Article: Analysis: A currency manipulator tag for Switzerland may not deter FX approach

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Analysis: A currency manipulator tag for Switzerland may not deter FX approach

Saikat Chatterjee, John Revill and David Lawder, 16 December 2020

LONDON/ZURICH/WASHINGTON (Reuters) – The threat of being named a currency manipulator by the U.S. Treasury may be an embarrassment for Switzerland, but even if the country does get the tag, it likely will have little effect on the Swiss National Bank’s monetary policy.

Switzerland is expected to meet all three criteria for such designation in the long-overdue U.S. Treasury report on the foreign currency practices of major trading partners. The Treasury has some discretion on whether to issue such a label, and the coronavirus pandemic, which has thrown trade and capital flows into chaos this year, could be a factor.

There would be no automatic punishment with a label, though U.S. law requires Washington to demand negotiations with designated countries.

Vietnam, Thailand and Taiwan this year have also been in violation https://www.cfr.org/article/tracking-currency-manipulation of the Treasury’s three manipulation criteria: a $20 billion-plus bilateral trade surplus with the United States, foreign currency intervention exceeding 2% of GDP and a global current account surplus exceeding 2% of GDP.

Currency experts expect Treasury Secretary Steven Mnuchin to issue the report within days, just over a month before he leaves office.

“The subtle implication of being put on this list is that you eventually could come under sanctions, and that puts pressure on these countries not to weaken their currencies so much, or to allow strengthening,” said Win Thin, global head of Currency Strategy at BBH.

But he said that in Switzerland’s case, as the exchange rate is its main tool for fighting deflation, “they may say, ‘Well, tough’”.

The Swiss central bank is firmly under the Treasury’s focus after spending 90 billion Swiss francs ($101.50 billion) on foreign currency intervention in the first half of 2020 amid pandemic-driven safe-haven inflows.

The SNB has long argued it is not trying to weaken the franc to gain a trade advantage. Instead, it aims only to stem the appreciation of its currency to head off the threat of deflation, which runs contrary to its goal of price stability.

“Switzerland has always been treated as a special case when it comes to exchange rate policy and even the U.S. Treasury has conceded in the past that Switzerland’s economic situation is “distinctive” and that its monetary policy options are limited by its small stock of domestic assets,” said David Oxley, a senior European economist at Capital Economics.

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Article: Steve Cohen gets subpoena in US insider trading probe

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Steve Cohen gets subpoena in US insider trading probe

Steve Cohen has received a subpoena to testify before a grand jury in a federal insider trading investigation at his hedge fund, SAC Capital Advisers. Steve Cohen’s subpoena puzzles defense lawyers.

The decision by U.S. prosecutors to compel Steven A. Cohen to testify before a federal grand jury about allegations of insider trading at his $15 billion hedge fund is leaving many criminal defense lawyers scratching their heads.

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Article: Heist of the century: Wall Street’s role in the financial crisis

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Heist of the century: Wall Street’s role in the financial crisis

Charles Ferguson, 20 May 2012

Bernard L Madoff ran the biggest Ponzi scheme in history, operating it for 30 years and causing cash losses of $19.5bn. Shortly after the scheme collapsed and Madoff confessed in 2008, evidence began to surface that for years, major banks had suspected he was a fraud. None of them reported their suspicions to the authorities, and several banks decided to make money from him without, of course, risking any of their own funds. Theories about his fraud varied. Some thought he might have access to insider information. But quite a few thought he was running a Ponzi scheme. Goldman Sachs executives paid a visit to Madoff to see if they should recommend him to clients. A partner later recalled: “Madoff refused to let them do any due diligence on the funds and when asked about the firm’s investment strategy they couldn’t understand it. Goldman not only blacklisted Madoff in the asset management division but banned its brokerage from trading with the firm too.” Continue reading “Article: Heist of the century: Wall Street’s role in the financial crisis”

Article: SEC to limit shorting of Fannie, Freddie, brokers

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SEC to limit shorting of Fannie, Freddie, brokers

SAN FRANCISCO (MarketWatch) — The Securities and Exchange Commission said Tuesday that it will try to limit so-called “naked” short selling of shares in Fannie Mae, Freddie Mac and big brokerage firms.

The SEC will issue an emergency order stating that all short sales of shares in these companies will be subject to a “pre-borrow” requirement, said Christopher Cox, chairman of the SEC. This will last for 30 days, he said. The SEC is also planning more rule-making focused on short selling in the broader market, Cox said.

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