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‘Smart Money Knows That Crypto Is Not Ready’; Spoofing Trial Updates

Apr 2, 2019

First Read

US v. Jitesh Thakkar: An Exercise in Justice
Thom Thompson – John Lothian News

April 1, 2019 was the first day in the criminal trial U.S. v Thakkar, in which the government charges that Jitesh Thakkar aided and abetted spoofing in a manipulative and deceptive scheme carried out by another person. It is a serious allegation and everyone is taking it seriously. There are four prosecuting and three defending attorneys. If things run as scheduled, yesterday was just the first of a half-dozen or so days of testimony and arguments as the Federal Government endeavors to right the wrongs perpetrated by Jitesh Thakkar, president of Edge Financial Technologies, a software development firm that programs applications for the trading industry.

To read the rest of this commentary, go here.


Commentary: No Joking Matter
Chuck Mackie – Medium

There may be some cruel irony in the fact that the trial of Jitesh Thakkar commenced on April Fools Day, but I’m pretty sure he’s not laughing. Given the gravity of the charges brought against him and the sheer weight that the U.S. government is bringing to bear on him in a Federal courtroom in Chicago, he shouldn’t be. This is serious stuff.

Thakkar is being charged with spoofing of futures markets based upon software that his firm, Edge Financial, created for the notorious “flash crash trader,” Navinder Sarao. Sarao is a London-based futures trader who was arrested in April 2015 and charged with 22 counts, including one for wire fraud, ten for commodities fraud, 10 for commodities price manipulation and one for spoofing. Sarao pleaded guilty to two counts?ó?wire fraud and spoofing?ó?in November 2016, paying the government over $12 million and facing up to 30 years in prison. He was allowed to remain free, however, as he agreed to cooperate with prosecutors in exchange for a possible reduction in his sentence. His testimony against Thakkar is part of that deal.

To read the rest of Chuck’s commentary, go here.


Hits & Takes
JLN Staff

Trading Technologies’ latest attempt at humor on April Fool’s Day features a video about “live sounds” being added to the X_Trader platform. The in-house produced video takes some time to get to the funny parts, but is delivered by a straight faced and mellow Rick Lane, TT’s CEO.~JJL

The JLN Team occasionally had a hard time yesterday deciphering between legitimate stories and the April Fool’s jokes scattered around the internet. Who knew a vegetable burger from Burger King was a real thing? It even took some time for the team to react to the new Scout Crackers being sold by the BSA in various disgusting flavors.~JJL

FIA released a nice photo album of the Boca Raton conference. ~SD

NFA is seeking a Business Continuity Disaster Recovery (BC/DR) Specialist to join their IT team in Chicago. This role will assist in developing, maintaining and implementing BC/DR plans according to guidelines, pertinent standards and frameworks, industry best-practices and applicable laws and regulations. Apply HERE.~JJL

Cboe’s Bryan Harkins and his wife Melissa Harkins received the Spirit Award from the Autism Science Foundation and the Cboe is a Diamond sponsor of the Annual Wall Street Rides FAR bike event in support of the foundation. Congratulations to the Harkins on the good work.~JJL

Odd sentence but it’s true ó Dow joins the Dow today.~SD


Walt Lukken on the Power of Markets and the FIA’s Agenda
In this video from JLN’s Industry Leader Series, FIA President and CEO Walt Lukken talks about the power of markets and the FIA’s regulatory focuses in 2019.
Watch the video »


Slack Chooses NYSE for Direct Listing; Slack follows Spotify in choosing the exchange, IPO method
Corrie Driebusch and Maureen Farrell – WSJ
Slack Technologies Inc. has selected the New York Stock Exchange for the direct listing of its shares, the second time a major company has picked the exchange to host its unorthodox initial public offering.

*****JLN’s favorite chat app.~JJL


A New Bank for Crypto Traders Has Opened in Puerto Rico
Anna Baydakova – Coindesk
San Juan Mercantile Bank & Trust International (SJMBT), a new Puerto Rico-based institution catering to traders of cryptocurrency, has opened for business. Announced Monday, SJMBT has accepted its first client deposit. Licensed last month as an international financial entity (IFE) by Puerto Rico’s Office of the Commission of Financial Institutions (OCIF), the bank is a unit of Mercantile Global Holdings (MGH), which also owns San Juan Mercantile Exchange (SJMX), a soon-to-be-launched “institutional-grade electronic trading platform for digital assets.”

