ga­tions about me that are not true don’t make any sense. Sui­cide doesn’t make any sense. It is a tragedy.”

    Han­cock, a polit­i­cal con­sul­tant, also said that while he has done research for Hanaway’s cam­paign in the past, he has “nev­er spo­ken to a donor on behalf of Cather­ine Han­away.”

    ...

    Schwe­ich grad­u­at­ed from Clay­ton High School, Yale Uni­ver­si­ty and the Har­vard Uni­ver­si­ty School of Law. He served as an intern for then‑U.S. Sen. John Dan­forth, R‑Mo., and lat­er joined Dan­forth at the Bryan Cave law firm down­town, where Schwe­ich became a part­ner. Schwe­ich long had been close polit­i­cal­ly to Dan­forth.

    When Dan­forth led the fed­er­al inves­ti­ga­tion in 1999 into the mass deaths at the Branch David­i­an com­pound at Waco, Texas, he chose Schwe­ich for chief of staff. He also worked with Dan­forth dur­ing the for­mer senator’s ser­vice in 2004-05 as Amer­i­can ambas­sador to the Unit­ed Nations, then with the U.S. State Depart­ment as a top offi­cial with the Bureau of Inter­na­tion­al Nar­cotics and Law Enforce­ment.

    Schwe­ich returned to Clay­ton and to Bryan Cave in 2008, and was a vis­it­ing pro­fes­sor and “ambas­sador in res­i­dence” at Wash­ing­ton Uni­ver­si­ty.

    In 2010, in his first bid for pub­lic office, Schwe­ich unseat­ed incum­bent state audi­tor Susan Mon­tee, a Demo­c­rat. He breezed to re-elec­tion last Novem­ber, receiv­ing 73 per­cent of the vote against two minor-par­ty chal­lengers. The Democ­rats did not run a can­di­date against him.

    ...

    Posted by Pterrafractyl | February 28, 2015, 4:16 am
  8. Giv­en the pos­si­ble role the Libor manip­u­la­tion inves­ti­ga­tion of Deutsche Bank alleged­ly played in the death of senior Deutsche Bank exec­u­tive William Broeskmit, it’s worth not­ing that Deutsche Bank set­tled with the US today with a $2.5 bil­lion fine. Also, as usu­al, no one was crim­i­nal­ly charged:

    The New York Times
    Deutsche Bank to Pay $2.5 Bil­lion Fine to Set­tle Rate-Rig­ging Case

    By BEN PROTESS and JACK EWINGAPRIL 23, 2015

    They called each oth­er “dude,” “mate” and “ami­go,” sug­gest­ing a cer­tain inno­cence to their friend­ship. And yet at the cen­ter of their dis­patch­es, Unit­ed States and British author­i­ties say, was actu­al­ly a col­lu­sive effort to manip­u­late world­wide inter­est rates.

    “I’m beg­ging u, don’t for­get me,” one Deutsche Bank trad­er wrote in an online chat to an employ­ee at a rival bank, seek­ing to influ­ence rates. “Ple­assssssssssssssseeeeeeeeee ... I’m on my knees ...”

    The mes­sages cap­tured the scheme at Deutsche Bank, which on Thurs­day became the lat­est big bank to set­tle accu­sa­tions that it manip­u­lat­ed inter­est rates that under­pin tril­lions of dol­lars in mort­gages, stu­dent loans and oth­er debt.

    To set­tle the case, the bank agreed to pay $2.5 bil­lion in penal­ties, a record for the inter­est rate cas­es, which have already stung the likes of Bar­clays and UBS. Deutsche Bank — Germany’s largest finan­cial insti­tu­tion and, at least for now, a prob­lem child in the eyes of reg­u­la­tors — also agreed to accept a crim­i­nal guilty plea for the British sub­sidiary at the cen­ter of the case. It is the most sig­nif­i­cant bank­ing unit to accept a crim­i­nal plea in the long-run­ning inves­ti­ga­tion into the manip­u­la­tion of the Lon­don inter­bank offered rate, or Libor.

    While the deals require Deutsche Bank to dis­miss cer­tain employ­ees, no one at the bank has been crim­i­nal­ly charged, though in at least one pre­vi­ous Libor case, pros­e­cu­tors charged indi­vid­u­als after reach­ing a set­tle­ment with the bank itself. “Today’s res­o­lu­tion of the Libor inves­ti­ga­tion with Deutsche Bank is in some respects the most sig­nif­i­cant one yet,” said Leslie R. Cald­well, head of the Jus­tice Department’s crim­i­nal divi­sion, which han­dled the case along with author­i­ties in Wash­ing­ton, Lon­don and New York, where the state’s finan­cial reg­u­la­tor, Ben­jamin M. Lawsky, joined a Libor set­tle­ment for the first time.

    The case spot­light­ed the col­lu­sive ele­ments of Wall Street trad­ing desks, where rival banks have occa­sion­al­ly joined forces to manip­u­late finan­cial bench­marks. It also fore­shad­ows loom­ing actions against banks sus­pect­ed of team­ing up to manip­u­late the price of for­eign cur­ren­cies, peo­ple briefed on the mat­ter said, with the Jus­tice Depart­ment plan­ning to announce guilty pleas from at least four banks — Bar­clays, JPMor­gan Chase, Cit­i­group and the Roy­al Bank of Scot­land — by next month.

    “Finan­cial mar­kets func­tion prop­er­ly only if cus­tomers and com­pet­ing banks have con­fi­dence that they are untaint­ed by fraud and col­lu­sion,” said William J. Baer, the head of the Jus­tice Department’s antitrust unit, adding that “the unprece­dent­ed size of the penal­ty” demon­strates just “how far from that bedrock prin­ci­ple Deutsche Bank and its traders strayed.”

    As the for­eign exchange nego­ti­a­tions heat up, the Libor cas­es are draw­ing to a close. In the final chap­ter of the case, the author­i­ties will con­tin­ue to scru­ti­nize three Amer­i­can banks — JPMor­gan, Cit­i­group and Bank of Amer­i­ca — though it is unclear whether those inves­ti­ga­tions will result in crim­i­nal cas­es.

    ...

    The set­tle­ment is some­thing of a mixed bag for Deutsche Bank.

    In agree­ing to the deals, the bank clos­es a sor­did chap­ter in its his­to­ry. But the terms announced on Thurs­day will be cost­ly to share­hold­ers, and could do fur­ther dam­age to the bank’s already bat­tered rep­u­ta­tion.

    “We deeply regret this mat­ter but are pleased to have resolved it,” Jür­gen Fitschen and Anshu Jain, the co-chief exec­u­tives of Deutsche Bank, said in a a state­ment on Thurs­day. “The bank accepts the find­ings of the reg­u­la­tors.”

    The size of the fine is par­tic­u­lar­ly hard to swal­low for the bank, which had hoped to pay less than $2 bil­lion, one of the peo­ple briefed on the mat­ter said. And while the deals will pro­vide some clo­sure to Deutsche Bank, they will not end the bank’s legal prob­lems. It is also ensnared in the for­eign exchange inves­ti­ga­tion. And it is sus­pect­ed of vio­lat­ing Unit­ed States sanc­tions against coun­tries like Iran.

    The size of the Libor fine, which eclipsed the $1.5 bil­lion UBS agreed to pay in 2012, reflect­ed in part the breadth of wrong­do­ing that the author­i­ties uncov­ered. The author­i­ties also denounced the bank for lax over­sight of traders and a fail­ure to respond to warn­ing signs of mis­con­duct. The bank, the author­i­ties said, also dragged its feet in pro­vid­ing infor­ma­tion, tak­ing two years to pro­vide audio record­ings request­ed by inves­ti­ga­tors and acci­den­tal­ly destroy­ing some evi­dence.

    The wrong­do­ing at Deutsche Bank last­ed from 2005 to 2011 and touched employ­ees in Lon­don, Frank­furt, New York and Tokyo, the author­i­ties said.

    “Mar­kets do not just manip­u­late them­selves,” Mr. Lawsky said in a state­ment. “It takes delib­er­ate wrong­do­ing by indi­vid­u­als.”

