Courtesy of Pam Martens.
The last 30 days have been pretty much the summer from hell for the Obama administration’s efforts to shore up confidence that its policing of Wall Street is producing results.
Still under multiple investigations for rigging the interest rate benchmark known as Libor, we learned late last month that Wall Street’s largest firms have also gained effective control of the London Metal Exchange and are causing financial damage to the economy by hoarding aluminum in metal warehouses. On top of that, JPMorgan recently paid a $410 million fine for rigging electricity markets in California and the Midwest while two of JPMorgan’s traders were just criminally indicted for their role in the infamous London Whale matter where $6.2 billion of bank deposits were lost in a wild trading scheme.
Certainly no slouch, Goldman Sachs is holding up its end in the busting of public confidence in U.S. financial markets. One of its former salesmen, Fabrice Tourre, was found guilty earlier this month of six counts of securities fraud, including one count of aiding and abetting Goldman Sachs in the fraud. That matter is known as ABACUS and involved the hedge fund titan, John Paulson, plotting with Goldman Sachs to create a bundled pool of assets designed to fail so that he could make $1 billion betting against it. The SEC allowed Goldman Sachs to avoid trial by paying $550 million to settle charges. Paulson was not charged.
And, of course, Goldman Sachs figures prominently in the ongoing Senate investigation of the potential rigging of physical commodity prices by Wall Street.
Against that backdrop comes the news yesterday that another “computer glitch” befell the stock market in the opening minutes of trading. The problem has now been traced to Goldman Sachs. The “official” story making the rounds is that a computer at Goldman Sachs incorrectly sent indications of interest as confirmed trades to three options exchanges. Later this morning, the exchanges are expected to announce how many trades will have to be busted as a result of that “computer glitch.”
To understand our skepticism on these ongoing trading malfunctions, we’ve listed some relevant background articles below.
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