*****Bo Collins said at FIA’s Boca conference that there was tremendous interest in the bank from other exchanges.~JJL


Monday’s Top Three
Our top read story was Wired’s Futures Aren’t Just for Juice. They’re for Truck Routes, Too about the new freight futures contracts from Freightwaves, listed on Nodal Exchange. It’s also another story that leans on the 30-plus year old movie Trading Places. Second was the FT’s Hedge fund fee model morphs from ‘two and 20’ to ‘one or 30’. Third was Bloomberg’s Wall Street Embraces Weather Risk in New Era of Storms, Drought


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Lead Stories

Amid Bitcoin Uncertainty, ‘the Smart Money Knows That Crypto Is Not Ready’
Nathaniel Popper – NY Times
Paul Chou was among the many Bitcoin aficionados who thought big Wall Street institutions were about to become heavy hitters in the cryptocurrency markets. Mr. Chou came from one of those institutions, Goldman Sachs, and created a cryptocurrency exchange, LedgerX, that would cater to big investors with sophisticated financial contracts.

City stock exchanges under pressure to alter no-deal Brexit plans; The likes of Cboe, Aquis and Turquoise plan to shift trading in EU27 stocks to the continent
By Samuel Agini – Financial News
London’s stock exchanges are under pressure to put their no-deal Brexit plans on hold, amid rising regulatory and political concerns that billions of euros in trading could be about to flood out of the City.

March sees Eurex well on track: Eurex Exchange up by 5 percent
Eurex Exchange, Europe’s largest derivatives exchange and part of Deutsche Bˆrse Group, has continued its upward trend in March. The number of traded contracts reached 203.3 million compared to 194.1 million in March 2018. This is an increase of 5 percent.

Clash on Brexit share trading rules could see further UK-EU regulatory divergence
Charles Gubert – The Trade
Up until about a week ago, most financial institutions felt UK and EU regulators had done an impeccable job minimising the risks facing the industry should there be a no deal Brexit. For instance, the Financial Conduct Authority (FCA) announced in 2018 that it would set up a temporary permissions regime (TPR) enabling EEA investment firms to continue passporting into the UK for a limited period under a no deal outcome, thereby curtailing disruption.

Barclays duo sentenced to jail for Euribor conspiracy; Former bankers given multi-year terms over conspiracy to submit false rates
Barney Thompson – FT
Two former Barclays employees have been sent to jail for their roles in the Euribor rate-rigging conspiracy. Carlo Palombo, a 40-year-old former trader at the bank, was sentenced to four years’ imprisonment on Monday while 62-year-old Colin Bermingham, who worked as a senior rate submitter, was given five years.

Flash Trade Spoofer Says Computer Whiz Made His Crime Easier
Bloomberg Law
Programmer’s software was made to break the law, U.S. says; System used by Flash Crash trader delayed his bogus CME orders
A Chicago programmer is on trial over software he developed that prosecutors say had only one purpose: to manipulate markets with bogus orders. It’s a significant expansion of the U.S. crackdown on spoofing because Jitesh Thakkar never actually placed such trades.

Wall Street Is Getting Cut Out of Bond Market It Long Dominated
Matthew Leising – Bloomberg
Investors slowly embrace electronic corporate bond trading; All-to-all trading is a clear sign of moves to come in market
The banks that have stood in the middle of the corporate bond market for decades are increasingly getting pushed aside.

The World Federation of Exchanges & Oliver Wyman launch ‘The Future Of Clearing’ report
The WFE Communications Team
The World Federation of Exchanges today published a joint report with Oliver Wyman examining the post-crisis developments that have shaped the current clearing landscape, along with forward-looking recommendations on how to build the CCP of the future.

