Monthly Archives: November 2012

Comment from  Is this the kind of foreign policy we are willing to accept.  Remember, soon after Obama took office in 2009, he promptly flew down to Venezuela to give a bro hug to Hugo Chavez and gladly accept a signed copy of Chavez’s book?  UNREAL!  Now, concerning the events in Benghazi, it is clear that the C.I.A. knew all along that it was a terrorist attack and not a flash-mob.  Then we must explain the words of the president, his U.N. ambassador and his secretary of state — all endlessly repeated with supporting theatrics.  Basically, the Obama administration knew it could count on a friendly media that is loath to expose anything that might undermine its preferred foreign policy narrative.  After Benghazi, the administration is confident of ‘running out the clock’ until the election, stonewalling legislative inquiries and sequestering those few media outlets actually trying to probe the Libya story.

Full-Article below from the

Bottom line first: Ever since the Benghazi attack, President Obama and his advisers have lied through their teeth to avoid awakening the slumbering American electorate. They have been assisted throughout by a media establishment intent on supporting the president’s re-election while maintaining its usual charade of objectivity — the great oxymoron of our time.

My career encompassed that oxymoron as well as an even earlier one, military intelligence. So I watched in amazement as only the Fox News Channel seemed intent on unraveling an extraordinarily thin cover story. A flash-mob that got out of hand over a provocative YouTube video? But with mortars and automatic weapons, a coordinated assault that killed an American ambassador and three bodyguards? I felt like Carrie Mathison, the Claire Danes character in the Showtime series “Homeland,” constantly asking “Are you serious?” Yet President Obama, from the Rose Garden to the United Nations rostrum, kept repeating the flash-mob story until the second cover story was trotted out: Our intelligence community was working diligently to uncover the truth and go after attackers — a thrilling re-run of “Osama and the Seals,” coming soon to a theater near you!

But this week I received subtle warnings from old friends still in that beleaguered intelligence community. They expressed great irritation with Fox News, undoubtedly because of political motivations. But they were most offended by the idea that the spooks had done nothing. They suggested that the attack on Benghazi was like Mogadishu, the epic Somali battle that left a hundred American Rangers killed or wounded. They warned darkly of some “push-back” against the version of events gradually emerging from determined Fox reporters like Catherine Herridge.

Well, today that push-back surfaced as The New York Times and other papers reported background briefings from un-named C.I.A. officials. As Eric Schmitt wrote, “Thursday’s briefing for reporters was intended to refute reports, including one by Fox News last Friday, that the C.I.A.’s chain of command had blocked the officers on the ground from responding to the mission’s calls for help.” The New York Times account was not a headline — appearing on page 4. Neither its reporter not those anonymous C.I.A. officials used the word “inoperative,” as the Nixon White House used to do when Watergate cover stories were unraveling.

Yet in Benghazi-gate as well as Watergate, earlier lies were shed as smoothly as snakeskins. So the C.I.A. knew all along that it was a terrorist attack and not a flash-mob? Okay, then how do you explain the words of the president, his U.N. ambassador and his secretary of state — all endlessly repeated with supporting theatrics? If high officials from the Pentagon, the State Department and the West Wing knew the truth — that this was actually 9/11.2 — then how do you explain either of the administration’s mutually inconsistent cover stories? And why was the U.S. four-star general responsible for North Africa suddenly and mysteriously relieved of command after Benghazi?

Actually, you cannot explain any of these things unless you also account for the hear-see-report-no-evil approach of the media establishment. The Obama administration knew it could count on a friendly media that is loath to expose anything that might undermine its preferred foreign policy narrative. After Benghazi, the administration was understandably confident of running out the clock until the election, stonewalling legislative inquiries and sequestering those few media outlets actually trying to probe the Libya story.
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Comment from  Another day, more financial douchebaggery.  The Federal Energy Regulatory Commission (FERC) is going to town on financial institutions that in any way manipulated the energy markets.  Barclays is alleged to have run a very active scheme of “manipulating physical electricity prices at a loss in order to make profits in related positions in the swaps market, a strategy known as a ‘loss-leader”.  Barclays bank documents show that energy traders “bragged about how they would ‘crap on’ certain markets to profit in other ones.”  Nice touch guys.

Article below from the Huffington Post:

U.S. regulators threatened to fine Barclays roughly $470 million to settle allegations that the bank and four traders manipulated California electricity markets, reviving the specter of a sector-wide crackdown on energy trading.

It could possibly be the biggest penalty ever levied by the Federal Energy Regulatory Commission (FERC), and potentially exceeds the fine Barclays paid over the Libor bid-rigging scandal that cost Chief Executive Robert Diamond his job.

