7 ms·

The Biggest Price-Fixing Scandal Ever

204 points by Jaigus 13y ago

incongruity 13y ago
"But when the attorney general says, 'I don't want to indict people,' it's the Wild West. There's no law." How long has it been since we've actually had an AG that really went to bat for the American people? I feel like more there than anywhere, we've been failed by every administration for a good long while. Yes, the blame goes much, much deeper, but so many of the problems (be it banking or privacy and liberty related issues) all end up at the feet of the attorney general and we've not had one that's been a champion for the people for far too long.
- rosser 13y ago
  How long has it been since we've actually had an AG that really went to bat for the American people? At this point, I don't think it's terribly inaccurate to say that AGs seem to go to bat against the American people more than they do for them.
  - jakerocheleau 13y ago
    This is why all of my friends that I talk to don't even want to try anymore. We've watched this happen for so many years and it just feels hopeless... what can we even do anymore? Banking cartels are just gonna keep doing whatever they want because no DA or law enforcement official will stand up to them.
    - maxerickson 13y ago
      Unfair banking practices are probably a better deal than say, outright feudalism. And unfair banking practices being in the news can sort of be interpreted as someone doing something about it (not hearing about it could be better, or it could be worse...). And then 0.5% on a loan isn't going to smash all that many dreams.
- intended 13y ago
  IIRC there was a class-action(?) lawsuit against the banks which was with regards to the forged documents in the mortgage scandal (The one where people forged the signatures of people who had signing authorities when they lost the chain of ownership for properties under mortgage - this may have been 2008-9) At that time, the bank(s) were batting for a settlement which I believe was opposed by the then DA of New York and 1 more. Most of the other DAs were on board. I forget what happened to that particular lawsuit though.
rasengan0 13y ago
the frog has not boiled yet
jholman 13y ago
Slightly OT nit-pick here... PRIMARY SUBMITTER: Whats it worth SWSISS FRANC TRADER: ive got some sushi rolls from yesterday?... PRIMARY SUBMITTER: ok low 6m, just for u Uh, what. Assuming this is a real transcript, and without some very compelling proof that PS actually fixed the price, I think that this is obviously, literally, a joke. That is, SFT and PS are bullshitting around, a bit of gallows humour about the possibility of price fixing.
- querulous 13y ago
  while it's possible PS was going to submit `low 6m' regardless, all you'd have to do to verify this mostly likely was not a joke is check to see what PS submitted
- fixxer 13y ago
  I agree. Sounds like two jagoffs joking around. I used to be one of those jagoffs, and I joked around like that with friends at other firms. That said, I believe the article. Some of the stuff you could get away with LEGALLY on BrokerTec (ICAP's electronic platform) would amaze most.
  - webnrrd2k 13y ago
    Would you care to elaborate about (potential) shenanigans on BrokerTech? [BTW, surprisingly apropos username.]
- nikcub 13y ago
  it is definitely bankers humor, that Taibbi took it seriously says everything you need to know about him - a tabloid financial journalist. edit: it isn't even bankers humor, it is just general office humor. you wouldn't recognize it if you haven't worked anywhere.
  - justsee 13y ago
    Don't you see any similarities between your comment's sense of propriety and the traders? It's not about whether people can have a joke, it's that people of that mindset should not be anywhere near global levers of capitalism. Like they shouldn't be air traffic controllers, or have national security clearance, or judge legal cases. However the point in this particular scandal is that the two groups should not have been talking to each other, let alone joking.
bdb 13y ago
Taibbi's pieces always make me feel so powerless.
- anigbrowl 13y ago
  That's a deliberate choice on his part. He leaves out pertinent information so as to increase the reader's feeling of helplessness. If you ever read a story of his about a subject you happen to be familiar with the amount of manipulation he engages in is nauseating. I'm not saying this to blow off the story, I'm alarmed that there's more rate-fixing going on and suspect that we'll hear about more again. But Taibbi writes to incite, not to inform. I don't trust him any more than I trust Glenn Beck or Alex Jones.
  - davidw 13y ago
    > But Taibbi writes to incite, not to inform. Pretty much anything written from that point of view ought to be considered for flagging and being removed from this site, as it's flame bait.
  - alan_cx 13y ago
    Isnt that just fighting fire with fire? The government, banks, big business, whatever pull out all the stops to manipulate "us" to force their view of the world. So, if the opposition are bland and straight up factual, the opposing view will not have the same impact. I think of the political scare and hate ads that I (as a non US citizen) associate with US right wing politics, and that the US left (still right from a UK perspective) don't seem to do that, so lose out in the attention seeking stakes. People react to fear. Scare them and they will react. Sort of like with terrorists and how gov uses that fear to implement draconian policies. But, when the non right, non business, non government, non banking people over do the emotive stuff, they get criticised. But I think they, sadly, have to play that game to compete in the information and ideas competition. You need to scream, manipulate, and scare to get heard. Its awful, horrible and not what I want at all, but I dont see any other way. If this article makes people think, better still act, or at least wake up, then its done its job, IMHO.