    Manip­u­la­tion of Libor, an aver­age of how much banks say they would pay to bor­row from one anoth­er, struck a nerve with gov­ern­ment author­i­ties. As a bench­mark for tril­lions of dol­lars in cred­it-card loans and oth­er finan­cial instru­ments, Libor is a cor­ner­stone of the finan­cial mar­ket­place.

    “Today’s action against Deutsche Bank reflects the C.F.T.C.’s unwa­ver­ing com­mit­ment to pro­tect the integri­ty of crit­i­cal, glob­al finan­cial bench­marks from prof­it-dri­ven traders,” Aitan Goel­man, the head of the trad­ing commission’s enforce­ment divi­sion, said in a state­ment.

    Besides serv­ing as a guide­post to set rates, the bench­marks are a barom­e­ter of the broad­er health of the finan­cial sys­tem. If banks are pay­ing more to bor­row from one anoth­er, it can be a sign that they are unsta­ble, a con­cern at the heart of the mes­sage in which the Deutsche Bank trad­er begged a com­peti­tor to sub­mit a low­er rate.

    Oth­er times, Deutsche Bank employ­ees would use their sub­mis­sions to push ref­er­ence rates up or down to suit their own finan­cial needs. In 2005, a Deutsche Bank trad­er con­tact­ed a col­league who was mak­ing rate sub­mis­sions, to ask, “can we have a high 6mth libor today pls?” The col­league replied, “sure dude, where wld you like it mate?”

    Inside Deutsche Bank, there was wide­spread recog­ni­tion of the prob­lem, the author­i­ties said.

    In 2009, for exam­ple, a Deutsche Bank vice pres­i­dent wrote to a trad­er that the Tokyo inter­bank rate “is a cor­rupt fix­ing and D.B. is part of it!”

    Beyond the issue of basic jus­tice, part of the rea­son the lack of banker pros­e­cu­tions in recent years is so omi­nous is that the option the pub­lic seems to gen­er­al­ly pre­fer dur­ing a major finan­cial cri­sis, just let­ting the banks implode to teach the banksters a les­son and shrink them down to size, also has the poten­tial side effect of hurt­ing a lot more than just the banksters. That’s why jail­ing. crim­i­nal bankers is such a crit­i­cal tool: it allows the pub­lic to bailout the banks, if nec­es­sary, with­out bail­ing out the the banksters in the process and slap­ping them with a ‘cost of doing busi­ness’ fine.

    Plus, it’s not like jail­ing the banksters is unprecen­dent­ed. Tick...tick...tick...tick...

    Posted by Pterrafractyl | April 23, 2015, 8:19 pm
  9. Here’s a reminder that at least the non-super-sus­pi­cious appar­ent sui­cides in the finan­cial sec­tor in recent years real­ly could eas­i­ly be sui­cides. Why? Because even if you find your­self drunk on Wall Street’s wealth and pow­er you’re still prob­a­bly mis­er­ably drunk on chron­ic sleep depri­va­tion too and have been so for a long, long time:

    The Guardian
    Gold­man Sachs restricts intern work­day to 17 hours in wake of burnout death

    The benev­o­lent firm intro­duced new work hours for sum­mer interns after Bank of Amer­i­ca Mer­rill Lynch intern died from seizure induced by all-nighters

    Rupert Neate in New York

    Wednes­day 17 June 2015 17.32 EDT

    Go home before mid­night, and don’t come back before 7am. Gold­man Sachs – one of Wall Street’s tough­est firms – has told interns they have got to work hard, but not too hard.

    The new rules, intro­duced for this summer’s crop of invest­ment bank­ing interns, have been intro­duced “to improve the over­all work expe­ri­ence of our interns”, a Gold­man Sachs spokesman said. All of its sum­mer interns across the world were informed of the new work­ing hours rule on their first day in the office ear­li­er this month.

    Wall Street’s shift to car­ing cap­i­tal­ism comes in the wake of the death of a 21-year-old Bank of Amer­i­ca Mer­rill Lynch intern who had reg­u­lar­ly pulled all-nighters in a des­per­ate bid to impress his boss­es.

    Moritz Erhardt was found dead in the show­er at his Lon­don accom­mo­da­tion after work­ing 72 hours straight. An inquest found he died of an epilep­tic seizure that could have been a trig­gered by his long work­ing hours.

    ...

    Yes, you read that cor­rect­ly: 17 hour days are sup­posed to the new kinder, gen­tler expec­ta­tions for Gold­man Sach­s’s sum­mer interns. And it does­n’t get any bet­ter from there.

    So now that Gold­man Sachs has gra­cious­ly relaxed its cul­ture of self-muti­la­tion a bit, hope­ful­ly at least some of the next gen­er­a­tion of banksters will be some­what less brain-dam­aged than the cur­rent crop. It’s progress. Not remote­ly enough progress to indi­cate any real san­i­ty or human­i­ty in Gold­man Sach­s’s lead­er­ship, but still progress.

    Posted by Pterrafractyl | June 24, 2015, 4:57 pm
  10. Regard­ing the alleged sui­cides of Deutsche Bank lawyer Calogero “Char­lie” Gam­bi­no and Deutsche Bank man­ag­er William Broeksmit, first recall Gam­bi­no’s close prox­im­i­ty to the Libor-rig­ging legal nego­ti­a­tions and note William Broeksmit’s close ties to Deutsche Bank’s recent­ly resigned for­mer co-CEO, Anshu Jain as well as Broeksmit’s name com­ing up in rela­tion to the Libor inves­ti­ga­tion and his grow­ing anx­i­ety over the var­i­ous probes fac­ing the bank.

    With that in mind, here’s an update on the inves­ti­ga­tion into the role of Deutsche Bank’s upper man­age­ment in the Libor scan­dal:

    First, note that, back in Decem­ber 2014, Ger­many’s finan­cial reg­u­la­tor, BaFin, absolved Deutsche Bank’s upper man­age­ment of any involve­ment or aware­ness of the Libor-rig­ging:

    Reuters
    Bafin exon­er­ates Deutsche Bank’s Jain in Libor probe: Han­dels­blatt
    Sun Dec 7, 2014 3:49pm EST

    FRANKFURT (Reuters) — Ger­man finan­cial watch­dog Bafin has found that Deutsche Bank co-Chief Exec­u­tive Anshu Jain was nei­ther aware nor part of pos­si­ble attempts at the Ger­man lender to manip­u­late inter­est rates, Ger­man news­pa­per Han­dels­blatt report­ed.

    After a two-year inves­ti­ga­tion, Bafin con­clud­ed there was no evi­dence the bank’s board mem­bers par­tic­i­pat­ed in or knew about any pos­si­ble inter­est rate manip­u­la­tion efforts, the Ger­man busi­ness dai­ly said, cit­ing unnamed finan­cial sources.

    Deutsche Bank and Bafin declined to com­ment on the report.

    Inves­ti­ga­tions into the pos­si­ble abuse of ref­er­ence rates such as the Lon­don inter­bank offered rate (Libor) or for­eign exchange fix­ings have dogged banks since a post-finan­cial cri­sis reg­u­la­to­ry back­lash against the sec­tor.

    Deutsche Bank said it was coop­er­at­ing with reg­u­la­tors and con­duct­ing its own probe into the pos­si­ble manip­u­la­tion of Libor, a bench­mark against which some $450 tril­lion of finan­cial prod­ucts from deriv­a­tives to home loans are priced world­wide.

    The lender has paid at least 5.6 bil­lion euros ($6.9 bil­lion) in the past two years in fines and set­tle­ments and expects to pay around 3 bil­lion euros more this year.

    Note that Deutsche Bank was fined an addi­tion­al $2.5 bil­lion from US and UK author­i­ties for its Libor-rig­ging behav­ior and that was just one of the big inves­ti­ga­tions that bank is fac­ing (although no one went to jail). We have yet to find out what the Ger­man reg­u­la­tors are going to do, but they con­clud­ed their Libor inves­ti­ga­tion in May and report­ed­ly had a harsh report in the pipeline in June. Accord­ing to peo­ple that saw the report, top man­agers top man­agers were not direct­ly impli­cat­ed, but were respon­si­ble for struc­tur­al defi­cien­cies at the lender. In oth­er words, they man­agers let the guilty low-lev­el hel­lions run wild. The bankster CEO ver­sion of “guilty”:

    Fri Jun 12, 2015 7:26pm IST
    Ger­man watch­dog’s Libor report rebukes Deutsche Bank — source
    FRANKFURT, June 12

    Ger­many’s finan­cial watch­dog Bafin heav­i­ly crit­i­cis­es Deutsche Bank in its report into attempts to manip­u­late inter-bank inter­est rates such as Libor, a per­son famil­iar with the report’s con­clu­sions said.