Spoofing or wire fraud? DOJ fires back at industry criticism of charging decision
Lene Powell – Wolters Kluwer
In a strongly worded response to recent industry amicus briefs, the Department of Justice defended its decision to charge two defendants with conspiracy to commit wire fraud rather than spoofing for alleged illegal trading in the precious metals markets. According to the DOJ, the wire fraud charges are valid, the amicus briefs suffer from factual and legal distortions, and the groups are motivated by “undisclosed legal, monetary, and reputational interests” (U.S. v. Vorley, March 26, 2019).

Euronext updates on Oslo B¯rs VPS acquisition; Euronext has received the declaration of non objection from its College of Regulators for the contemplated acquisition of up to 100% of the capital of Oslo B¯rs VPS
Euronext, the leading pan-European exchange, announced today it has received the declaration of non objection from its College of Regulators for the contemplated acquisition of up to 100% of the capital of Oslo B¯rs VPS. This approval further improves the certainty of execution of Euronext’s acquisition of Oslo B¯rs VPS by meeting one of the condition precedents of Euronext’s Offer, available on www.euronext.com1.

U.K. Brexit Crisis Deepens, Parliament Rejects All Other Options
Tim Ross and Robert Hutton – Bloomberg
The U.K.’s deadlocked Parliament failed to agree on a new blueprint for Brexit, rejecting all the options that were put forward to replace Theresa May’s unpopular deal.
On Monday the House of Commons voted on four different policies but none of them won a majority, pushing Britain’s messy divorce from the European Union deeper into crisis. The pound fell.

Yale Alum, 21, Accused of Running Hedge Fund Scam by SEC
Matt Robinson – Bloomberg
Omar Zaki lied about returns and assets, U.S. regulator says; Zaki will pay $25,000 fine and agrees to bar from industry
This is one college side hustle a recent Yale grad might be regretting.
Omar Zaki, 21, ran a hedge fund while enrolled at the Ivy League university, saying his firm relied on an algorithm that had produced eye-popping returns over a 10-year period, according to the Securities and Exchange Commission. That would make him roughly 11 years old when trading got started.

Euribor rate-rigging trial delivers the Serious Fraud Office a much-needed win
Alexandra Rogers – City A.M.
The convictions of two former Barclays bankers in the Serious Fraud Office’s long and protracted probe into Euribor manipulation will inject a new sense of purpose into an agency weary from a string of defeats and climbdowns.

A Key to the Arctic’s Oil Riches Lies Hidden in Ohio; The findings of a test well drilled in Alaska three decades ago have been a closely guarded secret. We found answers in a Cleveland courthouse.
Steve Eder and Henry Fountain – NY Times
Working through two winters in the biting Arctic cold, roustabouts bored three miles deep into the coastal plain of northeast Alaska in search of oil. In the spring of 1986, they packed up and left, uttering not a word about what they had found and leaving only a short section of steel pipe to mark the spot.

BlackRock Launches Sweeping Overhaul in Bid to Boost Growth; Wall Street giant installs new leaders at key division, reorganizes sales staff and shifts roles for directors
Dawn Lim – WSJ
BlackRock Inc. is undertaking its most sweeping organizational overhaul in a decade as the Wall Street behemoth wrestles with how to keep its empire growing.

Exchanges, OTC and Clearing

OCC Cleared Contract Volume Down Seven Percent in March
OCC, the world’s largest equity derivatives clearing organization, announced today that total cleared contract volume in March reached 411,838,353 contracts, a 7.0 percent decline compared to last March. OCC’s year-to-date average daily cleared contract volume is 19,482,998, down 15.1 percent compared to 2018’s record-breaking pace.

LCH ForexClear posts two margin breaches in Q4 2018
Alessandro Aimone – Risk.net
LCH ForexClear reported two initial margin breaches averaging $13.9 million in size in the last three months of 2018, ending a spotless record stretching back six quarters.

IEX – March 2019 update
Matt Hurd – Meanderful
The InvestorS-exChange (IEX) remains dark and expensive.

