conflicts-of-interestDOL regulationseconomic justiceFiduciaryInvestment AbusesNeoliberalism

Nation’s Largest Banks Sued by Pension Funds for Market Manipulation

It looks like the nation’s biggest banks cannot help preying on their own customers, large and small. 

The latest case involves the esoteric world of securities lending, which is used for short selling and for hedge funds and is an important means of eliminating “failed” transactions.  In exchange, the lender (such as a brokerage firm) charges a stock loan fee to a client for borrowing shares.

The latest news involves three U.S. pension funds which sued six of the world’s largest banks, including Goldman Sachs Group Inc. and JP Morgan Chase & Co.  The banks are accused of conspiring to stifle competition in the more than $1 trillion stock lending market, according to an article in The Business Insider.

The plaintiffs are the Iowa Public Employees’ Retirement System, Orange County Employees’ Retirement System and Sonoma County Employees’ Retirement Association. The plaintiffs said in the lawsuit that the banks cornered the market on stock lending in violation of federal antitrust law.

In the words of their lawyer, Michael Eisenkraft, a lawyer for the funds and partner with Cohen Milstein, “the likes of Goldman Sachs and Morgan Stanley have for years colluded to maintain their power over this little-known-but-lucrative corner of Wall Street.”

As numerous lawsuits over the past decades have shown, trading against, and in front of clients is part of the DNA of large banks. Regardless of the fines and investigations and assaults on their reputations, the big banks cannot stem the practice of abusing their own clients.

This is all being facilitated by federal and state regulators who are not arresting the offenders for securities violations and financial frauds.  If the bank and investment firm executives and managers have to sign agreements saying they committed the crimes, then regulators and prosecutors should prosecute. But they don’t. This has been the same practice since the Reagan, Bush, Clinton and Obama administrations and will continue under Trump who is vehemently against pro-investor regulations.

All this means we will continue to see large financial frauds that go unpunished. It’s the American way.

 

 

 

Previous post

Lending Industry Faces Huge LIBOR-Related Costs Due to Bank Fraud

Next post

The Retirement Crisis Gets Worse

Chuck Epstein

Chuck Epstein

Chuck Epstein has managed marketing communications and public relations departments for major global financial institutions and participated in the launch of industry-changing financial products. He also has written by-lined articles for over 50 publications, five books and served as editor and publisher of nation’s first newsletter on the topic of using the PC for personal investing and trading. (“Investing Online, 1994-1999). He also is a marketing consultant, writer and speaker on topics related to investor protection and opportunities in the very dynamic cannabis industry.

He has held senior-level marketing, PR and communications positions at the New York Futures Exchange, Chicago Mercantile Exchange, Lind-Waldock, Zacks Investment Research, Russell Investments and Principal Financial.

He has won national awards from the Mutual Fund Education Alliance (MFEA) and his web site, www.mutualfundreform.com, was named best small blog in 2009 by the Society of American Business Editors and Writers (SABEW).

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *