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Article: Citigroup Can’t Duck Trader’s Malicious Prosecution Claims

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Citigroup Can’t Duck Trader’s Malicious Prosecution Claims

Hailey Konnath, 11 March 2021

Citigroup Inc. must face a $112 million malicious prosecution suit brought by a former London-based trader who’s been acquitted on foreign exchange-rigging charges, a New York federal court ruled Thursday, finding that the trader has adequately alleged the bank knowingly fed the Justice Department false information about him.

Rohan Ramchandani, the former head of Citigroup’s European forex spot-market trading desk, was among three traders acquitted by a Manhattan federal jury in 2018. Ramchandani has accused the bank of lying to the U.S. Department of Justice to save itself during an antitrust probe into allegations that traders from several major banks colluded to affect daily benchmark rates on the forex spot markets. Continue reading “Article: Citigroup Can’t Duck Trader’s Malicious Prosecution Claims”

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Article: EMERGING MARKETS-Taiwan dollar shrugs off potential manipulation tag; other Asian FX gain

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EMERGING MARKETS-Taiwan dollar shrugs off potential manipulation tag; other Asian FX gain

Shruti Sonal, March 2021

March 11 (Reuters) – The Taiwan dollar strengthened on Thursday even as the country’s central bank warned of a potential U.S. scrutiny of its monetary policy, while other emerging Asian currencies gained as easing inflation fears and falling Treasury yields hurt the greenback.

The Taiwan dollar, among the best performing currencies in the region this year, added 0.6%. Taiwan’s central bank said it bought a net $39.1 billion to intervene in the foreign exchange market, as it stepped up efforts in November and December to “avoid serious disorder”, possibly putting the trade-dependent island in Washington’s crosshairs to be labelled a manipulator.

Most other currencies also gained as the U.S. dollar languished near one-week lows. The South Korean won climbed 0.6%, while the Thai baht added 0.4%.

However, the long-term outlook for the region’s currencies remained less than rosy.

A Reuters poll showed investors cut long bets sharply on the Chinese yuan, while turning short on most other Asian currencies, as improving prospects of economic growth in the United States and the recent rise in yields have bolstered the dollar.

Bets on the South Korean won, the Singapore dollar and the Malaysian ringgit all turned bearish for the first time since early last summer.

Most equities climbed higher, tracking gains on Wall Street overnight after benign consumer price data for February calmed inflation fears and Congress gave final approval to one of the largest economic stimulus measures in U.S. history.

The South Korean benchmark climbed over 2% after five consecutive sessions of declines, while Taiwan and Singapore added 1.6% and 0.9% respectively.

Thai shares hit their highest in nearly two months as consumer confidence increased for the first time in three months in February, bolstered by an easing coronavirus outbreak, government stimulus and the distribution of vaccines.

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Article: Mt. Gox CEO Fights Class In $400M Bitcoin Fraud Case

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Mt. Gox CEO Fights Class In $400M Bitcoin Fraud Case

Clark Mindock, 10 March 2021

The former CEO of defunct Japanese bitcoin exchange Mt. Gox doubled down on his opposition to class certification for customers of the service, saying a plan recently announced in Japan would better compensate them than U.S. litigation would.

Mark Karpeles asked an Illinois federal court Tuesday to weigh the impact of a plan created through a Japanese rehabilitation proceeding to return assets to Mt. Gox customers. The former CEO said that though the plan’s details are private, public estimates related to the Japanese plan indicate that former customers could potentially be compensated well through the deal and with much lower costs than proceeding with American litigation. Continue reading “Article: Mt. Gox CEO Fights Class In $400M Bitcoin Fraud Case”

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Article: US Can’t Seize $330M Allegedly Tied To 1MDB Fraud Scheme

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US Can’t Seize $330M Allegedly Tied To 1MDB Fraud Scheme

Caroline Simson, 10 March 2021

U.S. prosecutors came up short in their bid to seize some $330 million in assets held in escrow by Clyde & Co. that are allegedly connected to embezzled 1Malaysia Development Berhad funds when a California judge ruled that the government had not sufficiently shown how the money was tied to the alleged scheme.