University of Maryland Finance Professor Albert Kyle to Receive CME Group-MSRI Prize in Innovative Quantitative Applications
CME Group
CME Group, the world’s leading and most diverse derivatives marketplace, and the Mathematical Sciences Research Institute (MSRI) announced its eleventh Innovative Quantitative Applications Prize recipient. Albert Kyle, Charles E. Smith Chair Professor of Finance at the University of Maryland is the 2018 CME Group-MSRI Prize winner for his work in market microstructure. A ceremony honoring Kyle will take place at the Chicago Cultural Center on Monday, April 8, at 9:30 a.m. CT.

Third-Best March In MGEX History
MGEX, a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO), reports March 2019 as the third-best March in MGEX history with a total volume of 163,316 contracts traded.

HKEX: Risk Management Arrangements In Respect Of The Ching Ming Festival And Easter Holidays
The Traded Options Market will be closed for business on 5 April 2019 and from 19 April to 22 April 2019 respectively.

Capital Markets Division Leadership
London Stock Exchange Group
London Stock Exchange Group (“LSEG”, “the Group”) today announces that Raffaele Jerusalmi, Group Director of Capital Markets, LSEG and CEO, Borsa Italiana, has informed the Group of his intention to step down as Group Director of Capital Markets by the end of 2019.

Toronto Stock Exchange and TSX Venture Exchange Head to South America; Canada’s premier equity exchanges advance global growth strategy by expanding presence in the region
Canada’s leading equity markets, Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV), today announced a South American listings roadshow set to kick-off this week with stops in Peru and Brazil. The Exchanges will focus on strengthening established relationships with the South American business community and exploring new opportunities as part of their international growth strategy.

The Spanish Exchange traded EUR34.68 bn. in March
The Spanish Exchange traded 34.68 billion euros in Equities in March, 7.2% more than in February and down 29.6% from the same month in 2018. The number of trades stood at 3.1 million, up 12.5% from the previous month and 17.8% less than in March 2018.


Financial services compliance run by AI
Gurpreet Narwan – The Times
Compliance in the financial services industry could be overseen by artificial intelligence, with the Bank of England developing computer programs to make reporting more accurate and efficient.

Edinburgh fintech Nucleus hails growth in volatile markets
Hannah Burley – Scotsman.com
Nucleus Financial Group has hailed a strong full-year performance in “volatile” market conditions in its first period of trading on London’s junior market.

Goldman Sachs backs retirement technology platform Vestwell
Elizabeth Dilts – Reuters
Vestwell Holdings Inc, a tech platform for retirement plans, said on Tuesday it raised $30 million from Goldman Sachs Group Inc, Point72 Ventures and the Bank of New York Mellon Corp.

Credit Suisse launches algo trading platform in China; Joint venture Credit Suisse Founder Securities will provide access to the bank’s Advanced Execution Services algo trading suite.
Hayley McDowell – The Trade
Credit Suisse has expanded access to its next generation algorithmic trading platform by launching the service in China through a partnership with its joint venture, Credit Suisse Founder Securities (CSFS).

News: Broadway Technology Acquires Barracuda FX, Bolsters Senior FX Team
Bill Hodgson – The OTC Space
Broadway Technology, a leading provider of high-performance fixed income and foreign exchange solutions, today announced it has acquired 100% of Barracuda FX, a global provider of FX order management technology. With this acquisition, Broadway will continue to expand its product suite and deliver its multi-asset solutions across more parts of the investment lifecycle while allowing clients to automate additional workflows.


San Juan Mercantile Bank & Trust International Commences Banking Operations in Support of Digital Asset Trading
The San Juan Mercantile Bank & Trust International (SJMBT) announced today that it has received its first client deposit and commenced operations, following the bank’s receipt last month of its license to operate from Puerto Rico’s Office of the Commission of Financial Institutions (OCIF). SJMBT offers fiat and digital asset custody and settlement services, and it is expected to be integrated with the trading platforms offered by its affiliate, the San Juan Mercantile Exchange (SJMX). Together, SJMX and SJMBT will provide an integrated end-to-end solution for institutional customers seeking a familiar, efficient and secure way to trade digital currencies.

Bitcoin soars 20 percent, mystery buyer seen as catalyst
Tom Wilson, Tommy Wilkes – Reuters
Bitcoin burst to its highest level in almost five months on Tuesday, sending smaller cryptocurrencies up, with analysts ascribing the move to a major order by an anonymous buyer that triggered a frenzy of computer-driven trading.