    The report crit­i­cis­es organ­i­sa­tion­al fail­ings and insuf­fi­cient con­trols at Ger­many’s largest lender, as well as slug­gish­ness in clear­ing up the prob­lems, the per­son said.

    Top man­agers were not direct­ly impli­cat­ed in the manip­u­la­tion of the inter­est rates, used as bench­marks for tril­lions of dol­lars in finan­cial con­tracts, but were respon­si­ble for struc­tur­al defi­cien­cies at the lender, the per­son added.

    ...

    Bafin said in May it had com­plet­ed its report and was await­ing Deutsche Bank’s response before con­sid­er­ing any nec­es­sary con­se­quences. It did not give any details of the report at that time.

    Deutsche Bank agreed in April to pay $2.5 bil­lion to U.S. and British author­i­ties for manip­u­la­tion of Libor.

    Bafin’s report also crit­i­cis­es co-chief exec­u­tive Anshu Jain, per­son­nel head Stephan Lei­th­n­er, for­mer chief exec­u­tive Josef Ack­er­mann and for­mer board mem­ber Her­mann-Josef Lam­ber­ti, the per­son famil­iar with its con­clu­sions said, echo­ing a report in Ger­man mag­a­zine Der Spiegel on Fri­day.

    ...

    Deutsche Bank has said it was “cat­e­gor­i­cal­ly false” that pres­sure from reg­u­la­tors was a fac­tor in the deci­sion announced on Sun­day by Jain and co-CEO Juer­gen Fitschen to step down ear­ly.

    “Deutsche Bank has said it was “cat­e­gor­i­cal­ly false” that pres­sure from reg­u­la­tors was a fac­tor in the deci­sion announced on Sun­day by Jain and co-CEO Juer­gen Fitschen to step down ear­ly.” LOL.

    So a not very pleas­ant report was head­ing Deutsche Bank’s way, but at least the senior man­age­ment was still large­ly absolved by Ger­many’s finan­cial reg­u­la­tors. Large­ly, but not nec­es­sar­i­ly entire­ly, since inves­ti­ga­tors are now reopen­ing the inves­ti­ga­tion, and tak­ing anoth­er look at Jain:

    Reuter
    Ger­man reg­u­la­tor says Deutsche Bank CEO Anshu Jain mis­led Bun­des­bank — FT
    FRANKFURT

    Sat Jun 27, 2015 8:35am IST

    Deutsche Bank’s co-chief exec­u­tive Anshu Jain may have “know­ing­ly made inac­cu­rate state­ments” to Ger­many’s Bun­des­bank dur­ing inves­ti­ga­tions into manip­u­la­tion of the inter-bank rate set­ting process, the Finan­cial Times report­ed online, cit­ing a con­fi­den­tial report from Ger­man reg­u­la­tor BaFin.

    BaFin declined to com­ment.

    Deutsche Bank told Reuters it dis­put­ed the alle­ga­tion that Anshu Jain mis­led the Bun­des­bank.

    Ear­li­er this month, a source told Reuters that Ger­many’s finan­cial watch­dog Bafin heav­i­ly crit­i­cised Deutsche Bank in its report inves­ti­gat­ing attempts to manip­u­late inter-bank inter­est rates such as Libor.

    The Ger­man reg­u­la­tor has been inves­ti­gat­ing Deutsche Bank and the role it played dur­ing the finan­cial cri­sis when a glob­al inter-bank lend­ing rate mech­a­nism was being manip­u­lat­ed.

    BaFin rec­om­mends that Deutsche Bank should face “spe­cial bank­ing super­vi­so­ry mea­sures” as a result, the Finan­cial Times report­ed, quot­ing the BaFin report.

    Jain, who resigned his posi­tion as CEO effec­tive June 30, is accused of hav­ing “know­ing­ly made inac­cu­rate state­ments” in a 2012 inter­view with the Ger­man cen­tral bank, the Finan­cial Times said.

    ...

    Jain is alleged to have told the cen­tral bank he had no knowl­edge of rumours of pos­si­ble rig­ging in 2008, but con­tem­po­ra­ne­ous e‑mails about a meet­ing on the sub­ject were for­ward­ed to him at the time, the Finan­cial Times said.

    Deutsche Bank on Fri­day said, “The BaFin report con­firms our find­ings that no present or for­mer mem­ber of Deutsche Bank’s Man­age­ment Board or Group Exec­u­tive Com­mit­tee instruct­ed employ­ees to manip­u­late intra-bank offered rates (IBOR) sub­mis­sions or was aware of any attempt­ed manip­u­la­tions pri­or to June 2011 when cer­tain mis­con­duct first came to light dur­ing the Bank’s inves­ti­ga­tion of this mat­ter.”

    In a state­ment, Deutsche Bank said, “Mr Jain dis­putes as base­less the alle­ga­tion that he mis­led the Bun­des­bank in his 2012 inter­view. He under­stood Bundesbank’s ques­tion about when he first learned of rumours of pos­si­ble IBOR rig­ging to mean rig­ging at Deutsche Bank itself which he learned of in 2011, not rig­ging in the mar­ket­place which was pub­licly report­ed on in 2008.”

    Deutsche fur­ther said that report also address­es con­cerns about con­trol relat­ed issues, a num­ber of which have since been rec­ti­fied and oth­ers of which the bank was still work­ing to improve.

    “As we have not yet respond­ed to the BaFin report as part of the reg­u­la­to­ry process, we believe it would be inap­pro­pri­ate to com­ment fur­ther pub­licly at this time,” Deutsche Bank said.

    From the report, the Finan­cial Times quotes BaFin’s lead bank­ing super­vi­sor who is quot­ed Frauke Menke, lead bank­ing super­vi­so­ry as say­ing, “I have been aston­ished to learn [...] that the sug­ges­tion is that the audit by BaFin sup­pos­ed­ly result­ed in clear­ing the senior man­age­ment of DB, espe­cial­ly Mr Jain, and that sup­pos­ed­ly no bank­ing super­vi­so­ry mea­sures are expect­ed,” Menke was quot­ed as say­ing in the report.

    “I express­ly want to point out that this is not cor­rect,” the Finan­cial Times said, quot­ing Menke in the report.

    So there are clear sus­pi­cions that ex-CEO Anshu Jain received some emails about the Libor-rig­ging self-declared “car­tel”. But he some­how for­got about that when chat­ting with inves­ti­ga­tors. And con­tin­ues to deny the alle­ga­tions.

    At the same time, let’s hope that BaFin’s bank­ing super­vi­sor, Frauke Menke, was gen­uine­ly “aston­ished to learn aston­ished to learn [...] that the sug­ges­tion is that the audit by BaFin sup­pos­ed­ly result­ed in clear­ing the senior man­age­ment of DB, espe­cial­ly Mr Jain, and that sup­pos­ed­ly no bank­ing super­vi­so­ry mea­sures are expect­ed,” and there isn’t a round of reg­u­la­to­ry ass-cov­er­ing going on for Ger­man reg­u­la­tors going easy on Deutsche Bank.

    Either way, at the end of the day, for a bank as big as Deutsche Bank, if it’s just a big fine, that’s not real­ly all that big of a deal since, as Deutsche Bank was remind­ed of back in April with its $2.5 bil­lion Libor fine, your bank can get one of the biggest fines in his­to­ry for rig­ging one of the key glob­al inter­est rates for the fir­m’s prof­it and no onegoes to jail. You might die sud­den­ly, from either the stress alone or with ‘assis­tance’, but you won’t go to jail.

    Bankster jus­tice is fick­le jus­tice.