cynicalkane 13y ago
Is this story of interest to hackers? The claim that "everything is rigged" is supported by a small number of specific examples coupled with a generous helping of polemics. Facts are not placed in useful contexts. The reader, after reading this article, has likely learned very little but only had whatever pre-bias he had confirmed. It takes a lot more than that to support the fantastic superpowered-global-banking-conspiracy thesis of the article. Since, on articles like this, you tend to be downvoted for going against the zeitgeist, I'll provide a specific example. The civil suit over LIBOR fixing, mentioned on page one, was thrown out because antitrust laws only apply to competitive processes. (Source: http://www.upi.com/Top_News/US/2013/03/30/Judge-drops-antitrust-claims-in-Libor-suit/UPI-99301364658941/ http://www.upi.com/Top_News/US/2013/03/30/Judge-drops-antitr...) Taibbi writes: "In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place." This is a baffling recontextualization: suits are thrown out when they are not lawful because we live in a democratic rule of law, and there is no reason to believe the judge wished to punish or blame consumers. The suit was thrown out because the suit was illegal. This isn't an uncommon or partisan thing: the famous Walmart v. Dukes discrimination lawsuit was thrown out 9-0 by the Supreme Court, because it was unlawful. (The reason the case is famous is because of a 5-4 decision on whether it could be refiled, but that's beyond the scope of this comment.) A long history of reading Taibbi comment threads on HN and r/economics has taught me that Taibbi routinely lies in this fashion; this is just one example.
- fixxer 13y ago
  I think, in the case of fixed income, there is a public expectation of fair play (i.e. competitive market). That simply is not the case, nor is it mandate. Case in point, there is no such thing as "insider trading" when it comes to UST auctions. As for "interest to hackers", this market seems to like finance. I suppose the grass is always greener...
  - cynicalkane 13y ago
    Well, if it wasn't clear, my broad point is that the story isn't of interest to hackers because it yields no better understanding of how finance works. Hackers should be interested in understanding things, not eyeball-glazing polemics full of hopelessly re-contextualized non-information. I used to work in finance, and think it's fascinating, the good and the bad. I'm sympathetic to the argument that banks are too large, too undisciplined, and have too much power, but agreeing with nonsense because you want to is an anti-pattern, both personally and in terms of the long-term ideological fight.
knodi 13y ago
Please sentence them to life in prison, send a message that people can stand behind.
deleted 13y ago
[deleted]
apalmer 13y ago
only thing shocking about this story, is that people are actually shocked by it. do we not know that money runs the world? i mean its almost infantile, its not even a question of world view, its simple science, its like writing a news story about the fact that the earth is round
Sven7 13y ago
Now replace LIBOR with google page rank. OMG! people who can "fix" things actually "fix" things! This isn't a conversation about banking. It's a conversation about human nature.
bjourne 13y ago
Finance is a game of imperfect information. Most investors only has access to published information such as companies quarterly reports, so obviously, if you have an information advantage (by being an insider or knowing the next LIBOR rate) you can translate that into guaranteed profit. Contrast finance with sports betting. If you bet on a hockey team, you have almost complete information about any variable you can imagine. The career of each player, how the team has performed so far, how far the away team has to travel (you use that to estimate the fatigue of the players), any player injuries and so on. Surprisingly, sports betting is both more transparent and much more fair than finance because everyone has access to the same information. Sure, someone might know that the ice cleaning machine in the arena is malfunctioning so there may be debris left on the ice which may negatively effect one star players skating abilities and be able to exploit that information advantage. But it is marginal in comparison to the huge advantage traders and insiders can acquire in finance. My point is that looking at finance as betting makes it much clearer what is going on. Some of the players have an information advantage and are exploiting it. The rest are getting screwed.
webnrrd2k 13y ago
I'm curious -- does anyone know of other important financial numbers that are easily manipulated? I'm thinking, in particular, of numbers like LIBOR that are generated from privately-reported or easily manipulated data. Although deregulation seems to lead to major fraud sooner or later, so that would be worth keeping track of too. I'd like to get a feel for which numbers are "soft" and easily manipulated, vs. "hard". Prior to this I thought that LIBOR and ISDAfix were fairly hard to manipulate. Theoretically, it seems like they would be tough to manipulate, but the reality of the financial system is very different from theory.