Bitcoin’s Sudden Surge Propels It Above $5,000
Eric Lam – Bloomberg
Sharp jump in virtual currencies ends months of calm; Traders struggle to pinpoint reasons for the advance
An abrupt surge in Bitcoin sent the world’s most popular cryptocurrency to the highest level since November, jolting the $160 billion market for digital assets after three months of calm.

Crypto Lenders Push No-Tax Perk of Leveraging Bitcoin for Cash
Lynnley Browning – Bloomberg
Alchemy of turning virtual money into cold hard cash risky; Tax break lures cash-strapped borrowers into ‘Wild West’ world
Former Wall Street trader Edgar Fernandez used some of his Bitcoin as collateral to borrow nearly $100,000, a move that let him keep his cryptocurrency and avert a tax bill on the newly acquired cash.

XRP Exchange-Traded Product Goes Live on Swiss SIX Exchange
Yogita Khatri – Coindesk
An exchange-traded product (ETP) tracking the price of the XRP cryptocurrency has gone live on Switzerland’s primary stock exchange SIX.

Alt Season? Over 100 Crypto Assets Outperform Bitcoin in Q1 Surge
Sam Ouimet – Coindesk
The first quarter of 2019 was a breath of fresh air for the cryptocurrency market, having recorded its first quarterly increase in overall network valuations since the fourth quarter of 2017.

A CryptoKitties founding employee on why she thinks the concept will ultimately land on its feet; What happened to CryptoKitties? One of its veteran employees shares why the quirk could be a model for the future
Isabel Woodford – The Block Crypto
It’s the game that cemented crypto’s place in the public domain. But since hitting headlines in 2017, the CryptoKitties obsession has waned, a victim of the same cycle as many other digital “have-beens”.

Finally, a cracking use-case for bitcoin
Jemima Kelly – FT
Those who say bitcoin is completely useless are completely wrong. It does have a value: it allows people to pay for things on the internet that either the buyer or the seller ó or both ó don’t want other people to know about. That’s why bitcoin was the currency of choice for people buying drugs, arms and other illicit things on places like AlphaBay and Hansa, the dark-web marketplaces, which were both shut down in 2017.

Pakistan Introducing Regulations, Licensing Scheme for Crypto Firms
Yogita Khatri – Coindesk
Pakistan is putting in place regulations for the cryptocurrency industry. The Express Tribune, citing finance ministry sources, reported Monday that the nation’s federal government has decided to bring in Electronic Money Institutions (EMIs) regulations following recommendations from the Financial Action Task Force (FATF).


Erdogan’s election setback sparks investor uncertainty about Turkey’s lira, financial markets
Anneken Tappe – MarketWatch
Turkish President Recep Tayyip Erdogan suffered a blow in local weekend elections, setting the stage for more near-term uncertainty for investors, according to ABN Amro.
Erdogan’s People’s Alliance, comprising the AKP (Justice and Development Party) and MHP, (Nationalist Movement Party), lost control of Ankara, Istanbul and Izmir ó Turkey’s three largest cities in terms of population and economic clout.

Shell to quit U.S. refining lobby over climate disagreement
Ron Bousso – Reuters
Royal Dutch Shell on Tuesday became the first major oil and gas company to announce plans to leave a leading U.S. refining lobby due to disagreement on climate policies.

Malaysia hits out at US and China behaviour in trade war; Trade minister urges countries to ‘stop thinking of themselves’ as tension hits other countries
James Politi and Stefania Palma – FT
Malaysia’s trade minister made a blunt appeal for the US and China to feel a greater sense of “global responsibility” and “stop thinking only of themselves” as they try to reach an agreement to end their bitter trade war.

Tariff War Will Hammer Global Trade Growth This Year, WTO Says
Bryce Baschuk – Bloomberg
World trade to continue downward trend in 2019, 2020, WTO says; Trade body cites trade tensions, rising economic uncertainty
The World Trade Organization slashed its global trade growth projection for 2019 to the lowest level in three years, citing the impact of rising commercial tensions and tariffs.