The bank has 30 days to show why it should not be penalized for an alleged scheme of manipulating physical electricity prices at a loss in order to make profits in related positions in the swaps market, a strategy known as a “loss-leader”.

British bank Barclays said it would fight the agency, likely setting up a landmark legal battle that could set a precedent over whether the once-common trading ploy in commodity markets is illegal or simply ill-advised.

It will have huge implications across the market, as the FERC – – w hich won expanded powers to tackle manipulation in 2005 after the California power trading scandal and related Enron meltdown — pur sues similar investigations against companies including BP and Deutsche Bank.

The FERC also said four of the company’s power traders — Daniel Brin, Scott Connelly, Karen Levine, and Ryan Smith — have 30 days to show why they should not be assessed a total of $18 million in civil penalties.

It said their activity accounted for nearly a quarter of all trading in the next-day power market during the period, accruing gains of an estimated $34.9 million. Bank documents showed how the traders bragged about how they would “crap on” certain markets to profit in other ones, the order shows.

Barclays “strongly disagreed” with the order, which it said was “by nature a one-sided document, and does not reflect a balanced and full description of the facts.”

“We believe that our trading was legitimate and in compliance with applicable law,” Barclays spokesman Mark Lane said in an email. “We have cooperated fully with the FERC investigation, which relates to trading activity that occurred several years ago. We intend to vigorously defend this matter.”

The four traders left Barclays over the past five years for reasons unrelated to the investigation, according to a source familiar with the matter. The bank closed its Portland office in 2011 and effectively quit the Western power market this year.

It is the latest blow for Barclays, which has fired staff, clawed back pay and taken other disciplinary action after being fined $450 million by U.S. and British regulators over Libor.

New CEO Antony Jenkins, who took over at the end of July, is in the middle of a review to change the bank’s culture and lift profitability. The changes are due to be unveiled in February.

Earlier on Wednesday, Barclays announced that the U.S. Department of Justice and the Securities and Exchange Commission were investigating whether it was complying with U.S. laws in its ties with third parties who help it win or retain business.

The FERC order is tantamount to an indictment, suggesting the issue may go to court after settlement talks were unsuccessful, said Craig Pirrong, a University of Houston professor and expert in energy trade regulation.


The order threatens to stir up memories of the California power crisis, but the allegations involve a far more subtle trading strategy that industry veterans say had been common in global markets: using loss-making trades in benchmark physical commodity markets in order to profit from derivatives positions.

The “loss leader” gambit had until recently been viewed as outside the bounds of regulators, whose purview typically covered either physical markets or derivatives, but rarely both. Although the practice has diminished greatly in recent years as regulators get tougher, many veterans fear that old deals could come back to haunt them.

As well as the return of $34.9 million gains plus interest, the commission is also seeking a $435 million civil penalty.

“Scary stuff,” said one senior executive at a trading firm. “Which I guess is the point.”

The FERC first flexed its muscles earlier this year with a record $245 million settlement with power company Constellation Energy over similar allegations. Other agencies pursued larger fines against power merchants after the California debacle.

“FERC is getting tougher,” said Pirrong. He cautioned that there are “factual and conceptual challenges” in proving manipulation in court, but that isn’t stopping the agency.

“It is going to town on this theory of manipulation, and I would wager that any firm that traded both physical and financial power is at risk of a similar FERC action,” he said.


The FERC Office of Enforcement staff alleged Barclays engaged in a coordinated scheme to manipulate trading at four electricity trading points in the Western United States.

The order alleges that Connelly, hired in May 2006 to start a North American power market desk, hired a team of traders who ultimately came to dominate the market, making up 24 percent of all next-day fixed-price trading on the IntercontinentalExchange trading platform during the months in question.

The bank’s “total market concentration” was as much as 58 percent and no less than 10 percent in any given month, it says.

It then engaged in “loss-generating trading of next-day fixed-price physical electricity” at a number of key electricity hubs in order to pay off positions in the swaps market, where contracts are settled based on physical market prices.

The traders were aware that the trading was “likely unlawful”, and ignored the warning of the head of Americas commodity trading Joe Gold, who “made clear the practice was unacceptable”, according to the FERC order.

Experts say one of the biggest challenges in winning any manipulation cases is demonstrating that traders intentionally engaged in a losing trade to make bigger profits.

But, just as recorded telephone conversations between California power traders about driving up power prices for ” g randma Millie” proved damning a decade ago, the agency used instant messages and emails to bolster its case.