204 points by Jaigus 13y ago

"But when the attorney general says, 'I don't want to indict people,' it's the Wild West. There's no law." How long has it been since we've actually had an AG that really went to bat for the American people? I feel like more there than anywhere, we've been failed by every administration for a good long while. Yes, the blame goes much, much deeper, but so many of the problems (be it banking or privacy and liberty related issues) all end up at the feet of the attorney general and we've not had one that's been a champion for the people for far too long.

rosser 13y ago
How long has it been since we've actually had an AG that really went to bat for the American people? At this point, I don't think it's terribly inaccurate to say that AGs seem to go to bat against the American people more than they do for them.
- jakerocheleau 13y ago
  This is why all of my friends that I talk to don't even want to try anymore. We've watched this happen for so many years and it just feels hopeless... what can we even do anymore? Banking cartels are just gonna keep doing whatever they want because no DA or law enforcement official will stand up to them.
  - maxerickson 13y ago
    Unfair banking practices are probably a better deal than say, outright feudalism. And unfair banking practices being in the news can sort of be interpreted as someone doing something about it (not hearing about it could be better, or it could be worse...). And then 0.5% on a loan isn't going to smash all that many dreams.
intended 13y ago
IIRC there was a class-action(?) lawsuit against the banks which was with regards to the forged documents in the mortgage scandal (The one where people forged the signatures of people who had signing authorities when they lost the chain of ownership for properties under mortgage - this may have been 2008-9) At that time, the bank(s) were batting for a settlement which I believe was opposed by the then DA of New York and 1 more. Most of the other DAs were on board. I forget what happened to that particular lawsuit though.

rasengan0 13y ago

the frog has not boiled yet

jholman 13y ago

Slightly OT nit-pick here... PRIMARY SUBMITTER: Whats it worth SWSISS FRANC TRADER: ive got some sushi rolls from yesterday?... PRIMARY SUBMITTER: ok low 6m, just for u Uh, what. Assuming this is a real transcript, and without some very compelling proof that PS actually fixed the price, I think that this is obviously, literally, a joke. That is, SFT and PS are bullshitting around, a bit of gallows humour about the possibility of price fixing.

querulous 13y ago
while it's possible PS was going to submit `low 6m' regardless, all you'd have to do to verify this mostly likely was not a joke is check to see what PS submitted
fixxer 13y ago
I agree. Sounds like two jagoffs joking around. I used to be one of those jagoffs, and I joked around like that with friends at other firms. That said, I believe the article. Some of the stuff you could get away with LEGALLY on BrokerTec (ICAP's electronic platform) would amaze most.
- webnrrd2k 13y ago
  Would you care to elaborate about (potential) shenanigans on BrokerTech? [BTW, surprisingly apropos username.]
nikcub 13y ago
it is definitely bankers humor, that Taibbi took it seriously says everything you need to know about him - a tabloid financial journalist. edit: it isn't even bankers humor, it is just general office humor. you wouldn't recognize it if you haven't worked anywhere.
- justsee 13y ago
  Don't you see any similarities between your comment's sense of propriety and the traders? It's not about whether people can have a joke, it's that people of that mindset should not be anywhere near global levers of capitalism. Like they shouldn't be air traffic controllers, or have national security clearance, or judge legal cases. However the point in this particular scandal is that the two groups should not have been talking to each other, let alone joking.

bdb 13y ago

Taibbi's pieces always make me feel so powerless.

anigbrowl 13y ago
That's a deliberate choice on his part. He leaves out pertinent information so as to increase the reader's feeling of helplessness. If you ever read a story of his about a subject you happen to be familiar with the amount of manipulation he engages in is nauseating. I'm not saying this to blow off the story, I'm alarmed that there's more rate-fixing going on and suspect that we'll hear about more again. But Taibbi writes to incite, not to inform. I don't trust him any more than I trust Glenn Beck or Alex Jones.
- davidw 13y ago
  > But Taibbi writes to incite, not to inform. Pretty much anything written from that point of view ought to be considered for flagging and being removed from this site, as it's flame bait.
- alan_cx 13y ago
  Isnt that just fighting fire with fire? The government, banks, big business, whatever pull out all the stops to manipulate "us" to force their view of the world. So, if the opposition are bland and straight up factual, the opposing view will not have the same impact. I think of the political scare and hate ads that I (as a non US citizen) associate with US right wing politics, and that the US left (still right from a UK perspective) don't seem to do that, so lose out in the attention seeking stakes. People react to fear. Scare them and they will react. Sort of like with terrorists and how gov uses that fear to implement draconian policies. But, when the non right, non business, non government, non banking people over do the emotive stuff, they get criticised. But I think they, sadly, have to play that game to compete in the information and ideas competition. You need to scream, manipulate, and scare to get heard. Its awful, horrible and not what I want at all, but I dont see any other way. If this article makes people think, better still act, or at least wake up, then its done its job, IMHO.