Federal Court Finds Former Precious Metals CEO Robert Escobio in Contempt of Court for Failure to Pay Restitution to Defrauded Customers
The U.S. Commodity Futures Trading Commission (CFTC) announced today that on March 18, 2019, District Judge James Lawrence King of the U.S. District Court for the Southern District of Florida entered an order finding Coral Gables, Florida resident Robert Escobio in contempt (“Contempt Order”) for failing to pay more than $1.5 million in previously-ordered restitution to defrauded customers of Mr. Escobio’s now-defunct precious metals firm, Southern Trust Metals, Inc.

FCA warns against Mayfair Wealth Management clone firm
Valentina Kirilova – Leaprate
The UK Financial Conduct Authority (FCA) has put out details of the cloned firm Mayfair Wealth Management. Fraudsters are using the details of firms, authorised by the FCA, to try to convince people that they work for a genuine, authorised firm.

Are You Prepared for Your Financial Future? Use the SEC’s Investor Preparedness Checklist to Find Out; Chairman Jay Clayton Breaks Down Investment Basics in New Video Series
Are you prepared for your financial future? That’s the question the Securities and Exchange Commission’s Office of Investor Education and Advocacy (OIEA) is asking investors. To help investors get started with creating their own saving and investing plan, OIEA developed an investor preparedness checklist to empower them.

FINRA Foundation and ALA Announce 50 Public Libraries to Host Thinking Money for Kids Traveling Exhibition
To kickoff April as Financial Literacy Month, the FINRA Investor Education Foundation (FINRA Foundation) and the American Library Association (ALA) today announced the selection of 50 U.S. public libraries to be part of a national tour of the traveling exhibition, Thinking Money for Kids.

OTC Transparency Data Issue
Currently, some ATS firm data is being displayed under multiple names, but for the same MPID. This is due to a mid-reporting period name change. FINRA is currently updating the display requirements to reflect only the Name associated with the MPID at the start of the reporting period. When the fix has been implemented and the historical data has been updated, FINRA will issue another Technical Notice providing an update. In the interim, users can take the total of the two MPIDs to arrive at the correct total for the Firm data. For example:

US extends StanChart deferred prosecution agreement
Kadhim Shubber – FT
Standard Chartered appears to be nearing a resolution with the US Department of Justice over alleged sanctions violations after it agreed a short extension to a 2012 deferred prosecution agreement.

City watchdog ordered to probe London Capital & Finance collapse; Treasury tells FCA to appoint independent reviewer of firm’s £236m failure
Barney Thompson – FT
The UK Financial Conduct Authority has been ordered to appoint an independent reviewer to investigate the regulatory failings exposed by the collapse of London Capital & Finance.

Ex-Barclays Euribor Traders Jailed for as Long as Five Years
Will Mathis – Bloomberg
Former traders Colin Bermingham and Carlo Palombo sentenced; Ex-Barclays Euribor Traders Jailed for as Long as Five Years
Two former Barclays Plc traders convicted of manipulating a benchmark interest rate were sentenced to as much as five years in prison by a London judge who warned those still working in the finance industry that misdeeds would bring jail time.

CFTC Commissioner Stump to Participate in a Fireside Chat at the 13th Annual Capital Markets Summit: The New World of Finance

Investing and Trading

U.S. disaster aid won’t cover crops drowned by Midwest floods
Tom Polansek – Reuters
The Black Hawk military helicopter flew over Iowa, giving a senior U.S. agriculture official and U.S. senator an eyeful of the flood damage below, where yellow corn from ruptured metal silos spilled out into the muddy water.

Central Banks Are Thinking Greener as Climate Change Hits Policy
Jana Randow and Piotr Skolimowski – Bloomberg
Monetary authorities are studying how to handle changes; Financial risks and economic trouble could emerge, they worry
Climate change is increasingly affecting the world’s central banks and their monetary policies.

13% of the world’s companies are ‘zombies.’ That’s not healthy
Matt Egan and Julia Horowitz – CNN Business
Easy money: The past decade of ultra-low interest rates has spawned the rise of “zombie” companies. These debt-laden firms don’t make enough to even cover their interest payments. That’s never a good sign.

