Courtesy of Pam Martens
On July 18 of last year, the U.S. Department of Justice indicted two Merrill Lynch precious metals traders, Edward Bases and John Pacilio, charging them each with one count of conspiracy to commit wire fraud affecting a financial institution and one count of commodities fraud each. Pacilio was further charged with five counts of spoofing. (Spoofing is where a trader uses a high-speed computer to issue a rapid barrage of buy or sell orders, with no intention of executing the trades, in order to mislead the market and gain an advantage for his own position in the market.)
On Tuesday of this week, a unit of Merrill Lynch was given a deferred prosecution agreement in the same matter by the Justice Department in exchange for an agreement to cooperate. Merrill also agreed to pay a measly $25 million in fines and disgorgement. (The amount of the fine and disgorgement is like a fly on the backside of an elephant. The parent of Merrill Lynch, Bank of America, had profits of $7.3 billion in just the first quarter of this year.)
Merrill’s promise to “cooperate” is also looking quite specious.
The Justice Department said it had obtained an agreement from Merrill and its parent, Bank of America, to “cooperate with the government’s ongoing investigation of individuals and to report to the Department evidence or allegations of violations of the wire fraud statute, securities and commodities fraud statute, and anti-spoofing provision of the Commodity Exchange Act in BAC’s Global Markets’ Commodities Business…”
The General Counsel of Global Banking, Global Markets and International at Bank of America Merrill Lynch is William C. Caccamise, who is also the Chairman Elect at the Wall Street trade association known as SIFMA. The Board of SIFMA includes representation from pretty much every mega bank on Wall Street – including the ones that are serially charged with market manipulations like Citigroup, Goldman Sachs and Deutsche Bank.
While Merrill is promising to “cooperate” with the Justice Department, SIFMA, along with the Bank Policy Institute and the Chamber of Commerce of the United States, has filed an Amicus (Friend of the Court brief) asking the Federal District Court in Illinois that is hearing the cases against the two indicted Merrill traders, Bases and Pacilio, to throw out the wire fraud charges.
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