    Posted by Pterrafractyl | June 29, 2015, 9:45 pm
  11. Ger­many’s finan­cial reg­u­la­tor, BaFin, wrote a scathing report about the con­duct of half a dozen cur­rent Deutsche Bank exec­u­tives in the Libor inves­ti­ga­tions, accord­ing to a con­fi­den­tial report. The accu­sa­tions includ­ed fail­ing to stop the manip­u­la­tion or telling reg­u­la­tors and gen­er­al­ly describes a bad­ly bro­ken cor­po­rate cul­ture. Fit­ting­ly, it looks like that cor­po­rate cul­ture of cor­rup­tion is going to end up being the fall guy too:

    The Wall Street Jour­nal
    Ger­many Blasts Deutsche Bank Exec­u­tives Over Cul­ture
    Con­fi­den­tial BaFin report crit­i­cizes bank for keep­ing qui­et about attempt­ed Libor manip­u­la­tion

    By David Enrich,
    Jen­ny Stras­burg and Eyk Hen­ning
    Updat­ed July 16, 2015 7:29 p.m. ET

    Ger­man reg­u­la­tors accused a half-dozen cur­rent Deutsche Bank AG exec­u­tives of fail­ing to stop or tell reg­u­la­tors about years of attempt­ed mar­ket manip­u­la­tion, accord­ing to a con­fi­den­tial report reviewed by The Wall Street Jour­nal that por­trays the Ger­man bank as suf­fer­ing from a bad­ly bro­ken cor­po­rate cul­ture.

    BaFin, the Ger­man finan­cial watch­dog, sent the report to Deutsche Bank’s man­age­ment board May 11, less than a month before the Ger­man lender unex­pect­ed­ly announced that its co-chief exec­u­tives, Anshu Jain and Jür­gen Fitschen, planned to resign. Deutsche Bank offi­cials said in June that the res­ig­na­tions weren’t the result of reg­u­la­to­ry pres­sure.

    Mr. Jain, whose res­ig­na­tion took effect June 30 and who is still employed by Deutsche Bank as a con­sul­tant, is sin­gled out for espe­cial­ly harsh crit­i­cism in the let­ter, for alleged­ly pro­vid­ing inad­e­quate lead­er­ship and fail­ing to stop manip­u­la­tion of the Lon­don inter­bank offered rate, or Libor, and oth­er mar­ket bench­marks. Mr. Fitschen isn’t crit­i­cized in the report.

    Four cur­rent mem­bers of the bank’s man­age­ment board, as well as two oth­er senior exec­u­tives, also are sharply crit­i­cized by BaFin for neg­li­gent over­sight and selec­tive or inac­cu­rate dis­clo­sures to reg­u­la­tors that were inves­ti­gat­ing mar­ket manip­u­la­tion. The let­ter was sent by BaFin’s top super­vi­sor of large banks, Frauke Menke, to Deutsche Bank’s eight-per­son com­mit­tee of top exec­u­tives. The let­ter was orig­i­nal­ly writ­ten in Ger­man; the Jour­nal reviewed a 37-page Eng­lish trans­la­tion done by rep­re­sen­ta­tives of the bank.

    The BaFin let­ter rep­re­sents an unusu­al, sweep­ing rebuke of the upper man­age­ment of one of the world’s largest banks, years after the com­pa­ny start­ed try­ing to clean up its cul­ture fol­low­ing the finan­cial cri­sis. The let­ter, por­tions of which were pre­vi­ous­ly report­ed by the Finan­cial Times, warns that Deutsche Bank poten­tial­ly faces future reg­u­la­to­ry penal­ties for the prob­lems uncov­ered. It fol­lows sting­ing crit­i­cism of Deutsche Bank’s U.S. finan­cial sys­tems by the Fed­er­al Reserve in late 2013.

    Deutsche Bank strong­ly dis­putes BaFin’s crit­i­cisms, while say­ing in a state­ment that it express­es “deep regret for the wrong­do­ing that occurred” and say­ing that the bank has improved its inter­nal pro­ce­dures. The bank said that “the report includes state­ments that are tak­en out of con­text. It would be unwar­rant­ed to infer con­clu­sions about the con­duct of the bank or any indi­vid­u­als at this stage, espe­cial­ly because their detailed respons­es are sub­mit­ted pri­vate­ly out of respect for the reg­u­la­to­ry process.” Mr. Jain “dis­putes as base­less” alle­ga­tions that he mis­led reg­u­la­tors, the bank said.

    BaFin, which has the pow­er to oust exec­u­tives and to issue writ­ten reports crit­i­ciz­ing them, but not to impose large finan­cial penal­ties, declined to com­ment on the Deutsche Bank let­ter.

    Two of the cur­rent exec­u­tives rep­ri­mand­ed in the let­ter, Gen­er­al Coun­sel Richard Walk­er and Chief Risk Offi­cer Stu­art Lewis, hold senior glob­al roles in which they are respon­si­ble for ensur­ing that Deutsche Bank com­plies with the law and avoids exces­sive risk-tak­ing that could cause loss­es or rep­u­ta­tion­al dam­age.

    BaFin accused Messrs. Walk­er and Lewis of fail­ing to take seri­ous­ly infor­ma­tion requests from U.S. reg­u­la­tors when they were inves­ti­gat­ing manip­u­la­tion of key inter­est-rate bench­marks, and it said they some­times mis­led BaFin about reg­u­la­to­ry inves­ti­ga­tions or employ­ees’ involve­ment in ques­tion­able behav­ior. The BaFin report said Mr. Lewis’s incor­rect state­ment was “not on pur­pose.”

    “It appears to me that this is a man­i­fes­ta­tion of…culture that is pos­si­bly still char­ac­ter­is­tic to your bank, i.e. to pre­fer hid­ing, cov­er­ing up or entire­ly negat­ing prob­lems instead of address­ing them open­ly and active­ly in order to pre­vent sim­i­lar issues in the future,” Ms. Menke wrote in rela­tion to Mr. Walk­er.

    A Deutsche Bank spokesman described the alle­ga­tions against Mr. Walk­er as “unfound­ed” and said he has writ­ten a detailed response to BaFin. Mr. Lewis didn’t respond to requests for com­ment. On his behalf, a spokesman referred to the bank’s state­ment.

    The com­ments are part of a “Senior Man­age­ment Review” that takes up more than half of BaFin’s report and address­es alleged short­com­ings of 11 cur­rent or for­mer Deutsche Bank exec­u­tives. The let­ter is based in part on a review con­duct­ed by account­ing and con­sult­ing firm Ernst & Young into the bank’s han­dling of the Libor inves­ti­ga­tion. Deutsche Bank paid $2.5 bil­lion in April to set­tle U.S. and British Libor-rig­ging alle­ga­tions. It admit­ted wrong­do­ing.

    Anoth­er exec­u­tive, Deutsche Bank’s Euro­pean CEO, Stephan Lei­th­n­er, is fault­ed for alleged “incor­rect attes­ta­tion” of facts relat­ed to traders’ roles in mul­ti­ple bench­mark-rig­ging inves­ti­ga­tions. Mr. Lei­th­n­er didn’t respond to requests for com­ment. Michele Fais­so­la, the bank’s head of asset and wealth man­age­ment and a long­time con­fi­dant of Mr. Jain’s, also is crit­i­cized for alleged­ly with­hold­ing infor­ma­tion from reg­u­la­tors and for “stub­born­ly main­tain­ing the sta­tus quo” of the bank’s Libor process­es, despite what BaFin says was mount­ing evi­dence of sus­pi­cious behav­ior. Mr. Fais­so­la has writ­ten to BaFin dis­put­ing the regulator’s find­ings, said a per­son famil­iar with the mat­ter.

    “The mis­con­duct for which Mr. Fais­so­la is account­able, which relates pri­mar­i­ly to the omis­sion of inves­ti­ga­tion mea­sures and the fail­ure to rem­e­dy pro­ce­dur­al defi­cien­cies, must be clas­si­fied as seri­ous,” BaFin wrote.

    The reg­u­la­tor also ques­tioned whether it is plau­si­ble that nei­ther Mr. Fais­so­la nor Mr. Jain knew about Libor-rig­ging while it was occur­ring, as the bank has claimed. “Not con­vinc­ing” was BaFin’s descrip­tion of Mr. Jain’s expla­na­tions for why the bank didn’t take action soon­er than it did to rein in prob­lem­at­ic behav­ior.

