Citing the Bloomberg News report brought to your attention this afternoon
about the New York attorney general's supposed investigation of the use of
"spoofing" to manipulate the foreign-exchange market --
http://www.gata.org/node/15957
-- Zero Hedge asks tonight, "Why is the New York attorney general not
prosecuting the real FX spoofing criminalgos?":
http://www.zerohedge.com/news/2015-11-23/why-...eral-not-pro...
... Dispatch continues below:
Zero Hedge writes:
More interesting than who was named in this latest 'investigation' is
who wasn't -- and while the 'carbon-based' inter-dealer traders are looking
at billions more in settlement charges and fines over the coming months, the
real culprits of constant foreign-exchange spoofing remain unnamed. We refer
of course, to the algo-based 'FX traders' of the Virtus, the Volants, the Citadels
of the world ... but especially the latter, whose role in executing New York
Fed trades and curbing sharp market moves lower is well-known and has been
documented.
We also refer to the central banks themselves that trade either
directly out of their own account, like the Swiss National Bank, or via trust
banks such as the Bank of Japan, or like the New York Fed, which transacts in
various pathways but most notably by spoofing FX using high-frequency-trading
firms.
So why not go after the true FX riggers?
Because as noted above, if one really begins pursuing the spoofers, one
will ultimately have to charge central banks for engaging in this criminal
behavior. And that is unacceptable because with central bank credibility
already on the way out, the last thing the monetary "authorities"
need is for the general population to realize that the concept of price
discovery has been dead since 2008.
And yet if one really wants true price transparency and discovery ever
to return to markets, instead of focusing on various anonymous small-time
traders in aptly-named chat rooms, they should look at just one thing: the
central banker meetings every other month on Sunday at 7 p.m. in Conference
Room E on the 18th floor of the Bank for International Settlements tower in Basel.
They won't.
Zero Hedge thus summarizes pretty neatly GATA's 16-year study of the
markets, except for one important detail, a detail GATA discovered long
before it discovered most of its documentation about market rigging,
documentation summarized here:
http://www.gata.org/node/14839
That is, the authorities don't prosecute market rigging undertaken by
governments and central banks precisely because it is legal.
Back in 1999 GATA spent its first substantial money on legal research by a
major anti-trust law firm. The lawyers reported that our hopes for suing the
U.S. government for rigging the gold market were pretty much dashed by the
Gold Reserve Act of 1934, which established the Exchange Stabilization Fund
within the U.S. Treasury Department and which, as amended through the years,
conferred on the ESF the power to trade in and presumably rig not just the
gold market but every market:
https://www.treasury.gov/resource-center/i...ages/esf-ind...
Nevertheless two years later, in 2001, GATA's consultant, the
Harvard-trained lawyer Reginald H. Howe, found a novel mechanism for
challenging gold market rigging -- a lawsuit in U.S. District Court in Boston
against the Bank for International Settlements, U.S. Treasury Department,
U.S. Federal Reserve, and various major investment banks, in which Howe
claimed standing as one of the few remaining private shareholders in the BIS,
whose own gold holdings, he charged, were undervalued because of market
rigging by Western central banks.
Howe's lawsuit eventually failed on a jurisdictional technicality but it
produced an enormous disclosure at the one hearing held in the case, at which
the defendants moved for dismissal. An assistant U.S. attorney put it
plainly. Without admitting the conduct Howe's lawsuit alleged, the assistant
U.S. attorney said the lawsuit had to be dismissed because the government had
the legal power to do exactly what Howe accused it of doing: rigging the gold
market.
Your secretary/treasurer attended the hearing and wrote about it a few
hours later. His report is here:
target="_blank"
http://www.gata.org/node/4211
Much of GATA's documentation consists of the records of surreptitious gold
trading by governments and even admissions by central bankers that such
trading is undertaken secretly to control the gold price. After all these
years of market rigging they wouldn't leave themselves open to a charge that
it was illegal.
Of course mainstream financial news organizations won't touch this issue;
doing so would enrage their governments and reveal that their reporting has
been and remains a big hallucination -- that as a high school graduate put it
at GATA's Washington conference seven years ago, "there are no markets
anymore, just interventions":
target="_blank"
http://www.gata.org/node/6241
But even some advocates of the monetary metals fail to understand this,
instead railing against regulatory agencies that are actually powerless to do
anything about the biggest market rigging of all, though the U.S. Commodity
Futures Trading Commission, during the tenure of Commissioner Bart Chilton,
gave GATA a spectacular forum to thrust the issue at market participants and
news reporters at a hearing in Washington in March 2010 at which GATA
Chairman Bill Murphy and Board of Directors member Adrian Douglas spoke:
target="_blank"
http://www.gata.org/node/8466
That's why GATA long has concentrated on research, freedom-of-information
requests, and publicity rather than complaining to market regulators. For as
the recently retired editor of The Washington Monthly, Charles Peters, often
said: "The scandal isn't what's illegal. The scandal is what's perfectly
legal."
