Monday, October 2, 2023

Five-Count Felon JPMorgan Chase Gets Hit with Another Federal Fine for 40 Million Derivative Violations; Pays 37 1/2 Cents Per Violation

SUBSCRIBE TO THIS NEWSLETTER TO RECEIVE TIMELY ISSUES

Five-Count Felon JPMorgan Chase Gets Hit with Another Federal Fine for 40 Million Derivative Violations; Pays 37 1/2 Cents Per Violation

By Pam Martens and Russ Martens: October 2, 2023 ~

In the eyes of Wall Street veterans who are paying close attention to what’s going down at the mega banks on Wall Street, federal regulators are making the crime wave at these banks worse, not better. The federal fines for egregious behavior at these banks are getting smaller and more meaningless by the day.

Take, for example, what happened on Friday. The Commodity Futures Trading Commission (CFTC) fined three of the largest trading houses on Wall Street a combined $53 million for derivative reporting violations. Those trading houses were units of Goldman Sachs, Bank of America, and JPMorgan Chase.

But what was particularly tone deaf about the CFTC’s settlement with JPMorgan Chase was the tiny amount of the monetary fine and the praise heaped on the five-count felon bank for its “cooperation” with the federal regulator.

According to the CFTC, over a period of five years, spanning 2017 to 2022, JPMorgan Chase Bank and two of its units “failed to report, or failed to correctly report, more than 40 million swap transactions.” The fine was a pathetic $15 million in total for the three JPMorgan units, meaning it cost this global behemoth just 37 ½ cents per law violation.

Last year, JPMorgan Chase reported $37.7 billion in net income. A fine of $15 million for 40 million violations of law is something that traders will make jokes about around the water cooler.

What is a “swap,” and what was JPMorgan Chase likely up to in failing to report or incorrectly reporting 40 million swap trades?

A swap is a derivative trade entered into between two parties via contract. According to the CFTC, the 40 million derivatives in this $15 million fine against JPMorgan Chase involved interest rate derivatives, foreign exchange derivatives, commodity derivatives and equity (stock) derivatives.

Why would a trading house fail to report a derivative trade? It could be that it had exceeded its speculative trading limits or that its counterparty on the trade was a risky counterparty that a federally-insured bank shouldn’t be doing business with or with whom it already had too many risky derivative trades. It could also be that one large trading house was attempting to manipulate the market to benefit one of its other trading positions.

Regarding that last point – attempting to manipulate the market to benefit one of its trading positions – on September 29, 2020, the U.S. Department of Justice charged JPMorgan Chase with rigging the precious metals market and hit it with a criminal felony count for its conduct, to which it admitted. According to the Justice Department, the rigging occurred for more than eight years, from March of 2008 to August of 2016, and involved “tens of thousands” of incidents. The Justice Department wrote that traders at JPMorgan Chase:

“…knowingly and intentionally placed orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution (‘Deceptive PM [Precious Metals] Orders’), including in an attempt to profit by deceiving other market participants through false and fraudulent pretenses and representations concerning the existence of genuine supply and demand for precious metals futures contracts. By placing Deceptive PM Orders, the Subject PM Traders intended to inject false and misleading information about the genuine supply and demand for precious metals futures contracts into the markets, and to deceive other participants in those markets into believing something untrue, namely that the visible order book accurately reflected market-based forces of supply and demand. This false and misleading information was intended to, and at times did, trick other market participants, including competitor financial institutions and proprietary traders, into reacting to the apparent change and imbalance in supply and demand by buying and selling precious metals futures contracts at quantities, prices, and times that they otherwise likely would not have traded.”

In the current case, the CFTC wrote that it was recognizing JPMorgan’s “substantial cooperation and appropriate remediation” which was “further reflected in the form of a reduced civil monetary penalty.” The CFTC appeared clueless that it was thanking a serial recidivist lawbreaker and five-count felon for “cooperation.”

