Posts Tagged ‘citibank’

Citigroup Saw Warning Signs, Knew Of Madoff Fraud; Picard Suit Wants $430M In Damages

Courtesy of The Daily Bail

Source – Bloomberg

Citigroup ignored warning signs of Bernard L. Madoff’s Ponzi scheme, and a bank executive knew the con man’s stated trading strategy couldn’t generate the reported returns, the trustee liquidating Madoff’s firm said in a lawsuit.

The unidentified Citibank executive, who was responsible for making recommendations to clients on derivatives, “concluded” by June 2007 that returns reported by a Madoff feeder fund, Fairfield Sentry Ltd., couldn’t have come from the strategy, trustee Irving Picard said in a complaint unsealed yesterday. The executive reached his conclusion after meeting with analyst Harry Markopolos, a whistleblower who also alerted U.S. regulators to the fraud, Picard said.

The Citibank official later communicated with Markopolos orally and in writing, specifically discussing the fraud before the Ponzi scheme was exposed in December 2008, Picard alleged.

“Citi knew, and was on notice of, irregularities and problems concerning the trades reported by BLMIS, and strategically chose to ignore these concerns in order to continue to enrich themselves,” Picard said in the complaint, referring to Madoff’s firm, Bernard L. Madoff Investment Securities LLC.

Picard laid out in the complaint details of a lawsuit he filed under seal in December against New York-based Citigroup and other banks. He is demanding $425 million from Citigroup – money it received “in connection with” a loan to a Madoff feeder fund and a swap transaction with a Swiss hedge fund linked to a second feeder fund, Picard said.

Continue reading at Bloomberg…


We first got an inkling of Picard’s filing from this Bloomberg story in December.

Citigroup, Bank of America Sued by Madoff Trustee

Citigroup Inc.’s Citibank, Bank of America Corp.’s Merrill Lynch unit and five other banks were sued by the trustee liquidating Bernard Madoff’s firm to recover more than $1 billion for the con man’s defrauded customers.

The banks, which include Natixis SA, Fortis Prime Fund Solutions Bank (Ireland) Ltd., ABN Amro Bank NV, Nomura Bank International Plc. and Banco Bilbao Vizcaya Argentaria SA, received money through Madoff feeder funds when they knew, or should have known, that Madoff’s investments were a fraud, the trustee, Irving Picard, said yesterday in a statement.

Picard, who faces a two-year legal deadline that runs out Dec. 11, has filed hundreds of suits in the past month, seeking more than $34 billion from banks, feeder funds, investors and others alleged to have profited from Madoff’s decades-long Ponzi scheme, the biggest in…
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Wall Street Reform Could Cost Goldman Sachs BILLIONS

Wall Street Reform Could Cost Goldman Sachs BILLIONS

Courtesy of Ryan Grim and Shahien Nasiripour at The Huffington Post 

The proposed financial reforms pending before Congress could cost Goldman Sachs nearly a quarter of its annual profits, Citigroup analysts estimate in a new report.

Goldman, the most profitable securities firm on Wall Street, could lose up to $5.06 in earnings on a per-share basis if Congress passes a bill that forbids banks from trading for their own profit, owning or sponsoring hedge funds and private equity funds, and compelling them to move most of their derivatives dealing into regulated markets, according to the research note.

Combined with a potential fee to recoup taxpayer losses on TARP and higher deposit insurance assessments on its bank, Goldman could lose up to 23 percent of its profits, giving it the distinction of being the firm most impacted by the financial reform legislation.

Morgan Stanley is a close second as the team of Citi analysts, led by Keith Horowitz, estimate that it could lose up to 20 percent of its profits. Up to 18 percent of JPMorgan Chase’s profits are at risk, while Bank of America, the nation’s largest bank by assets, could see up to 16 percent of its profits evaporate.

The so-called "Volcker Rules," which would ban banks from putting their own capital at risk in hedge funds, private equity firms and through proprietary trades, and limit the growth of the largest ones, could shave four percent off the banks’ bottom lines, the Citi analysts estimate. Tighter restrictions on prop trading, which come in the form of a provision pushed by Democratic Senators Carl Levin of Michigan and Jeff Merkley of Oregon, could cost the big banks five percent of their profits.

Combined with the various other aspects of the pending legislation — like compelling banks to hold better-quality capital, making the biggest ones pay more for deposit insurance and robust regulation of heretofore unregulated derivatives — and the nation’s biggest banks could collectively lose up to 11 percent of their annual profits, the Citi analysts estimate in their Wednesday report. Goldman, Morgan, JPMorgan and Bank of America would be the most impacted.

"[O]ne of the biggest areas of risk for the group is tougher trading rules via [a] narrow definition of what constitutes banned proprietary activity," the authors noted. They were also careful to note that while their estimates required…
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Brazil Almost Bought Citibank During Crisis

Brazil Almost Bought Citibank During Crisis

BrazilCourtesy of The Shocked Investor

Newspaper O Estado de Sao Paulo reports that the Brazilian Minister of Mines and Energy, Edison Lobao, revealed today in New York that at the height of the crisis Brazil almost bought Citibank:

"We could have bought and could have had great profit, in addition to prestige," he said. The minister said the decision not to acquire the bank was made by the government as a whole.

Mr. Lobao said that before the U.S. government had bought a third of Citi, the institution sought the Brazilian authorities. He said he did not know the "fair price" which was discussed with Brazil, but, considering the size of the country’sreserves, the country could have purchased a share of the institution.

In late July, Citigroup completed the exchange of securities of $60B that made the U.S an owner of a third of the bank. All the $ 20.3B in preferred stock and hybrid securities and equity securities issued publicly by Citi were exchanged in the offer for common shares, while the federal government shifted about $39.5B of preferred stock for new bonds.