cynicalkane 13y ago

Is this story of interest to hackers? The claim that "everything is rigged" is supported by a small number of specific examples coupled with a generous helping of polemics. Facts are not placed in useful contexts. The reader, after reading this article, has likely learned very little but only had whatever pre-bias he had confirmed. It takes a lot more than that to support the fantastic superpowered-global-banking-conspiracy thesis of the article. Since, on articles like this, you tend to be downvoted for going against the zeitgeist, I'll provide a specific example. The civil suit over LIBOR fixing, mentioned on page one, was thrown out because antitrust laws only apply to competitive processes. (Source: http://www.upi.com/Top_News/US/2013/03/30/Judge-drops-antitrust-claims-in-Libor-suit/UPI-99301364658941/ http://www.upi.com/Top_News/US/2013/03/30/Judge-drops-antitr...) Taibbi writes: "In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place." This is a baffling recontextualization: suits are thrown out when they are not lawful because we live in a democratic rule of law, and there is no reason to believe the judge wished to punish or blame consumers. The suit was thrown out because the suit was illegal. This isn't an uncommon or partisan thing: the famous Walmart v. Dukes discrimination lawsuit was thrown out 9-0 by the Supreme Court, because it was unlawful. (The reason the case is famous is because of a 5-4 decision on whether it could be refiled, but that's beyond the scope of this comment.) A long history of reading Taibbi comment threads on HN and r/economics has taught me that Taibbi routinely lies in this fashion; this is just one example.

fixxer 13y ago
I think, in the case of fixed income, there is a public expectation of fair play (i.e. competitive market). That simply is not the case, nor is it mandate. Case in point, there is no such thing as "insider trading" when it comes to UST auctions. As for "interest to hackers", this market seems to like finance. I suppose the grass is always greener...
- cynicalkane 13y ago
  Well, if it wasn't clear, my broad point is that the story isn't of interest to hackers because it yields no better understanding of how finance works. Hackers should be interested in understanding things, not eyeball-glazing polemics full of hopelessly re-contextualized non-information. I used to work in finance, and think it's fascinating, the good and the bad. I'm sympathetic to the argument that banks are too large, too undisciplined, and have too much power, but agreeing with nonsense because you want to is an anti-pattern, both personally and in terms of the long-term ideological fight.

knodi 13y ago

Please sentence them to life in prison, send a message that people can stand behind.

deleted 13y ago

[deleted]

apalmer 13y ago

only thing shocking about this story, is that people are actually shocked by it. do we not know that money runs the world? i mean its almost infantile, its not even a question of world view, its simple science, its like writing a news story about the fact that the earth is round

Sven7 13y ago

Now replace LIBOR with google page rank. OMG! people who can "fix" things actually "fix" things! This isn't a conversation about banking. It's a conversation about human nature.

bjourne 13y ago

Finance is a game of imperfect information. Most investors only has access to published information such as companies quarterly reports, so obviously, if you have an information advantage (by being an insider or knowing the next LIBOR rate) you can translate that into guaranteed profit. Contrast finance with sports betting. If you bet on a hockey team, you have almost complete information about any variable you can imagine. The career of each player, how the team has performed so far, how far the away team has to travel (you use that to estimate the fatigue of the players), any player injuries and so on. Surprisingly, sports betting is both more transparent and much more fair than finance because everyone has access to the same information. Sure, someone might know that the ice cleaning machine in the arena is malfunctioning so there may be debris left on the ice which may negatively effect one star players skating abilities and be able to exploit that information advantage. But it is marginal in comparison to the huge advantage traders and insiders can acquire in finance. My point is that looking at finance as betting makes it much clearer what is going on. Some of the players have an information advantage and are exploiting it. The rest are getting screwed.

webnrrd2k 13y ago

I'm curious -- does anyone know of other important financial numbers that are easily manipulated? I'm thinking, in particular, of numbers like LIBOR that are generated from privately-reported or easily manipulated data. Although deregulation seems to lead to major fraud sooner or later, so that would be worth keeping track of too. I'd like to get a feel for which numbers are "soft" and easily manipulated, vs. "hard". Prior to this I thought that LIBOR and ISDAfix were fairly hard to manipulate. Theoretically, it seems like they would be tough to manipulate, but the reality of the financial system is very different from theory.