Source Link: wallstreetonparade.com
By Pam Martens and Russ Martens: July 23, 2014
Anshu Jain, Co-CEO of Deutsche Bank, was not having a good day
yesterday. First the oath-taking, subpoena-issuing Senate Permanent
Subcommittee on Investigations released a detailed email to him from
William Broeksmit, the 58-year old former Deutsche risk executive
alleged to have hanged himself in his London home on January 26. By the
end of the day, someone had leaked to the Wall Street Journal a deeply
critical letter of Deutsche Bank from the New York Fed which said that
“The size and breadth of errors strongly suggest that the firm’s entire
U.S. regulatory reporting structure requires wide-ranging remedial
action.”
What the U.S. Senate’s Permanent Subcommittee on Investigations was taking testimony on yesterday, however, was far from an “error” committed by Deutsche Bank. Both Deutsche Bank and Barclays were shown, through emails, marketing materials and witness testimony, to have set up elaborate schemes to effectively loan out their balance sheet to hedge funds to conduct billions of trades each year in trading accounts under the bank’s name, deploying massive leverage that is illegal in a regular Prime Brokerage account for a hedge fund client.
The banks got paid through margin interest, fees for stock loans for short sales, and trade executions. The hedge funds got paid not only from trading profits but also through a tricked up “basket option” offered by the banks that magically turned millions of short-term trades into long-term capital gains, saving the hedge funds about half the rate of taxes owed on the short-term trades, some of which lasted only minutes.
http://wallstreetonparade.com/2014/07/documents-emerge-in-senate-hearing-from-william-broeksmit-deutsche-exec-alleged-to-have-hanged-himself-in-january/
By Pam Martens and Russ Martens: July 23, 2014
Satish Ramakrishna of Deutsche Bank
What the U.S. Senate’s Permanent Subcommittee on Investigations was taking testimony on yesterday, however, was far from an “error” committed by Deutsche Bank. Both Deutsche Bank and Barclays were shown, through emails, marketing materials and witness testimony, to have set up elaborate schemes to effectively loan out their balance sheet to hedge funds to conduct billions of trades each year in trading accounts under the bank’s name, deploying massive leverage that is illegal in a regular Prime Brokerage account for a hedge fund client.
The banks got paid through margin interest, fees for stock loans for short sales, and trade executions. The hedge funds got paid not only from trading profits but also through a tricked up “basket option” offered by the banks that magically turned millions of short-term trades into long-term capital gains, saving the hedge funds about half the rate of taxes owed on the short-term trades, some of which lasted only minutes.
http://wallstreetonparade.com/2014/07/documents-emerge-in-senate-hearing-from-william-broeksmit-deutsche-exec-alleged-to-have-hanged-himself-in-january/
