Posted Aug 6, 2012 by Martin Armstrong
The 4 year silver probe into manipulation will be dropped according the FT. Did anyone really expect a different outcome?
Both Congress & the Regulators will never EVER investigate the banks. So get real! As long as government need them to sell their debt, they will never expose the fact that there is ever any manipulation of markets. That would also reveal that the regulators are corrupt. It took the British to expose the LIBOR manipulations. The USA will never do that. The Solomon Brothers manipulation of the US Treasury Auctions in 1991. That was before the NY Banks did a reverse takeover of government led by Goldman Sachs’ Robert Rubin the first to become Secretary of Treasury. Once that took place in 1995-99, the banks were free to do as they please not to mention Glass-Steagall was repealed by Clinton.
Just look at the track record of Salomon that became Salomon Smith Barney and then Citigroup Global Markets in 1998.
The scandals and frauds in which the various arms of Salomon was involved prior to the 1998 merger to form Citigroup is amazing.
There was the Maxwell Scandal London 1991 where Maxwell fell off his boat and supposedly drowned. His firm lost hundreds of millions of pounds involved in attempts to manipulate markets that turned bad. The British report eventually investigating this pointed out Salmon brothers involvement.
Then there was the famous US Bond Rigging scandal of 1991. They were rigging and price fixing at government bond auctions over a 10 year period. Now we find European banks have been doing that in LIBOR and the head of Barclays was American from this same culture. Salomon brothers were the ring leaders and they were widely followed with their analyst Henry Kaufman. They even took the othetr side of trades when Henry would move the market on a comment. They of course blamed staff. Others that were involved included most other top NY banks. Yes, Citicorp was included in the investigation. There were 9 lawsuits filed against Salomonby investors seeking damages. The other primary dealers alleged to have been involved included Merrill Lynch, First Boston, and of course Goldman Sachs.
The Independent (London) September 7, 1991
In 1992, there was the broker scandal where they were hired to cheat customers. This involved the biggest investment houses including Smith Barney. The inquiry following exposure of brokerage practices in the LA Times. This was an early precursor to the massive scandal which erupted 10 years later. The SEC began a probe of how firms were cheating small investors. (see LA Times, August 3, 1992)
Then there was the Municipal Bonds scandal of 1994. Mr. Lissack, of Smith Barney, filed a Qui Tam action to blow the whistle in regard to industry wide fraud in the “$1.2 trillion municipal bond market”. Smith Barney played a major part in this. He himself participated in that fraud while working for them. He paid a $30,000 fine for his part but received over US $35 million as his share of the US $250 million fine paid by the companies. Smith Barney paid $40 million, the largest individual fine. The NY firms paid $120 million fine. (see New York Times April 6, 2000).
Then there was the Securities fraud price fixing, conspiracy 1994-99. There were 31 banks involved in this large fraud scandal involving price fixing and other collusive practices. An academic study claimed that patterns of trading suggested “tacit collusion” between market participants. The reports indicated 3 phases. A justice department settlement in 1996 which included regulatory changes, a US $1 billion civil settlement in 1997, and a SEC settlement in January 1999. There were complaints that the civil settlement was too low because so many millions of investors lost money.
While the frauds have continued, in truth, once Rubin became Secretary of the Treasury, no other firms were targeted to be shut down as was the case with Salomon Brothers. Thereafter,they pay fines only, small at that, and are never criminally prosecuted. This is just the way things go down in New York – i.e. MF Global.