This is the same bank that the Chair of the Senate Permanent Subcommittee on Investigations in 2013, the late Senator Carl Levin, said “piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight, and misinformed the public.” That statement was made regarding the London Whale derivatives scandal at JPMorgan Chase Bank, where it used depositors’ money from its federally-insured bank to gamble in derivatives in London and end up losing $6.2 billion.

This is the same bank that recently agreed to pay $365 million to settle claims that it rolled out the red carpet for child sex trafficker Jeffrey Epstein for a decade and a half in order to boost its bottom line from his referral of wealthy clients? JPMorgan Chase didn’t report to law enforcement Epstein’s hundreds of suspicious withdrawals of cash, sometimes amounting to $40,000 to $80,000 a month, until Epstein was dead in his jail cell in 2019 while awaiting trial. (The New York City Medical Examiner ruled the death a suicide.) The $365 million in settlements were made with Epstein victims ($290 million) and with the Attorney General for the U.S. Virgin Islands ($75 million). The U.S. Department of Justice has yet to bring criminal charges against JPMorgan Chase for acting as a cash conduit for a notorious sex trafficker of children for more than 15 years.

Federal regulators are defining deviancy down on Wall Street and greasing the skids for another epic crash like the one that occurred in 2008 that left the U.S. economy in tatters.

https://wallstreetonparade.com/2023/10/five-count-felon-jpmorgan-chase-gets-hit-with-another-federal-fine-for-40-million-derivative-violations-pays-37-1-2-cents-per-violation/

POLITICO Nightly: California’s Senate scramble

BY CALDER MCHUGH

Presented by

Laphonza Butler, president of EMILY's List, speaks during an event in Washington, June 23, 2023. | Susan Walsh/AP Photo

APPOINTMENT VIEWING — When California Governor Gavin Newsom named Laphonza Butler to the late Dianne Feinstein’s open Senate seat on Sunday, he made a historic selection — and sparked a new set of questions for voters.

Chief among them is whether Butler intends to run for the seat already contested by Democratic Reps. Adam Schiff, Barbara Lee and Katie Porter. Butler is a longtime power player in California politics, first as a union organizer and then as a consultant and as the president of EMILY’s List, a powerful political action committee aimed at electing female Democratic candidates who support abortion rights.

Newsom decided not to name any of the three candidates currently in the race, not wanting to tip the scales for any of them — though Lee fit Newsom’s 2021 promise to nominate a Black woman to Feinstein’s seat if he got the chance. Still, Newsom’s adviser Anthony York told POLITICO that there are no preconditions on Butler’s appointment; she hasn’t promised not to run in 2024. If she decides to seek a full term, she could further scramble an already tight race.

Californians will now vote four times for Senate in 2024 — for the remainder of Feinstein’s term in primary and general special elections, as well as in the primary and general election for a full term that begins in 2025. With three existing big name Democratic candidates already in the race, it makes for a complicated situation.

To get a better sense of the state of play in California and the political implications of Butler’s nomination, we spoke with the person who broke the news of the appointment, POLITICO’s California Bureau Chief Christopher Cadelago. This conversation has been edited.

How does Laphonza Butler’s appointment affect the 2024 race to fill Dianne Feinstein’s Senate seat?

A lot of this will depend on whether Butler decides to run. I’m told she’s genuinely torn over the decision — and for good reason. The other candidates have been running for months, have political networks of their own and have amassed large warchests, particularly in the cases of Reps. Adam Schiff and Katie Porter. In the short-term, Newsom’s appointment of Butler is a major blow, to say the least, to Rep. Barbara Lee. While Lee and Newsom were not personally close, she put a huge amount of stock in winning this appointment, only to criticize Newsom’s comments before Feinstein died about not wanting to pick an interim senator. Lee was never a lock to get this appointment. But blowing up Newsom was the worst thing she could have done. The timing for her was terrible.

Lee’s allies were still advocating for her appointment — was it those specific comments that certainly sunk her chances? And just how much does not getting the appointment hurt her, given that she’s also lagging behind in raising money?