Smith, for instance, described how he manipulated the Palo Verde market, according to the FERC order, and the “NP light” — or off-peak power (‘light’) in the North Path 15 (NP) market in northern California in an attempt to “drive the SP light lower.”

Levine asked colleagues to “keep the PV index up and the SP daily index down” while she was on vacation.

Mike Masters, co-founder of Better Markets and a frequent advocate for stronger rules, said it could be the “tip of the iceberg” as regulators probe more deeply into commodities.

“It’s a very significant fine and not just because of the dollar amount. It also highlights how banks and swap dealers were combining financial and physical positions in a predatory way to manipulate commodity markets,” he said.

“If it’s happened in power markets you can be sure it was also going on in crude oil and other markets like refined oil products,” Masters said.

Comment from thebrackpipe:  Analysts running afoul?  Impossible ;  )  “Investors in the highly anticipated offering have lost billions of dollars as Facebook’s shares have tumbled, and lawmakers and others have questioned whether small investors were unfairly kept in the dark amid reports that the underwriting firms selectively passed on financial warnings from the social-media company to favored clients, including large institutions.”  Oh, and by the way, I dare you to guess what banks were involved –  Morgan Stanley, JP Morgan and Goldman Sachs.

Article below from the

Citigroup Inc. fired Mark Mahaney, an Internet analyst whose deep ties to Silicon Valley start-ups helped the bank land lucrative jobs managing hot initial public offerings, after he and another analyst allegedly ran afoul of rules covering disclosures to the media about two companies he covered, Facebook and Google.

The New York company dismissed Mr. Mahaney for allegedly trying in April to cover up a violation of the bank’s protocol on responding to media requests, according to a person familiar with the matter. Massachusetts’ securities regulator on Friday fined the company $2 million for failing to supervise Mr. Mahaney and a junior analyst he oversaw.

Some at Citigroup were shaken by Mr. Mahaney’s dismissal, which came just a week after the board of the nation’s third-largest bank by assets forced out Vikram Pandit as chief executive and replaced him with Mike Corbat. The decision to fire Mr. Mahaney was approved by senior managers at the firm, but didn’t go up to board level, according to a person familiar with matter. The move isn’t directly linked to last week’s management change, the person added.

Mr. Mahaney, based in San Francisco, produced research that was considered influential by investors, and some technology companies sought Citi’s banking services because of his star power. Citi is currently ranked seventh by data-tracker Dealogic by U.S.-listed Internet IPOs underwritten so far in 2012, based on deal volume.

The action comes as federal and state regulators are stepping up their investigation into a number of the banks that underwrote May’s Facebook IPO, according to people familiar with the probes. Investors in the highly anticipated offering have lost billions of dollars as Facebook’s shares have tumbled, and lawmakers and others have questioned whether small investors were unfairly kept in the dark amid reports that the underwriting firms selectively passed on financial warnings from the social-media company to favored clients, including large institutions.

The Securities and Exchange Commission is looking into the Facebook IPO, according to people familiar with the probe. Investigators at the agency are scrutinizing the information given by the company to the banks and by the banks to their clients, as well as the technical glitches that marred the stock’s debut, the people said. The underwriting firms didn’t necessarily break any regulations, even if they may have left some small investors at a disadvantage.

The Financial Industry Regulatory Authority, a Wall Street self-regulator, is investigating whether certain of the underwriting firms breached securities laws in their communications with clients, the media or others as related to the Facebook IPO, the people said. Finra has sent subpoenas seeking information on those communications to Citigroup and other banks, according to people familiar with the matter.

Massachusetts’ top financial regulator, Secretary of the Commonwealth William Galvin, also is looking at a number of the underwriting firms in the Facebook IPO, in addition to its probe into Citi and its already disclosed inquiry into lead underwriter Morgan Stanley.  Mr. Galvin’s office has also sent subpoenas to the other two lead underwriters, J.P. Morgan Chase & Co. and Goldman Sachs Group Inc., the person said.

Meanwhile, Citi said it would discontinue publishing research about some of the about 30 companies Mr. Mahaney followed and transfer coverage for some of those companies to senior analyst Neil Doshi. In addition to Facebook and Google, Mr. Mahaney covered Inc., Groupon Inc. and Yahoo Inc.

The junior analyst in the case, identified by people close to the matter as Eric Jacobs, was fired on Sept. 27, Massachusetts said in the consent order on the Citigroup case.

Citigroup Global Markets Inc., the bank’s investment-banking arm, admitted to the regulator’s statement of facts and agreed to permanently cease and desist from violating state securities laws.