    Ste­fan Krause, Deutsche Bank’s for­mer finance chief, who remains a top exec­u­tive at the bank, is fault­ed by BaFin for alleged­ly fail­ing to address increas­ing­ly obvi­ous prob­lems at the bank and for over­see­ing inter­nal inves­ti­ga­tions that lacked rig­or or inde­pen­dence. Hen­ry Ritchotte, the bank’s chief oper­at­ing offi­cer, who also is respon­si­ble for the bank’s inter­nal tech­nol­o­gy, faces crit­i­cism for pre­sid­ing over Deutsche Bank sys­tems that allowed improp­er behav­ior to take place on a wide scale.

    The bank spokesman said Mr. Ritchotte inher­it­ed man­age­ment of many tech­nol­o­gy sys­tems when he became chief oper­at­ing offi­cer in 2012 and that he has been work­ing to upgrade them. On Mr. Krause’s behalf, a spokesman referred to the bank’s state­ment.

    The report describes extra­or­di­nary efforts by senior exec­u­tives includ­ing Mr. Jain, in some cas­es going back to 2007, to pro­tect and reward star traders despite inter­nal warn­ings that their out­size prof­its could be the result of col­lu­sion with oth­er employ­ees or banks.

    In spring 2008, after front-page Wall Street Jour­nal arti­cles raised ques­tions about Libor’s reli­a­bil­i­ty, Deutsche Bank offi­cials inter­nal­ly dis­cussed whether the bench­mark might be manip­u­lat­ed, accord­ing to BaFin. Near­ly five years lat­er, in Feb­ru­ary 2013, Mr. Lei­th­n­er sent an email to Mr. Jain and Deutsche Bank spokesman Michael Gold­en not­ing that “it would be bet­ter” if 2008 dis­cus­sions about Libor “were not men­tioned to the press because oth­er­wise the ques­tion would be raised about why nobody at DB had react­ed at that time,” accord­ing to the BaFin report.

    The Deutsche Bank spokesman said Mr. Lei­th­n­er didn’t feel that the bank need­ed to pub­licly talk about five-year-old issues in 2013.

    The report rais­es new ques­tions about the flur­ry of man­age­ment and strate­gic changes that took place in the weeks before Messrs. Jain and Fitschen hand­ed in their res­ig­na­tions.

    ...

    BaFin may not have the pow­er to issue large finan­cial penal­ties for banks in Ger­many, but that does­n’t mean the agency isn’t a source of rev­enue. Just look at the com­e­dy gold it cre­at­ed this time:

    ...
    Deutsche Bank strong­ly dis­putes BaFin’s crit­i­cisms, while say­ing in a state­ment that it express­es “deep regret for the wrong­do­ing that occurred” and say­ing that the bank has improved its inter­nal pro­ce­dures. The bank said that “the report includes state­ments that are tak­en out of con­text. It would be unwar­rant­ed to infer con­clu­sions about the con­duct of the bank or any indi­vid­u­als at this stage, espe­cial­ly because their detailed respons­es are sub­mit­ted pri­vate­ly out of respect for the reg­u­la­to­ry process.” Mr. Jain “dis­putes as base­less” alle­ga­tions that he mis­led reg­u­la­tors, the bank said.

    BaFin, which has the pow­er to oust exec­u­tives and to issue writ­ten reports crit­i­ciz­ing them, but not to impose large finan­cial penal­ties, declined to com­ment on the Deutsche Bank let­ter.

    Two of the cur­rent exec­u­tives rep­ri­mand­ed in the let­ter, Gen­er­al Coun­sel Richard Walk­er and Chief Risk Offi­cer Stu­art Lewis, hold senior glob­al roles in which they are respon­si­ble for ensur­ing that Deutsche Bank com­plies with the law and avoids exces­sive risk-tak­ing that could cause loss­es or rep­u­ta­tion­al dam­age.

    BaFin accused Messrs. Walk­er and Lewis of fail­ing to take seri­ous­ly infor­ma­tion requests from U.S. reg­u­la­tors when they were inves­ti­gat­ing manip­u­la­tion of key inter­est-rate bench­marks, and it said they some­times mis­led BaFin about reg­u­la­to­ry inves­ti­ga­tions or employ­ees’ involve­ment in ques­tion­able behav­ior. The BaFin report said Mr. Lewis’s incor­rect state­ment was “not on pur­pose.”

    “It appears to me that this is a man­i­fes­ta­tion of…culture that is pos­si­bly still char­ac­ter­is­tic to your bank, i.e. to pre­fer hid­ing, cov­er­ing up or entire­ly negat­ing prob­lems instead of address­ing them open­ly and active­ly in order to pre­vent sim­i­lar issues in the future,” Ms. Menke wrote in rela­tion to Mr. Walk­er.
    ...

    Yes, it’s very seri­ous that the Deutsche Bank exec­u­tives that would have been over­see­ing the depart­ments asso­ci­at­ed with exe­cut­ing the Libor manip­u­la­tion car­tel were mis­lead­ing US inves­ti­ga­tors. Of course, they did­n’t do it on pur­pose. They were a vic­tim of Deutsche Bank’s cul­ture!

    So did Deutsche Bank’s lead­er­ship learn its les­son? Well, yes and no: Yes, they assert, they learned their lessons and deeply regret their wrong­do­ing. But they also strong­ly dis­pute the crit­i­cisms about past wrong­do­ings and a cul­ture of cor­rup­tion. At least, they dis­pute our abil­i­ty to make any infer­ences about any of Deutsche Bank’s individuals...at this stage:

    ...
    Deutsche Bank strong­ly dis­putes BaFin’s crit­i­cisms, while say­ing in a state­ment that it express­es “deep regret for the wrong­do­ing that occurred” and say­ing that the bank has improved its inter­nal pro­ce­dures. The bank said that “the report includes state­ments that are tak­en out of con­text. It would be unwar­rant­ed to infer con­clu­sions about the con­duct of the bank or any indi­vid­u­als at this stage, espe­cial­ly because their detailed respons­es are sub­mit­ted pri­vate­ly out of respect for the reg­u­la­to­ry process.” Mr. Jain “dis­putes as base­less” alle­ga­tions that he mis­led reg­u­la­tors, the bank said.
    ...

    So, accord­ing to Deutsche Bank, it sounds like we have to wait a while before we can deter­mine whether or not Deutsche Bank’s exec­u­tives were inno­cent­ly suf­fer­ing under a cul­ture of cor­rup­tion because such con­clu­sions were based on detailed respons­es giv­en to inves­ti­ga­tors that should be kept pri­vate out of respect for the reg­u­la­tor process. And they strong­ly dis­pute that any of that cul­ture of cor­rup­tion remains. The exec­u­tives remain, for the most part, but the cul­ture of cor­rup­tion is all gone...according to the exec­u­tives.

    BaFin seems some­what less than con­vinced and since BaFin can issue large fines and pret­ty much the only thing it can do is press for pun­ish­ment for indi­vid­u­als, that basi­cal­ly means Deutsche Bank is going to get off almost entire­ly from Ger­man reg­u­la­tors with­out pun­ish­ment for the Libor rig­ging unless BaFin pun­ish­es those exec­u­tives per­son­al­lyy.

    So maybe, just maybe, a banker will actu­al­ly go to jail! Or some­thing per­son­al. After all, the mega-fines that just hit share­hold­ers and nor­mal­ly shield the exec­u­tives aren’t an option in this case! So that’s all some­thing to watch.

    And in oth­er news...