Lee’s allies were trying to do a few things: Pressure Newsom publicly through groups like the Congressional Black Caucus to choose Lee, particularly after Feinstein’s death on Thursday. Work allies — particularly Black women — to try and get them to turn Newsom down in the event he turned to them for the appointment. And, try to work Newsom with a lighter touch. In the end, none of it mattered. He wasn’t going to pick Lee.

It’s notable, like you mentioned, that Butler is considering running, and also that Newsom didn’t appear to ask her to publicly commit to not doing so. How specifically would a Butler run scramble the race?

Butler has the chance to cut a very dynamic profile in the Senate. She’s California’s first openly gay senator — and the Senate’s first openly gay person of color. Butler’s nearly two decades working in the trenches of organized labor (before becoming a political consultant and the president of EMILY’s List) gives her a real opportunity to speak to the economic anxieties people are facing. There are few members of Congress from the coasts with the history and standing to be a messenger on this. In addition, as Newsom said, Butler also brings credibility when it comes to speaking out against what he calls the “rights regression” and other issues like voting rights.

And she’s also been a player in California politics for a long time. What are her connections with the other three big name candidates?

Butler has worked very closely with nearly every political figure of note in California, either through her labor role or later as a consultant. I’ve talked to folks connected with Lee who say Butler was helping her campaign a bit. EMILY’s List backed Porter in her prior House race, and she drew praise from Butler. But the group also backed a candidate running against Porter’s endorsed pick in the race for the House seat she is vacating, which is currently a toss-up.

And in terms of Newsom, do his assumed national political aspirations factor into his choice of Butler? How so?

The governor can’t blink without someone analyzing how it might play in 2028, let alone 2024. So you better believe that this Senate appointment — one he really didn’t want to make — is being viewed through a political prism. First, Newsom had pledged to choose a Black woman, after picking Alex Padilla to succeed Kamala Harris. Then, more recently, he said he wouldn’t pick Lee because he didn’t want to tip the scales. He also suggested that his pick would be a temporary senator. That opened the door for criticism of him that he was going to pick a Black woman, but only as a short-timer. And although Newsom didn’t use the word himself, Lee accused him of wanting a “caretaker” for the seat. That didn’t sit well with her allies and some progressives, who said the governor’s remarks would someday be remembered in early primary presidential states like South Carolina. To get himself out of that jam, Newsom’s team spent the weekend making clear that he was putting no preconditions on the pick and that they were free to run in 2024 if they wanted. Politically, Butler is a shrewd choice. And if we can zoom out some more, Newsom’s appointments more broadly have been historic, and reflect the changing demographics of California: Padilla, the Latino son of a short-order cook and a housekeeper; Attorney General Rob Bonta, the first person of Filipino descent to hold the post whose parents organized farmworkers; Secretary of State Shirley Weber, a career academic and the daughter of a sharecropper from a town called Hope, Ark., and now Butler. He’s helped remake the Democratic bench in the state — and very much not in his own image.

Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com . Or contact tonight’s author at cmchugh@politico.com or on X (formerly known as Twitter) at @calder_mchugh .

A message from PhRMA:

PBMs are siphoning money away from you. They decide what you pay and what medicines you can get. PBMs steer you toward pharmacies they own that make them more money. And, they're creating new fees that pad their profits, but don't benefit patients. Learn more.

WHAT'D I MISS?

— U.S. to send more aid to Ukraine ‘soon’ amid funding concerns, WH says: The U.S. will be sending another aid package to Ukraine “soon,” White House press secretary Karine Jean-Pierre said today, in an effort to assuage concerns about diminishing support for the embattled country.The latest aid package will come later this week, according to a U.S. official. The announcement comes two days after Congress passed an 11th hour government funding bill that did not include aid for Ukraine, an omission that was a blow for both Ukrainian President Volodymyr Zelenskyy and President Joe Biden, who has made support for Ukraine one of his priorities as he seeks reelection in 2024.

— Court rejects Eastman’s bid to scrap rulings that sent his emails to Jan. 6 investigators: The Supreme Court, minus a recused Clarence Thomas, has turned down a bid by attorney John Eastman to erase court rulings that described him as a linchpin in former President Donald Trump’s bid to subvert the 2020 election. The high court’s decision today essentially enshrines rulings by a federal district judge in California that found Eastman’s emails contained evidence of a likely crime related to Trump’s efforts.