U.S. District Judge Dale S. Fischer concluded on Tuesday that the government’s amended complaint filed last fall failed to show how the money — which an arbitral tribunal determined is owed to a PetroSaudi unit for drilling services provided to Venezuela’s state-owned oil company, Petróleos de Venezuela SA — was traceable to the fraud against 1MDB. Nor had the government proven that the funds were involved in a money laundering transaction, the judge found. Continue reading “Article: US Can’t Seize $330M Allegedly Tied To 1MDB Fraud Scheme”

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Article: Japan Day Trader Arrested on Market Manipulation Charges: Report

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Japan Day Trader Arrested on Market Manipulation Charges: Report

Gearoid Reidy and Shoko Oda, 10 March 2021

Toru Yamada, a Japanese retail investor who was among the most vocal trading voices on the country’s social media, was arrested in Osaka on charges of market manipulation, according to local media reports.

Yamada, better known by his Twitter account name @Tonpin1234, was arrested on Monday local time by the Osaka District Public Prosecutors Office along with another man, Hironobu Utsunomiya, for allegedly breaching the Financial Instruments and Exchange Act, the Nikkei newspaper reported.

The charges related to trades involving Jasdaq-listed company Nichidai Corp. in 2018, the report said. The two placed a large number of sell orders below the market price just before the close, seeking to artificially stabilize Nichidai’s share price with the intention of preventing it from being subject to restrictions on new margin trades, according to the reports. Shares in Nichidai had surged since the start of that year, rising more than threefold by the time of Yamada’s last filing on March 26.

On Twitter, where he was a regular presence until last June, Yamada frequently tweeted about his favored stocks, and his bets were often followed by smaller retail investors. A combative presence on social media, Yamada frequently argued with other users who accused him of manipulation.

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Article: For Telcos, There’s An Inherent Cybersecurity Risk In Just Doing Business

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For Telcos, There’s An Inherent Cybersecurity Risk In Just Doing Business

Daniel Woods, 10 March 2021

Telecommunications companies are in the crosshairs of hackers around the world, and it’s a problem that everyone should be concerned about. Nearly everyone has an account with a telco, and those accounts can be gateways into your bank accounts, investments, digital currencies and other high-value targets.

In this industry, one misstep by a skilled security team could result in millions of dollars in losses for a company and its customers, not to mention embarrassing headlines, costly fines and brand damage that could last decades. Continue reading “Article: For Telcos, There’s An Inherent Cybersecurity Risk In Just Doing Business”

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Article: GameStop, The Second Surge: Anatomy Of A ‘Gamma Swarm’

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GameStop, The Second Surge: Anatomy Of A ‘Gamma Swarm’

George Calhoun, 10 March 2021

GameStop GME -0.7% is not following the script. Despite the confident predictions by almost all the sideline observers (including myself) that the January frenzy in GME shares would end predictably, and badly… this “Stonk” has suddenly surged a second time, embarrassing the conventional wisdom once again.

When GME first erupted in January, I thought it looked like just a clever way to accelerate a conventional short squeeze. (The mechanics of a short squeeze, and the “gamma” accelerant using call options, are described in my previous column.) On that basis, I expected that it would soon deflate and “return to normal.” The battlefield would be littered with the carcasses of small investors who bought at the top. We’d hear the distant sound of champagne popping in the proud towers of Wall Street and Chicago, and the scolds in the press would treat us to another round of lectures on thrift and the Madness of Crowds.

That’s not what happened. The stock did come down as low as $38, but the deflation didn’t stick. As of this moment mid-day (March 10), GME is again trading above $300 a share. [Things are moving fast. See the Update at the end of this piece.]