    Posted by Pterrafractyl | July 21, 2015, 9:18 am
  12. A for­mer Deutsche Bank trad­er, Tim­o­thy Pari­et­ti, report­ed­ly plead­ed guilty in a Man­hat­tan fed­er­al court back in May to con­spir­ing with oth­er bank employ­ees to manip­u­late the the Libor. A week lat­er, two oth­er Deutsche Bank traders were indict­ed by the Jus­tice Depart­ment and at least one of those indict­ed traders and not plead­ed. Whether or not Paret­ti’s guilty plea results in con­vic­tions for these oth­er two traders remains to be seen, but con­sid­er the recent med­ical his­to­ry of traders fac­ing legal scruti­ny, espe­cial­ly Deutsche Bank traders, it’s a safe bet that all three traders should prob­a­bly avoid tall build­ings for the time being:

    Reuters

    Ex-Deutsche Bank trad­er plead­ed guilty in U.S. to Libor scheme: records

    NEW YORK | By Nate Ray­mond

    Wed Jun 22, 2016 12:49pm EDT

    U.S. pros­e­cu­tors have secured a guilty plea from a sec­ond for­mer Deutsche Bank AG trad­er for con­spir­ing to manip­u­late Libor, the bench­mark inter­est rate at the cen­ter of glob­al inves­ti­ga­tions of var­i­ous banks, court records show.

    Tim­o­thy Pari­et­ti, a 50-year-old for­mer man­ag­ing direc­tor of Deutsche Bank’s New York mon­ey mar­ket deriv­a­tives trad­ing desk, plead­ed guilty on May 26 in Man­hat­tan fed­er­al court to con­spir­ing to com­mit wire fraud and bank fraud, records unsealed on Wednes­day showed.

    Accord­ing to a tran­script, Pari­et­ti admit­ted that from 2006 to 2008, he par­tic­i­pat­ed in a scheme with oth­er bank employ­ees to manip­u­late Libor so that trades he made on finan­cial instru­ments linked to the bench­mark might be more prof­itable.

    “At the time, I knew that this prac­tice was dis­hon­est. I par­tic­i­pat­ed in this dis­hon­est prac­tice and I accept respon­si­bil­i­ty for my role,” Pari­et­ti said. “I’m sor­ry for my con­duct.”

    The plea, pur­suant to a coop­er­a­tion agree­ment, was fol­lowed on June 2 by the U.S. Jus­tice Depart­ment unveil­ing an indict­ment against two oth­er for­mer Deutsche Bank traders, Matthew Con­nol­ly of New Jer­sey and Gavin Camp­bell Black of Lon­don.

    Both cas­es fol­lowed the ear­li­er guilty plea in Octo­ber of a for­mer senior trad­er at Deutsche Bank, Michael Curtler of Lon­don. The bank agreed in April 2015 to pay $2.5 bil­lion to resolve relat­ed U.S. and U.K. probes.

    Lar­ry Krantz, Pari­et­ti’s lawyer, declined com­ment, as did a spokes­woman for Deutsche Bank. A Jus­tice Depart­ment spokesman had no imme­di­ate com­ment.

    Libor is based on what banks say they believe they would pay if they bor­rowed from oth­er banks. The rate under­pins tril­lions of dol­lars of finan­cial prod­ucts glob­al­ly from mort­gages to cred­it card loans.

    U.S. and Euro­pean author­i­ties have been prob­ing whether banks attempt­ed to manip­u­late the rate to ben­e­fit their own trad­ing posi­tions.

    Those inves­ti­ga­tions have result­ed in rough­ly $9 bil­lion in sanc­tions world­wide against finan­cial insti­tu­tions, and 16 peo­ple being charged by the Jus­tice Depart­ment.

    Accord­ing to charg­ing papers, from 2005 to 2011 Pari­et­ti and oth­ers engaged in a scheme to manip­u­late Libor, which was tied to the prof­itabil­i­ty of deriv­a­tive trades in which they had a finan­cial inter­est.

    In charg­ing Con­nol­ly and Black, pros­e­cu­tors said that at least eight oth­er peo­ple, includ­ing Curtler, were involved in the scheme to sub­mit false esti­mates for some Libor rates in order to manip­u­late it.

    Con­nol­ly has plead­ed not guilty. Black­’s attor­ney has pre­vi­ous­ly declined com­ment.

    ...

    “In charg­ing Con­nol­ly and Black, pros­e­cu­tors said that at least eight oth­er peo­ple, includ­ing Curtler, were involved in the scheme to sub­mit false esti­mates for some Libor rates in order to manip­u­late it.”
    Keep in mind that pros­e­cu­tors are say­ing that the scheme includes at least either oth­er peo­ple. There could be more. Per­haps a lot more when you con­sid­er the scope of the Libor scam.

    So, yeah, Mr Pari­et­ti and the oth­er two indict­ed traders should def­i­nite­ly stay very far away from tall build­ings.

    Posted by Pterrafractyl | June 23, 2016, 1:57 pm
  13. Here is anoth­er sus­pi­cious sui­cide as a for­mer Bank­ing CEO at Danske Bank in Esto­nia asso­ci­at­ed with a mon­ey laun­der­ing scan­dal was found dead after being report­ed miss­ing.

     https://www.bloomberg.com/news/articles/2019–09-25/police-reassess-search-as-ex-danske-ceo-in-estonia-feared-dead

    Danske Bank Exec­u­tive Ensnared in Mon­ey-Laun­der­ing Scan­dal Found Dead

    By Ott Umme­las
    Sep­tem­ber 25, 2019, 3:35 AM EDT Updat­ed on Sep­tem­ber 25, 2019, 8:19 AM EDT

    Esto­nia branch Rehe over­saw until 2015 is at heart of affair
    Exec­u­tive wasn’t a sus­pect in taint­ed-mon­ey inves­ti­ga­tion

    The for­mer head of Danske Bank in Esto­nia, the unit at the cen­ter of a $220 bil­lion mon­ey-laun­der­ing scan­dal, was found dead after dis­ap­pear­ing from his home on Mon­day.

    Aivar Rehe, who was chief exec­u­tive offi­cer of the branch until he left in 2015, had been report­ed miss­ing from his home in greater Tallinn. Police had warned that the 56-year-old was a sui­cide risk.

    Rehe’s body was found near his home, the police said in a state­ment on Wednes­day. “This place had been checked ear­li­er by his fam­i­ly. The body has no signs of vio­lence, nei­ther does any­thing point to an acci­dent.” The police said no more details would be pro­vid­ed, out of cour­tesy to the fam­i­ly, and there would be no inves­ti­ga­tion into Rehe’s death.

    The case has dom­i­nat­ed Eston­ian media since the for­mer exec­u­tive dis­ap­peared. Rehe, known as a worka­holic, joined the bank a year before its 2007 takeover by Danske. He was pre­vi­ous­ly at the Eston­ian Tax and Cus­toms Board. He wasn’t a sus­pect in the laun­der­ing probe and wasn’t among a group of Eston­ian bankers detained by police last year.

    Val­do Poder, oper­a­tions chief of the North­ern Police Pre­fec­ture, told the pub­lic broad­cast­er ERR on Tues­day that Rehe’s “actions, domes­tic sit­u­a­tion, and the infor­ma­tion we have gath­ered from his fam­i­ly” all point­ed to the pos­si­bil­i­ty of sui­cide.

    In an emailed com­ment, Danske Bank said, “We are sad­dened to learn of the death of Aivar Rehe, the for­mer head of our Eston­ian branch. Our thoughts are with the fam­i­ly.”

    Felt Respon­si­ble
    In an inter­view with local media in March, Rehe said that as the CEO of the Eston­ian branch, he nat­u­ral­ly felt respon­si­ble for the affair. But he also said the unit had a “very nor­mal dai­ly” work­flow. “Com­pe­tent bod­ies inside and out­side the bank did their job to the best of their knowl­edge,” he told the Pos­timees dai­ly.

    Why Mon­ey-Laun­der­ing Case Hits Den­mark Close to Home: Quick­Take

    Danske was ordered by Estonia’s reg­u­la­tor to pull out of the coun­try ear­li­er this year and is now the tar­get of crim­i­nal inves­ti­ga­tions in Den­mark, Esto­nia and the U.S. Pre­lim­i­nary crim­i­nal charges have been brought against sev­er­al of its for­mer exec­u­tives in Den­mark, includ­ing for­mer group CEO Thomas Bor­gen.