— Trump blasts judge during first day of $250 million fraud trial: Donald Trump came face-to-face in a Manhattan court today with the attorney general who is suing him for massive business fraud and the judge who last week revoked his business licenses, as the former president attended the first day of a $250 million civil trial. A scowl on his face as he entered the courtroom, Trump showed up to see opening statements in the trial. New York Attorney General Tish James alleges that Trump, his adult sons, his companies and some of his business associates, fraudulently inflated Trump’s net worth in order to obtain favorable terms from banks and insurance companies.

GROWING IN THE GOLDEN STATE : POLITICO California is growing, reinforcing our role as the indispensable insider source for reporting on politics, policy and power. From the corridors of power in Sacramento and Los Angeles to the players and innovation hubs in Silicon Valley, we're your go-to for navigating the political landscape across the state. Exclusive scoops, essential daily newsletters, unmatched policy reporting and insights — POLITICO California is your key to unlocking Golden State politics. LEARN MORE .

NIGHTLY ROAD TO 2024

RFK JR.’S INDY GAMBIT — A super PAC supporting Robert F. Kennedy Jr. has begun polling his support as an Independent , one of the strongest indications to date that the long-shot Democrat is set to announce a party affiliation switch, reports POLITICO.

The poll, conducted by the firm John Zogby Strategies and commissioned by the American Values 2024 PAC, comes amid growing speculation — fueled by Kennedy himself — that he will leave the Democratic Party in the upcoming weeks. But what the PAC found in its survey may be as notable as the tea leaves around a switch itself: Kennedy, as an Independent, would pull more support away from Republican Donald Trump than Democrat Joe Biden, according to the findings.

All told, the poll shows that in a general election between Trump, Biden and a generic “independent candidate,” the result is Trump at 40 percent, Bident at 38 percent and the independent candidate at 17 percent. In a matchup between Trump, Biden and “Robert F. Kennedy Jr.” as the independent candidate, the result is Trump and Bide tied at 38 percent with Kennedy at 19 percent. The survey did not include Green Party candidate Cornel West.

PROXY VOTE — President Joe Biden’s name won’t appear on the ballot anywhere in 2023, but you wouldn’t know it from the campaigns that Republican candidates for governor are running in Kentucky and Mississippi , writes the Associated Press.

GOP nominees in both states — Kentucky Attorney General Daniel Cameron and first-term Mississippi Gov. Tate Reeves — are just as likely to mention the Democratic president as they are to name the person they face in the Nov. 7 general election.

In 2020, then-President Donald Trump won 62% of the vote in Kentucky and 58% in Mississippi in his loss to Biden. The Kentucky and Mississippi gubernatorial campaigns might well serve as messaging test drives for the 2024 presidential election year, when Biden is expected to be on the ballot. And while there’s a Republican incumbent in Mississippi and it’s a Democrat seeking a second term in Kentucky, the competitions bear striking similarities to each other. In each state, the Democrat has a previously existing brand that could help distinguish them from the Republican effort to define them as Biden allies.

A message from PhRMA:

AROUND THE WORLD

President Joe Biden walks with Ukraine's President Volodymyr Zelenskyy ahead of a working session on Ukraine during the G7 Leaders' Summit in Hiroshima. | Susan Walsh/Pool/AFP via Getty Images

CORRUPTION CONCERNS — Biden administration officials are far more worried about corruption in Ukraine than they publicly admit , a confidential U.S. strategy document obtained by POLITICO’s Nahal Toosi suggests.

The “sensitive but unclassified” version of the long-term U.S. plan lays out numerous steps Washington is taking to help Kyiv root out malfeasance and otherwise reform an array of Ukrainian sectors. It stresses that corruption could cause Western allies to abandon Ukraine’s fight against Russia’s invasion, and that Kyiv cannot put off the anti-graft effort.

“Perceptions of high-level corruption” the confidential version of the document warns, could “undermine the Ukrainian public’s and foreign leaders’ confidence in the war-time government.”