AQR’s Revamped Risk-Parity Fund Notches Record Quarterly Return
Luke Kawa – Bloomberg
Rebranded flagship fund jumped 9.6% as stocks, bonds rallied; Strong start to 2019 comes after walloping at end of last year
The “everything rally” that greeted investors to start 2019 delivered a record quarter for AQR Capital Management’s flagship fund.

Advisers warned to steer clear of insistent clients
Maria Espadinha – FT Adviser
Financial advisers should refuse to deal with insistent clients, as they won’t have a lot of protection if their cases reach the Financial Ombudsman Service, experts have warned


US Equity Payments for Order Flow: Up 42% for 2018
Alphacution Research Conservatory
Let’s have the numbers do the talking on this one.

Goldman Sachs made 220 million reporting errors over a decade, UK regulator says; Goldman Sachs is taking the expression “everyone makes mistakes” to an entirely new level.
Matt Egan – CNN Business
Goldman Sachs is taking the expression “everyone makes mistakes” to an entirely new level. A UK regulator fined Goldman Sachs on Thursday for making 220.2 million transaction reporting errors between November 2007 and March 2017.

Swedbank, Wells Fargo and Metro: all look too good to be true; Departures mark fall from grace of banks revered as models for post-crisis banking
Patrick Jenkins – FT
It has become a ritual in banking since the financial crisis. Install a star banker as chief executive, wait a few years and then watch them implode.

Deutsche-Commerzbank merger, Nordic money laundering and Wells Fargo’s departing CEO
Patrick Jenkins and guests discuss the latest twists of the Deutsche-Commerzbank merger plan, the spiralling Swedbank money laundering scandal and why Wells Fargo’s chief executive had to go. With special guest Graham Barrow, an independent financial crime expert.

Ex-Banque Pictet Employee Faces Probe Into Missing Millions
Hugo Miller – Bloomberg
Person accused of stealing from bank, not Pictet clients; Prosecutors investigate ex-employee for fraud, breach of trust
Geneva prosecutors are investigating a former back-office employee of Banque Pictet over allegations the person stole millions of dollars from Switzerland’s biggest privately-owned bank.


Investors Hold Back on Saudi Stock Bets
Rory Jones – WSJ
Foreign investors are treating Saudi Arabia’s stock market with caution following its addition to two major indexes, reflecting concern over a government campaign to pump up company values that accelerated after Jamal Khashoggi’s murder.

Singapore tables far-reaching bill against fake news; Draft legislation would allow government to publish ‘corrections’ to claims it deems false
Stefania Palma – FT
Singapore has published far-reaching draft legislation to tackle fake news, leaving human rights groups and technology companies, including Facebook, worried about the broad sway it could grant the government.

Malaysia Fund Loses $800 Million in Value Over Three Days
Abhishek Vishnoi – Bloomberg
The troubles are adding up for IHH Healthcare Bhd., wiping almost $800 million from its market value over three days. A whipsawing Turkish lira, a major shareholder cutting its stake, and continued uncertainty over a plan to buy Fortis Healthcare Ltd. have led IHH to fall 6.6 percent over three days while the benchmark index was largely flat. The stock fell as much as 6.1 percent on Tuesday, the most since Aug. 13, pushing its 14-day relative strength index into oversold territory for the first time since November.

Saudi Shares Overtake Turkey as Destination for U.S.-Based Funds
Filipe Pacheco – Bloomberg
ETFs trading in New York track stocks in Riyadh and Istanbul; Total assets for Saudi fund surpass that of Turkish peer
The amount of money that U.S.-based investors are pouring into Saudi Arabian equities has overtaken flows into Turkish stocks, a sign of the contrasting recent fortunes of the two markets.

Denmark Warns That Money Launderers Now Threaten Smaller Banks
Frances Schwartzkopff – Bloomberg
Denmark’s financial watchdog is warning that smaller banks need to be on high alert for signs of money laundering as larger lenders tighten their surveillance systems.