    Danske’s dirty-mon­ey saga has impli­cat­ed oth­er banks since it burst into the head­lines last year. In the Nordic region, Swed­bank is being inves­ti­gat­ed amid alle­ga­tions it may have han­dled more than $100 bil­lion in poten­tial­ly sus­pi­cious trans­ac­tions via its Baltic oper­a­tions. A pic­ture is emerg­ing of wide­spread mis­con­duct in which sus­pi­cious funds from Rus­sia were chan­neled via Nordic banks into the West over a peri­od of sev­er­al years.
    The affair has been dis­as­trous for Danske’s share price. Last year, it lost almost 50% in mar­ket val­ue, and share­hold­ers have had to swal­low anoth­er 25% in declines so far in 2019. The bank is now fac­ing class-action law­suits from investors.

    Rehe’s most recent posi­tion was as an advis­er to Estonia’s Big­bank AS, a job he left in Novem­ber, accord­ing to Pos­timees, which cit­ed Bigbank’s super­vi­so­ry board Chair­man Parvel Pru­un­sild. The chair­man said Rehe’s exit had noth­ing to do with the Danske scan­dal.

    In his March inter­view, Rehe said that the checks and con­trols in place while he was CEO were “suf­fi­cient.” He urged the pub­lic to await the out­come of mul­ti­ple inves­ti­ga­tions into the Danske affair before draw­ing any con­clu­sions. He also said anti-mon­ey-laun­der­ing require­ments at the time “were sig­nif­i­cant­ly dif­fer­ent” from those in place today.

    — With assis­tance by Frances Schwartzkopff

    Posted by Mary Benton | September 27, 2019, 1:25 pm
  14. Anoth­er Deutsche Bank exec­u­tive just com­mit­ted sui­cide. The cause of death is hang­ing. Whether or not it’s a sui­cide or a ‘sui­cide’ is unclear at this point, but in terms of sus­pi­cious cir­cum­stances for a sui­cide it’s hard to come by a case that’s more sus­pi­cious. That’s because the now-deceased banker, Thomas Bow­ers, hap­pened to be the for­mer head of Deutsche Bank’s U.S. Pri­vate Wealth Man­age­ment divi­sion dur­ing the peri­od of time when Trump got a num­ber of con­tro­ver­sial loans from that divi­sion of the bank. Bow­ers was the direct boss of Trump’s per­son­al banker at Deutsche Bank, Rose­mary Vrablic. Accord­ing to peo­ple famil­iar with Vrablic’s con­tract, part of how Deutsche Bank lured her to the bank in 2006 was by allow­ing her to bypass a lay­er of man­age­ment and report direct­ly to Bow­ers. So Bow­ers is pre­sum­ably quite famil­iar with Trump’s finan­cial escapes, in part because it sounds like the over­sight of the U.S. Pri­vate Wealth Man­age­ment divi­sion was set up in a way to lim­it the over­sight to Bow­ers alone.

    But it gets more sus­pi­cious, because accord­ing to anoth­er source with knowl­edge of Deutsche Bank’s inter­nal struc­ture, it’s Bow­ers who would have been the gate­keep­er for the finan­cial doc­u­ments of the bank’s clients. As we’ve seen, Deutsche Bank is one of the enti­ties cur­rent­ly resist­ing sub­poe­na’s of Trump’s tax doc­u­ments. And we’re told that Bow­ers was indeed approached by fed­er­al inves­ti­ga­tors regard­ing Trump’s doc­u­ments the bank might have. That’s all part of the con­text of this ‘sui­cide’:

    Law & Crime

    For­mer Deutsche Bank Exec­u­tive Who Over­saw Trump’s Loans Dies by Sui­cide

    by Col­in Kalm­bach­er
    5:01 pm, Novem­ber 27th, 2019

    NEW YORK, NEW YORK – JULY 08: Peo­ple walk past Deutsche Bank’s Man­hat­tan head­quar­ters fol­low­ing news that the glob­al bank­ing giant will be let­ting go of thou­sands of employ­ees due to a major restruc­tur­ing at the Ger­man bank on July 08, 2019 in New York City. The bank has announced that it will reduce its work­force by 18,000 peo­ple in Asia, Europe and Amer­i­ca.

    Thomas Bow­ers, iden­ti­fied as a for­mer Deutsche Bank exec­u­tive who signed off on con­tro­ver­sial loans to Pres­i­dent Don­ald Trump, died last week after appar­ent­ly tak­ing his own life at 55.

    Accord­ing to Foren­sic News Scott Sted­man, “One source who has direct knowl­edge of the FBI’s inves­ti­ga­tion into Deutsche Bank said that fed­er­al inves­ti­ga­tors have asked about Bow­ers and doc­u­ments he might have. Anoth­er source who has knowl­edge of Deutsche Bank’s inter­nal struc­ture said that Bow­ers would have been the gate­keep­er for finan­cial doc­u­ments for the bank’s wealth­i­est cus­tomers.”

    The news of Bowers’s death was ini­tial­ly shared late Tues­day after­noon by New York Times reporter David Enrich.

    I’ve learned that Tom Bow­ers, a for­mer senior @DeutscheBank exec­u­tive, died last week at 55 in Mal­ibu, Calif. I knew him. It’s very sad.

    — David Enrich (@davidenrich) Novem­ber 26, 2019

    The Los Ange­les Coun­ty Med­ical Examiner-Coroner’s ini­tial report attrib­ut­es Bowers’s death to sui­cide by hang­ing.

    Bow­ers pre­vi­ous­ly worked as Deutsche Bank’s head of their U.S. Pri­vate Wealth Man­age­ment divi­sion.

    Accord­ing to the New York Times, Deutsche Bank “agreed in 2005 to lend Mr. Trump more than $500 mil­lion [to build a sky­scraper in Chica­go]. He per­son­al­ly guar­an­teed $40 mil­lion of it, mean­ing the bank could come after his per­son­al assets if he default­ed.”

    After that loan was extend­ed and the rela­tion­ship between Deutsche Bank and Trump was solidified–and well before it went sour in 2008 due to Trump being unable or unwill­ing to repay the first loan–banker Rose­mary Vrablic was assigned the Trump port­fo­lio.

    Vrablic’s direct boss dur­ing her rela­tion­ship with Trump was Bow­ers.

    That New York Times sto­ry notes:

    Tra­di­tion­al­ly, pri­vate bankers dis­creet­ly man­age cus­tomers’ wealth and act as high-end concierges. Ms. Vrablic, who start­ed her career as a bank teller and then worked at Cit­i­group and Bank of Amer­i­ca, did that and more. She also arranged large real estate and com­mer­cial loans for her best clients.

    To lure her, Deutsche Bank guar­an­teed that she would earn at least $3 mil­lion a year, unusu­al­ly rich terms for a pri­vate banker, and would bypass a lay­er of man­age­ment to report direct­ly to Thomas Bow­ers, the head of the Amer­i­can wealth-man­age­ment divi­sion, accord­ing to peo­ple famil­iar with her con­tract.

    Hired in 2006, Deutsche Bank lav­ished praise on Vlab­ic and anoth­er recent hire, Dominic Scalzi, who were brought on as “Man­ag­ing Direc­tors and Senior Pri­vate Bankers in [Deutsche Bank’s] US Pri­vate Wealth Man­age­ment (PWM) busi­ness.”

    “Rose­mary is wide­ly rec­og­nized as one of the top pri­vate bankers to the US ultra high-net-worth com­mu­ni­ty,” Bow­ers said in a press release at the time. “With both Rose­mary and Dominic’s exten­sive bank­ing and struc­tured lend­ing expe­ri­ence, we will fur­ther enhance our posi­tion as a lead­ing inte­grat­ed Pri­vate Bank.”

    By 2010, Trump and Deutsche Bank were on lend­ing terms again. (A law­suit between Trump and the bank over his fail­ure to repay the $500 mil­lion loan was set­tled.) Trump reached out to Vrablic via his recent­ly acquired son-in-law and her client Jared Kush­n­er.

    On Trump’s dime, Vrablic arrived in Mia­mi to inspect a prop­er­ty Trump was inter­est­ed in buy­ing: the Doral Golf Resort and Spa. The star of NBC’s The Appren­tice need­ed $100 mil­lion to make the deal.

    ...

    He want­ed an addi­tion­al $48 mil­lion to infuse into the Chica­go sky­scraper bear­ing his name. Part of that sec­ond loan would help him pay off what he owed the bank’s invest­ment bank­ing divi­sion.