That’s starker than the analysis available in the little-noticed public version of the 22-page document, which the State Department appears to have posted on its website with no fanfare about a month ago.

The confidential version of the “Integrated Country Strategy” is about three times as long and contains many more details about U.S. objectives in Ukraine, from privatizing its banks to helping more schools teach English to encouraging its military to adopt NATO protocols. Many goals are designed to reduce the corruption that bedevils the country.

The administration wants to press Ukraine to cut graft, not least because U.S. dollars are at stake. But being too loud about the issue could embolden opponents of U.S. aid to Ukraine, many of them Republican lawmakers who are trying to block such assistance. Any perception of weakened American support for Kyiv also could cause more European countries to think twice about their role.

DOWNLOAD THE POLITICO APP: Stay in the know with the POLITICO mobile app, featuring timely political news, insights and analysis from the best journalists in the business. The sleek and navigable design offers a convenient way to access POLITICO's scoops and groundbreaking reporting. Don’t miss out on the app you can rely on for the news you need. DOWNLOAD FOR iOS – DOWNLOAD FOR ANDROID .

NIGHTLY NUMBER

Nearly 709,000

The number of Ford vehicles that U.S. auto safety investigators are probing for potential engine failures . The National Highway Safety Traffic Administration posted documents today that indicated the investigation has been upgraded to an engineering analysis, which is closer to a recall. The investigation covers the F-150 pickup truck, as well as Explorer, Bronco and Edge SUVs and Lincoln Nautilus and Aviator SUVs. The mechanical issue is largely with faulty valves that can cause engine failure under normal driving conditions.

RADAR SWEEP

RENTING RAT RACE — If you’re renting an apartment in a city with rent control protections, the dream is to find one of those apartments: a unit that has protections from the landlord significantly raising the rent each year. And as various housing crises overtake American cities and rents skyrocket, rent control becomes even more valuable for renters. For landlords, it’s the opposite — rent control stymies them from making profits. And the politics of rent control have gotten increasingly complicated , as some landlords and local politicians are claiming getting rid of rent control would be a racial justice victory. For The Baffler, Charlie Dulik reports on the future of the hot button issue and what it might mean for rent in multiple major American cities.

PARTING IMAGE

On this date in 1969: British Army Riot Squad troops wore gas masks, bullet proof vests and wielded two-foot-long batons during a demonstration in Belfast, Northern Ireland. The squad was designed to penetrate rioting crowds to bring out ringleaders and lawbreakers in the midst of The Troubles and fears of political and sectarian violence in Northern Ireland. | Peter Kemp/AP Photo

Did someone forward this email to you? Sign up here .

A message from PhRMA:

Health insurers and PBMs can refuse to share savings that should go to you. Now they've got another trick. A new report shows PBMs found new ways to profit off your prescriptions. They've doubled the amount of fees they charge on medicines in the commercial market. They tie these fees to the price of medicines. And experts warn this can lead PBMs to cover medicines with higher prices instead of lower-cost options.

Follow us on Twitter

Charlie Mahtesian @PoliticoCharlie

Calder McHugh @calder_mchugh

FOLLOW US

POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA

Trump ATTACKS Judge and Admits to Fraud as He ARRIVES at Fraud Trial

MeidasTouch host Ben Meiselas reports on Donald Trump’s arrival to the first day of the New York Attorney General fraud trial where Trump is a civil defendant. Trump held a press conference where he admitted to the fraud he has been accused of in the lawsuit.

October 1, 2023 HEATHER COX RICHARDSON

October 1, 2023

HEATHER COX RICHARDSON

OCT 2

On Friday, Chairman of the Joint Chiefs of Staff General Mark Milley spoke in Arlington, Virginia, at a farewell ceremony before his retirement after four years in the position to which former president Trump appointed him. Milley’s position as the highest-ranking and most senior military officer in the United States Armed Forces and the nation’s top military advisor during a stretch of U.S. history in which a president tried to overturn the results of a presidential election and undermine our democracy made his tenure perhaps more difficult than any of his predecessors’.