A Citigroup spokeswoman said, “We are pleased to have this matter resolved. We take our internal policies and procedures very seriously and have taken the appropriate actions.”

The consent order said that on April 30, the senior analyst—identified by people familiar with the case as Mr. Mahaney—provided unpublished information about revenue estimates for Google’s YouTube unit to a reporter for Capital, a French business magazine.

He then allegedly told a communications employee at Citigroup that he hadn’t responded to the magazine reporter’s questions. The employee told the reporter the analyst wasn’t available—prompting the reporter to say he had already responded, the state said in the consent order.

When told that an interview request would have to be approved, the analyst urged a research-department employee to submit approval for an interview the next day, a Tuesday, the order said.

When told that the request for a Monday post-interview approval had already been submitted, Massachusetts’ complaint alleges, the analyst responded, “This could get me in trouble. Shoot.”

The consent order said that in May, the junior analyst Mr. Jacobs shared nonpublic information about Citigroup’s view of Facebook investment risks and revenue estimates with employees of, an online media company, at a time when there was supposed to be no communication by underwriting banks with the public on the subject.

The Techcrunch employees were identified by people familiar with the case as Kim-Mai Cutler and Josh Constine. Ms. Cutler declined to comment. Mr. Constine did not immediately respond to a request for comment.

According to the consent order, the junior analyst emailed two TechCrunch reporters, saying that “my boss would eat me alive,” referring to Mr. Mahaney, if it was known he had disclosed the bank’s Facebook analysis.

Mr. Mahaney later initiated coverage of Facebook with a “hold” rating, in contrast to the “buy” ratings placed by analysts at the deal’s lead underwriters, Morgan Stanley, Goldman Sachs, and J.P. Morgan. His initial price target, $35, was among the lowest of analysts associated with underwriters of the IPO.

Facebook shares priced at $38 in May before briefly rising and then staging a long decline. Facebook fell 62 cents, or 2.7%, to $21.94 in Nasdaq trading Friday.

Mr. Mahaney was first brought to New York this past Wednesday to discuss his emails with the French reporter with Jonathan Rosenzweig, Citigroup’s director of research, according to people familiar with the discussions. He was informed he was fired Friday morning, after he had flown back to San Francisco.

People familiar with the matter said that Mr. Mahaney didn’t dispute the emails that led to his termination, and that he acknowledged making a mistake. Mr. Mahaney didn’t have knowledge of his junior analyst’s disclosures with regard to Facebook, and wasn’t involved at all in that matter, these people said.

As news spread of Mr. Mahaney’s departure, other analysts in the industry said they would keep a closer eye on what they said.

This case “absolutely” will make it more difficult for journalists to obtain confidential information from analysts, said Kelly McBride, a senior faculty member at the Poynter Institute, a nonprofit school for journalists.

Comment from  May the extent of the douch-baggery be fully exposed.  Is the banking industry all bad?  Seriously, help me out here because I don’t see how these institutions can ever be out for their customers and, god forbid, the greater good.  So, just some fun facts – among the banks subpoenaed are Bank of America (surprise, surprise), Credit Suisse (sounds about right), and Royal Bank of Canada .

Article below from the

Nine more banks have received subpoenas in connection with a probe into alleged widespread interest-rate manipulation by banks, a person familiar with the investigation said.

The probe, a joint effort by the offices of New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen, could lead to civil enforcement action related to breaches of antitrust and fraud laws.

The subpoenas, which were issued in August and September but haven’t been previously reported, bring the total number of subpoenas in the case to 16. The banks involved in the probe include most members of the panel that helps set the dollar London interbank offered rate.

The investigation by the state prosecutors is part of a global probe, in which more than a dozen federal and other regulators across three continents are looking into allegations that several banks rigged Libor.

Representatives for Bank of America, Credit Suisse, Bank of Tokyo and Norinchukin Bank declined to comment. The other five banks subpoenaed in August and September that hadn’t previously been disclosed couldn’t be reached for comment. Two of the banks disclosed the subpeonas in financial filings.

The joint probe of the two attorneys general was reported by The Wall Street Journal earlier this year.

The New York-Connecticut Libor investigation focus on the ways Libor rates could have affected investors, state agencies and municipalities that invested in interest-rate swaps tied to the rate to help manage their debt costs. The losses that may have occurred because of rate manipulation could have a direct impact on state finances. Interest-rate investigations are also occurring in other states, including Massachusetts and Florida, the Journal previously reported.

Barclays PLC paid about $450 million to U.S. and U.K. regulators as part of a settlement in which the British bank admitted that executives and traders had manipulated Libor. The deal led to the resignation of the firm’s CEO and chairman.