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Article: Biggest Players In The Short-Selling Game Are Getting A Pass

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Biggest Players In The Short-Selling Game Are Getting A Pass

ERIK SCHATZKER, BRANDON KOCHKODIN, 10 March 2021

It’s in the air again, on Reddit, in Congress, in the C-suite: Hedge funds that get rich off short-selling are the enemy. The odd thing is, the biggest players in the game are getting a pass.

Those would be the asset managers, pension plans and sovereign wealth funds that provide the vast majority of securities used to take bearish positions. Without the likes of BlackRock Inc. and State Street Corp., the California Public Employees’ Retirement System and the Kuwait Investment Authority filling such an elemental role, investors such as Gabe Plotkin, whose Melvin Capital Management became a piñata for day traders in the GameStop Corp. saga, wouldn’t have shares to sell short.

“Anytime we short a stock, we locate a borrow,” Plotkin said Feb. 18 at the House Financial Services Committee hearing on the GameStop short squeeze.

“Anytime we short a stock, we locate a borrow,” Plotkin said Feb. 18 at the House Financial Services Committee hearing on the GameStop short squeeze.

There’s plenty to choose from. As of mid-2020, some $24 trillion of stocks and bonds were available for such borrowing, with $1.2 trillion in shares—equal to a third of all hedge-fund assets—actually out on loan, according to the International Securities Lending Association.

It’s a situation that on the surface defies logic. Given the popular belief that short sellers create unjustified losses in some stocks, why would shareholders want to supply the ammunition for attacks against their investments? The explanation is fairly straight forward: By loaning out securities for a small fee plus interest, they can generate extra income that boosts returns. That’s key in an industry where fund managers are paid to beat benchmarks and especially valuable in a world of low yields.

The trade-off is simple: For investors with large, diversified portfolios, a single stock plummeting under the weight of a short-selling campaign has little impact over the long run. And in the nearer term, the greater the number of aggregate bets against a stock—the so-called short interest—the higher the fee a lender can charge.

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Article: Banks Tweak Bond Covenant Language To Protect Against Repeat Of Citi’s $500M “Fat Finger” Loss

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Banks Tweak Bond Covenant Language To Protect Against Repeat Of Citi’s $500M “Fat Finger” Loss

TYLER DURDEN, 10 March 2021

After a court battle that dragged on for more than a year, a New York judge shocked the investment banking community last month when they ruled that a group of Revlon creditors could keep some $500MM that they refused to return to Citi after some $900MM was accidentally transferred in what appeared to be a “fat finger”.

At the time, legal experts posited that the judge’s decision, which was based on quirks in New York State law, would force investment banks to reevaluate the wording of their bond covenants in all future deals, as the ruling created new risks that needed to be addressed. Continue reading “Article: Banks Tweak Bond Covenant Language To Protect Against Repeat Of Citi’s $500M “Fat Finger” Loss”

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Article: Russian central bank blocks effort by private investors to coordinate on stocks via Telegram

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Russian central bank blocks effort by private investors to coordinate on stocks via Telegram

Alexander Marrow, 10 March 2021

MOSCOW (Reuters) – Russia’s central bank said on Wednesday it had ordered brokers to block the accounts of more than 60 private investors it suspected of coordinating in a Telegram channel to try to raise the share price of an electric utilities firm.

In a development reminiscent of lurches in U.S. video game retailer GameStop’s stock price in January, the regulator said it had detected non-market pricing on Friday in shares in MRSK Yuga, a Rosseti portfolio company.

The central bank said it had sent instructions to Sberbank, VTB, Tinkoff, Alfa Bank, Otkritie Broker, BCS and Aton to suspend deals and operations on organised trading for individual clients. Continue reading “Article: Russian central bank blocks effort by private investors to coordinate on stocks via Telegram”

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Article: Losing LIBOR in the Capital Markets — A Reprieve?

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Losing LIBOR in the Capital Markets — A Reprieve?