London Banker Didn’t Suffer Race Discrimination, U.K. Judge Says
Kaye Wiggins – Bloomberg
Daniel Smith wins partial victory against United Overseas Bank; Judge describes lawsuit as a ‘murky factual situation’
A former banker at United Overseas Bank Ltd. lost a racial discrimination claim at a London employment tribunal, but did get a partial victory as the judge said the lender unfairly dismissed him.

Swiss Banks Should Face More Finma Inspections, IMF Says
Jan Dahinten and Hugo Miller – Bloomberg
IMF advisor Paul Mathieu rebukes Finma approach to regulation; Mathieu say banks’ auditors may lead to conflict of interest
Switzerland’s financial regulator should step up its on-site inspections of the country’s biggest banks, the International Monetary Fund said, in a rebuke to Finma’s approach to regulating the Swiss multi-trillion dollar financial industry.

Beer Stocks Are Among Turkey’s Biggest Winners in Erdogan’s Loss
Taylan Bilgic -Bloomberg
Preliminary tally shows opposition won in Ankara and Istanbul; Anadolu Efes had been trailing the benchmark index’s advance
It’s the one corner of Turkey’s markets that’s celebrating the return of secularists to power: brewer stocks.


U.K. Lawmakers Again Fail to Plot Brexit Course; Lawmakers considered four versions of future EU ties other than May’s deal, but none found a majority
Max Colchester and Stephen Fidler – WSJ
The House of Commons failed for a second time to find a majority for any alternative to the deal British Prime Minister Theresa May negotiated with the European Union, deepening the uncertainty over Brexit less than two weeks before Britain is scheduled to leave the bloc.

Barnier warns no-deal Brexit is becoming increasingly likely; EU chief negotiator says ‘strong justification’ is needed from UK for a long extension
Jim Brunsden – FT
Michel Barnier, the EU’s chief Brexit negotiator, has warned that a no-deal outcome “becomes day after day more likely” as he said that a “strong justification” would be needed from the UK for a long extension of the exit process.

Brexit Much Less Scary Than Baltics for Biggest Bank in Sweden
Hanna Hoikkala – Bloomberg
As Nordic banks reel from Baltic money laundering, one lender escaped taint by looking the other way, to the U.K. — and remains undaunted by Brexit.

Goldman Sees a ‘Big Finish’ for Brexit, Opportunity in the Pound
Gregor Stuart Hunter and Shery Ahn – Bloomberg
Britain’s pound presents the biggest opportunity within developed-market currencies with a probable break-the-Brexit logjam moment coming soon, according to Goldman Sachs Group Inc.


Ken Griffin Goes Zen and Makes His Mark on Shed at Hudson Yards
Amanda L Gordon – Bloomberg
Theater at new cultural venue on west side will bear his name; Guests at Founders Dinner learned about the gift Sunday night
Citadel founder Ken Griffin said the firm’s new offices at 425 Park Ave. will be designed to be a “tranquil” and “zen” environment to help people “be calm and focus and make good decisions.”

NYC Brokers Relieved as Mansion Tax Replaces a Pied-a-Terre Levy
Prashant Gopal, Sydney Maki and Henry Goldman – Bloomberg
One-time payment is preferable to once-a-year tax, brokers say; Rate would top out at 4.15% on home purchases over $25 million
For New York City’s luxury real estate brokers, a new mansion tax certainly isn’t welcome news, but it’s better than the alternative.

John Lothian Newsletter

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Past Newsletters

Facebook Token Runs Into Instant Political Opposition in Europe

[the_ad_group id="5822"] Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffJustin Llewellyn-Jones, chief operating officer and global head of derivatives at Fidessa/ION, announced he is leaving at the end of the month. Justin is one...

Facebook Plans Global Financial System Based on Cryptocurrency

[the_ad_group id="5822"] Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffThe FT has an entire series of articles on "Libra: Facebook's digital currency."~JJLI will not be heading to Asia this fall after all. I declined the...

10 EU Countries OK Financial Transaction Tax Revenue-Sharing Plan

[the_ad_group id="5822"] Get a FREE 90 day trial of John Lothian Newsletter First ReadHits & TakesJLN StaffSidley partner David R. Sawyier passed away on June 10 after a battle with cancer. He founded the firm's private investment funds practice in their Chicago...

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