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Consumer Confidence? Ha!

Consumer Confidence? Ha!

Courtesy of Karl Denninger at The Market Ticker


Gee, this is a green shoot….

NEW YORK, Oct. 27 /PRNewswire/ — The Conference Board Consumer Confidence Index®, which had declined in September, deteriorated further in October. The Index now stands at 47.7 (1985=100), down from 53.4 in September. The Present Situation Index decreased to 20.7 from 23.0 last month. The Expectations Index declined to 65.7 from 73.7 in September.

The kicker….

 In fact, the Present Situation Index is now at its lowest reading in 26 years (Index 17.5, Feb. 1983). The short-term outlook has also grown more negative, as a greater proportion of consumers anticipate business and labor market conditions will worsen in the months ahead. Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays."

Let me guess – Citibank’s decision to jack rates to 29.9% didn’t have anything to do with that?

Neither does the gross and outrageous under-reporting of jobless rates by the government?

Neither does the incessant attempts to jack up taxes by state and local governments (instead of cutting spending back to, for example, year 2000 levels)?

Neither does the fact that the very banks who managed to play the "end of the world" card just one year ago, effectively stealing government guarantees and handouts worth some twelve trillion dollars, are now paying record-level bonuses?

Neither does the fact that Bwarney Frank and Chris Dodder are "furious" about the credit card companies rate-jacking people, but they in fact wrote the bill to allow it to happen?

Neither does the Federal Government’s outrageous and insane refusal to acknowledge that we have too much debt, including at the federal level, and you can’t fix a drunk’s problem by giving him a bottle of whiskey?

Spring Shearing Takes Place In Australia

Many people consider The American People to be "sheep."

It appears that The Sheep have watched a cadre of a dozen foxes (the billions of "campaign contributions") and five sheep holding a vote on what’s for dinner, and realized that in such a rigged game the best choice is not to play, kneecapping the foxes’ ability to feast.

Beware if your thesis of "economic recovery" requires consumers…
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Phil's Favorites

Bernanke's Balderdash


Bernanke’s Balderdash

Courtesy of David Stockman

The US and world economies are drifting inexorably into the next recession owing to the deflationary collapse of commodities, capital spending and world trade. These are the inevitable “morning after” consequence of the 20-year global credit binge which has now reached its apogee.

The apparent global boom during that period was actually a central bank driven excursion into the false economics of household borrowing to inflate consumption in the DM economies; and frenzied, uneconomic investing to inflate GDP in China and the EM.

The common denominator was falsification of financial prices. By destroying honest price discovery...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Bond Funds Have Been Borrowing to Boost Returns (Bloomberg)

For more than two decade, Bill Gross did the seemingly impossible, according to Bill Gross.

Drug that rose 5,000% hasn't come down in price (CNN)

Remember the drug used by cancer and AIDS patients that skyrocketed from $13.50 to $750 a pill? Well, the price has yet to come back to earth.

The company still has not cut the price below $750 even thoug...

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Zero Hedge

The Deep State: Source Of All Negativity

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Doug Casey via,

I’d like to address some aspects of the Greater Depression in this essay.

I’m here to tell you that the inevitable became reality in 2008. We’ve had an interlude over the last few years financed by trillions of new currency units.

However, the economic clock on the wall is reading the same time as it was in 2007, and the Black Horsemen of your worst financial nightmares are about to again crash through the doors and end the party. And this time, they won’t be riding children’s ponies, but armored Percherons.


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Kimble Charting Solutions

Free Premium Trail Offer & Free Webinar Viewing Available Now!

Courtesy of Chris Kimble.


Ryan Detrick and I produced a webinar this week, covering some new indicators we created, which we shared publicly for the first time.

We also shared two new Buy & Hold indicators we created, as well as two short-term trades, that look goo...

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Chart School

Bulls Keep Buying Into The Close

Courtesy of Declan.

Good stuff for bulls as resistance levels get ticked off on the advance. There breathing room for many indices and a chance for consolidation. Nit pickers could point to light volume, but it would be hard for buyers to be coming in here given the sequence of gains.

The Nasdaq 100 still remains tagged to resistance. Can it break tomorrow or will sellers make an appearance. All I know is yet another short trade of mine is stopped out. I should add, I haven't touched my investment account. I would be looking to buy if I had the funds available.

The S&P made a decisive push past its 50-day MA. Next resistance is up at 2,044. Tech...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Whitney Tilson On LL, EXACT, And Martin Shkreli


Whitney Tilson On LL, EXACT, And Martin Shkreli

Courtesy of Value Walk

1) The shares of one of my largest short positions (~3%), Exact Sciences, crashed by more than 46% yesterday. Below is the article I published this morning on SeekingAlpha, explaining why I think it’s still a great short and thus shorted more yesterday. Here’s a summary:

  • The U.S. Preventative Services Task Force’s Colorectal Cancer Screening Draft Recommendation issued yesterday is devastating for Exact Sciences’ only product, Cologuard.
  • I think this is the beginning of the end for the company.
  • My price target for the stock a year from now is $3, so I shorted more yes...

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Sector Detector: Searching for solid support in the face of global headwinds

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

Uncertainty about the health of the global economy led investors to flee U.S. equities during Q3, primarily driven by worries about China's growth prospects and the Federal Reserve’s decision to not raise rates. Sure, there are plenty of real and perceived headwinds, but on balance it seems that a recession here at home is not in the cards. And when you consider sentiment and the technical picture, it appears that a continuation of Friday’s bounce is in store. The question remains as to whether the seasonally strong Q4 will be able to propel the bulls through levels of resistance that have built up.

In this weekly update, I give my view o...

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Swing trading portfolio - week of October 5th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Baxter's Spinoff

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...

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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 


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Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene


The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

Thank you for you time!

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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