    “Ms. Vrablic and Mr. Bow­ers ten­ta­tive­ly agreed to both loans,” the Times sto­ry notes–and the rela­tion­ship between Deutsche Bank and the even­tu­al 45th pres­i­dent soared after that.

    Due to Vrablic’s and Bowers’s trust in Trump, Deutsche Bank loaned Trump $170 mil­lion as he trans­mo­gri­fied the Old Post Office Build­ing in Wash­ing­ton, D.C. into what is now anoth­er Trump-brand­ed hotel.

    Trump’s ulti­mate­ly unsuc­cess­ful bil­lion dol­lar efforts to pur­chase the Buf­fa­lo Bills was also under­writ­ten by the Ger­man invest­ment firm.

    And the extend­ed Trump clan got the ben­e­fits of that long work­ing rela­tion­ship as well. Again the Times:

    Deutsche Bank lent mon­ey to Don­ald Trump Jr. for a South Car­oli­na man­u­fac­tur­ing ven­ture that would soon go bank­rupt. It pro­vid­ed a $15 mil­lion cred­it line to Mr. Kush­n­er and his moth­er, accord­ing to finan­cial doc­u­ments reviewed by The Times. The bank pre­vi­ous­ly had an infor­mal ban on busi­ness with the Kush­n­ers because Jared’s father, Charles, was a felon.

    The rela­tion­ship con­tin­ued into 2015 when an addi­tion­al $19 mil­lion loan was dis­pensed for Trump’s Doral estate. One final loan was broached in 2016–Trump need­ed mon­ey for his golf course in Scot­land. But by then Trump’s rhetoric had worn thin with Deutsche Bank’s upper ech­e­lons and their rep­u­ta­tion­al risk com­mit­tee.

    And Bow­ers was out–he joined Star­wood Cap­i­tal Group in 2015.

    ———-

    “For­mer Deutsche Bank Exec­u­tive Who Over­saw Trump’s Loans Dies by Sui­cide” by Col­in Kalm­bach­er; Law & Crime; 11/27/2019

    Accord­ing to Foren­sic News Scott Sted­man, “One source who has direct knowl­edge of the FBI’s inves­ti­ga­tion into Deutsche Bank said that fed­er­al inves­ti­ga­tors have asked about Bow­ers and doc­u­ments he might have. Anoth­er source who has knowl­edge of Deutsche Bank’s inter­nal struc­ture said that Bow­ers would have been the gate­keep­er for finan­cial doc­u­ments for the bank’s wealth­i­est cus­tomers.”

    The Deutsche Bank gate­keep­er for Trump’s doc­u­ments who was approached by fed­er­al inves­ti­ga­tors about those doc­u­ments. That’s the guy who just hap­pened to hang him­self. And this guy also hap­pened to have some sort of unusu­al direct over­sight of Trump’s per­son­al banker at Deutsche Bank, Rose­mary Vrablic, which was a con­di­tion of Vrablic’s 2006 hir­ing:

    ...
    That New York Times sto­ry notes:

    Tra­di­tion­al­ly, pri­vate bankers dis­creet­ly man­age cus­tomers’ wealth and act as high-end concierges. Ms. Vrablic, who start­ed her career as a bank teller and then worked at Cit­i­group and Bank of Amer­i­ca, did that and more. She also arranged large real estate and com­mer­cial loans for her best clients.

    To lure her, Deutsche Bank guar­an­teed that she would earn at least $3 mil­lion a year, unusu­al­ly rich terms for a pri­vate banker, and would bypass a lay­er of man­age­ment to report direct­ly to Thomas Bow­ers, the head of the Amer­i­can wealth-man­age­ment divi­sion, accord­ing to peo­ple famil­iar with her con­tract.

    Hired in 2006, Deutsche Bank lav­ished praise on Vlab­ic and anoth­er recent hire, Dominic Scalzi, who were brought on as “Man­ag­ing Direc­tors and Senior Pri­vate Bankers in [Deutsche Bank’s] US Pri­vate Wealth Man­age­ment (PWM) busi­ness.”
    ...

    So Bow­ers him­self was effec­tive­ly the per­son at Deutsche Bank’s U.S. Pri­vate Wealth Man­age­ment divi­sion who pro­vid­ed all the over­sight. And now he’s dead and can’t answer ques­tions. But as the ini­tial Foren­sic News report on his death not­ed, that does­n’t mean inves­ti­ga­tors can’t get answers to their ques­tions about Trump’s accounts at the divi­sion because Vrablic still expects to be called before Con­gress::

    Foren­sic News

    Deutsche Bank Exec­u­tive Who Signed Off On Trump Loans Kills Him­self At Age 55

    Novem­ber 27, 2019 12:03 am By Scott Sted­man

    Thomas Bow­ers, a for­mer Deutsche Bank exec­u­tive and head of the Amer­i­can wealth-man­age­ment divi­sion, killed him­self in Mal­ibu, Cal­i­for­nia, on Tues­day, Novem­ber 19th, accord­ing to the Los Ange­les coun­ty coroner’s ini­tial report.

    ...

    Bow­ers was the boss of Don­ald Trump’s banker Rose­mary Vrablic, accord­ing to a New York Times arti­cle in ear­ly 2019. Vrablic approved over $300 mil­lion dol­lars in high risk loans for Trump start­ing in 2010. Bow­ers per­son­al­ly signed off on the Deutsche Bank loan for Trump’s Doral resort, accord­ing to the New York Times report. Vrablic’s oth­er clients have includ­ed Jared Kush­n­er and Stephen M. Ross.

    Vrablic report­ed­ly attend­ed the Trump inau­gu­ra­tion in the VIP sec­tion, and expects to be called before Con­gress regard­ing Trump’s rela­tion­ship with the bank.

    Deutsche Bank and Trump have con­nec­tions going back to 1998, and over 30 years, Trump has received over $2 bil­lion dol­lars in loans from the bank.

    The Los Ange­les Coun­ty Med­ical Examiner/Coroner report­ed that Bow­ers died by sui­cide by hang­ing at his res­i­dence on the 19th.

    ...

    ———-

    “Deutsche Bank Exec­u­tive Who Signed Off On Trump Loans Kills Him­self At Age 55” by Scott Sted­man; Foren­sic News; 11/27/2019

    “Vrablic report­ed­ly attend­ed the Trump inau­gu­ra­tion in the VIP sec­tion, and expects to be called before Con­gress regard­ing Trump’s rela­tion­ship with the bank.”

    Yeah, it’s safe to say that Vrablic earned her VIP sta­tus. That could make for an inter­est­ing con­gres­sion­al tes­ti­mo­ny. But as Bow­er­s’s untime­ly death sug­gest, it’s unfor­tu­nate­ly not very safe to say what it was she actu­al­ly did for Trump. That’s all part of the con­text of the the death of Thomas Bow­ers: He was the gate­keep­er of the doc­u­ments that the pres­i­dent des­per­ate­ly wants to avoid turn­ing out and he was already approached by inves­ti­ga­tors about those doc­u­ments. And then he died.

    Oh, and let’s not for­get that one of the oth­er enti­ties resist­ing the sub­poe­na’s for Trump’s tax doc­u­ments is Trump’s account­ing firm Mazars USA, and dur­ing a recent court hear­ings over those doc­u­ments Trump’s legal team actu­al­ly argued that the pres­i­dent real­ly can shoot some­one on 5th Avenue and not be arrest­ed or stopped due to pres­i­den­tial immu­ni­ty to crim­i­nal inves­ti­ga­tions and pro­ceed­ings. So this isn’t just the sto­ry of the untime­ly death of the guy that held the finan­cial secrets of the pres­i­dent of the Unit­ed States. It’s the sto­ry of the untime­ly death of the guy that held the finan­cial secrets of the pres­i­dent of the Unit­ed States who pub­licly bragged he could shoot some­one on 5th Avenue and get away with it and then had his legal team lit­er­al­ly argued that in court in order to keep his finan­cial doc­u­ments secret. That’s also part of the con­text of Bow­er­s’s death.

    Posted by Pterrafractyl | November 28, 2019, 5:52 pm

Post a comment