Dawn Holicky Pruitt, 10 March 2021

As reported in our previous alert “Losing LIBOR in the Capital Markets — Are You Ready?,” the anticipated date for discontinuation of the London Interbank Offered Rate (LIBOR) is approaching. While LIBOR is a widely used benchmark rate for U.S. dollar-denominated floating-rate debt securities and other financial products, LIBOR was the subject of widespread market manipulation and ineffective regulation. In 2017, the Chief Executive of the United Kingdom Financial Conduct Authority (FCA) announced its intention to stop persuading or compelling banks to submit rates for the calculation of LIBOR to its administrator after 2021. This announcement strengthened the objective of the Alternative Reference Rates Committee (ARRC), a committee convened by U.S. regulators to identify LIBOR alternatives in the U.S. market.

While market participants were warned that LIBOR may cease to exist after 2021, the ICE Benchmark Administration Limited (IBA), as the administrator of LIBOR, recently announced the results of a November 2020 consultation regarding the upcoming discontinuation. Although certain lesser-utilized U.S. dollar-denominated LIBOR tenors will cease to be published after December 31, 2021, the IBA announced it will continue publishing widely used tenors (such as one-month LIBOR and three-month LIBOR) until June 30, 2023. The FCA’s support for the extension provides confidence regarding the ongoing representativeness of the continuing U.S. dollar-denominated LIBOR tenors until June 30, 2023.

The extension of widely used U.S. dollar-denominated LIBOR tenors provides issuers of LIBOR-linked debt securities with additional time to prepare for LIBOR discontinuance. In particular, the extension may, in many cases, allow for a natural end to LIBOR-linked debt securities through maturation or the exercise by issuers of redemption rights.

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Article: Luckin Coffee Investors Work Toward Stock Suit Settlement

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Luckin Coffee Investors Work Toward Stock Suit Settlement

Dean Seal, 08 March 2021

Luckin Coffee and a proposed class of its investors told a New York federal judge that they are working toward a potential resolution of claims that the Chinese coffee chain used “sham transactions” to fake hundreds of millions of dollars in sales.

The parties received approval on Friday from U.S. District Judge John P. Cronan for certification of a settlement class of investors who acquired Luckin securities between its initial public offering in May 2019 and July 2020, when a Cayman Islands court appointed joint provisional liquidators to oversee Luckin’s operations and negotiate with its creditors. Continue reading “Article: Luckin Coffee Investors Work Toward Stock Suit Settlement”

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Article: China cracks down on fraud and tries to clean up image with Luckin probe

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China cracks down on fraud and tries to clean up image with Luckin probe

Evelyn Cheng, 25 February 2021

In a period fraught with tensions with the U.S., China is trying to show it’s being serious about tackling fraud. Nasdaq-listed Luckin Coffee said Monday it was cooperating with regulators, following reports of government investigation into the company over recently disclosed financial fraud.

The rare crackdown comes after an update to China’s securities law took effect in March. A new clause said the Chinese government will take legal action against overseas securities issuance and trading activity that hurts domestic investors. Continue reading “Article: China cracks down on fraud and tries to clean up image with Luckin probe”

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Article: Millions vanish into crypto world in high-yield bond scam

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Millions vanish into crypto world in high-yield bond scam

Michael Roddan and Jonathan Shapiro, 08 March 2021

Sophisticated British criminals exploited vulnerabilities in Australia’s search engine and cryptocurrency infrastructure to dupe small investors, lured by the promise of high-yield funds badged by some of the finance world’s most trusted brands.

The complex scheme involved stolen identities and fraudulent prospectuses that claimed to represent high-yield investment funds run by global managers Citibank, Nomura, and IFM Investors. It has ensnared millions from unsuspecting victims who sought better returns as interest rates collapsed during the COVID-19 crisis. Continue reading “Article: Millions vanish into crypto world in high-yield bond scam”