Cocky & Arrogant Traders Allegedly Brag That They Manipulate The Market (smoking gun?)

[naaman fletcher]

The New York Post reports that a trader who recently accused JPMorgan of attempting to manipulate the gold and silver markets, had his car rammed in London last weekend. The police used helicopters to catch the fleeing driver, who absconded on foot.
Andrew Maguire is a metal trader at the London Bullion Market Association. He and his wife were hospitalised following the accident, as a car came out of a side street and smashed into their vehicle. They have made a full recovery.

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On February 3 Maguire gave two days' warning by e-mail to Eliud Ramirez, a senior investigator for the CFTC's Enforcement Division, that the precious metals would be attacked upon the release of the non-farm payroll data on February 5. On February 5, as market events played out exactly as predicted, further e-mails were sent to Ramirez while the manipulation was in progress.

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http://news.hereisthecity.com/news/business_news/10293.cntns

much more at the link

[WhiteTara]

1. wow. I hope someone in justice picks up on that.

[unc70]

2. Manipulation is SOP. Implications far beyond JPMorgan

This goes far beyond normal manipulation of markets and has implications that are dangerous to even contemplate. First a little background:

Manipulation is standard operating procedures for all the financial markets. The market insiders, usually the owners and operators of the exchanges (e.g. NYSE market makers) are also the main "regulators" of the markets, the brokers with supposed fiduciary obligations to their clients, the rule makers, and often the largest participants in the markets -- all this while able to "trade" on their own accounts. Think of it as "insider trading" without all those laws that apply to ordinary investors (suckers, most of us).

The central myth of economics, that an items value is the one set by the buyer and seller, each with all (the same) information. The only time that happens is when children divide and share a piece of cake using the "one cuts, the other chooses" rule.

In the past, the insiders set things up so they are profitable in obvious ways, charging their customers fees for stock trades, local governments for issuing school bonds, etc. They made greater amounts from trading in advance of their ordinary clients, placing prized IPO shares with friends, and short-selling shares of brokerage clients for huge gains while destroying the value of the shares of these same clients and often the companies these shares represent.

Peeling back the book of positions of others in the market using bid ask, then during a thin market overwhelming and then moving the markets -- everyday activities. Same for short-selling and then spreading rumors or planting "news" stories to drive down prices, both for immediate gain and possibly for a hostile takeover.

This was always a dangerous place to be, but somewhat constrained by most of those involved being personally at risk through partnership and direct liability. Incorporation of the investment banking and financial markets got rid of the that risk of personal ruin. Relaxing the rules and enforcement on selling stocks, bonds, commodities, or anthing else which you did not own or controlon a one-for-one basis (naked shorts or sales), meant that nothing was real and everyone was now at risk, even those insiders who had thought they controlled things.

Electronic markets with worldwide reach completely screwed up the insiders game in previously private "clubs".

Without making some enquiries, I can only speculate about what is really going on. I find it strange that the whistleblower trader in London could be as naive as he is portrayed in this and other articles. JPM through its acquisition of Bear Stearnes has a huge number of "naked futures" in silver (and other things) and has almost no real silver to deliver in satisfaction of these contracts. Being able to deliver the real silver to contract holders is the foundation of the commodity futures markets everywhere. While settlement of contracts with cash instead of the silver might satisfy speculators, buyers with real needs for silver have to be satisfied to avoid destroing the commodity and futures markets.

It appears that JPM might be walking down the market price for silver as part of its efforts to unwind contracts while delivering "real" silver to buyers who were just hedging future needs. I suspect that this is in concert with Fed and Treasury market inverventions is tightly related market areas, spot and futures: the dollar, stock markets, silver and gold, oil, FX.

Ordinary citizens, companies, local and state governments, and everyone else is little more than collateral damage to those at the top directing strategies. The traders implementing these strategies are typically young males taught the skills needed for their role in the mission, worked long hours, and motivated by ego stroking, perks, and expectaions of finacial and other rewards. By the time they might realize the damage and destruction they caused, they are already burned out and replaced by new recruits. (Much like young soldiers)

Those at the top use justifications like market valuation, economic stability, more options for consumers, competition, efficiency, or a some delusional economic theory to justify their looting, plundering, and destruction -- little different from those in the past: bringing civilization to the savages, manifest destination, God's will, divine right, predestination, inferior race, weaker sex, defending democracy.

Sorry for the long rant, but I see us rapidly approaching the economic equivalent of "duck and cover", where I first realized the adults in charge who talked of how to survive a nuclear first strike and such were either lying to us or were delusionally insane. Great.

The rapid introduction of computerized trading systems executing transactions too rapidly for human intervention, connect through a worldwide network with only the illusion of security providing about the same protection of your school desk 50 years ago.

PYHBYL and KYAG