Milley had been at Trump’s side at the start of the former president’s march across Lafayette Square on June 1, 2020, to threaten Black Lives Matter protesters, although Milley peeled off when he recognized what was happening and later said he thought they were going to review National Guard troops. Since then, Milley has spoken out against strongman rule and vocally defended the U.S. Constitution.

The day after the debacle, Milley wrote a message to the joint force reminding every member that they swore an oath to the Constitution. “This document is founded on the essential principle that all men and women are born free and equal, and should be treated with respect and dignity. It also gives Americans the right to freedom of speech and peaceful assembly…. As members of the Joint Force—comprised of all races, colors, and creeds—you embody the ideals of our Constitution,” he wrote. “We all committed our lives to the idea that is America,” he wrote by hand on the memo. “We will stay true to that oath and the American people.”

Trump and his loyalists turned on Milley, and that fury has only increased. On September 22, 2023, former president Trump suggested that Milley, who has served in the military for more than 40 years, had committed what some would call treason when he reassured his Chinese counterpart that the U.S. would not attack in the last days of the Trump administration—an assurance administration officials signed off on—in the face of Trump’s increasingly erratic behavior. Milley has told associates that if Trump is reelected, he expects to be thrown into prison.

Milley responded to Trump’s attempted intimidation in his farewell address. He began by thanking President Biden for his “unwavering leadership.” “I’ve seen you in the breach, I’ve seen you on the watch,” Milley told the president, “and I know firsthand that you’re a man of incredible integrity and character.”

After thanks to the president and vice president and to his colleagues, friends, wife, and children, and after good wishes for the incoming chair of the Joint Chiefs of Staff, United States Air Force general Charles Q. “CQ” Brown, Milley went on to explain his principles for the nation. His speech did not mention any names, but it was nonetheless a sharp rebuke to former president Trump and those who would abandon our democracy in favor of a dictator:

“Today is not about anyone up here on this stage…. It’s about something much larger than all of us,” Milley said.

“It’s about our democracy. It’s about our republic…. It’s about the ideas and values that make up this great experiment in liberty. Those values and ideas are contained within the Constitution of the United States of America, which is the moral North Star for all of us who have the privilege of wearing the cloth of our nation.

“It is that document…that gives purpose to our service. It is that document that gives purpose to our lives. It is that document that all of us in uniform swear to protect and defend against all enemies, foreign and domestic.

“That has been true across generations, and we in uniform are willing to die to pass that document off to the next generation. So it is that document that gives ultimate purpose to our death. The motto of our country is “E Pluribus Unum,” from the many, come one. We are one nation under God. We are indivisible, with liberty for all. And the motto of our army, for over 200 years…has been “This We’ll Defend,” and the “this” refers to the Constitution….

“You see, we in uniform are unique…among the world's armies. We are unique among the world’s militaries. We don’t take an oath to a country. We don’t take an oath to a tribe. We don’t take an oath to a religion. We don’t take an oath to a king or a queen or to a tyrant or a dictator. And we don’t take an oath to a wannabe dictator. We don’t take an oath to an individual.

“We take an oath to the Constitution, and we take an oath to the idea that is America, and we’re willing to die to protect it.…

“Those who sacrificed themselves on the altar of freedom in the last two and a half centuries of this country must not have done so in vain. The millions wounded in our nation’s wars did not sacrifice their limbs and shed their blood to see this great experiment in democracy perish from this earth. No. We the United States military will always be true to those that came before us. We will never, under any circumstances, turn our back on our duty….

“From the earliest days, before we were even a nation, our military stood…in the breach, has suffered the crucible of combat, and has stood the watch and defended liberty for all Americans. Each of us signs a blank check to this country to protect our freedom. The blood we spill pays for our freedom of speech. Our blood pays for the right to assemble, our due process, our freedom of the press, our right to vote, and all the other rights and privileges that come with being an American….

“We the American people, we the American military, must never turn our back on those that came before us. And we will never turn our back on the Constitution. That is our North Star, that is who we are, and that is why we fight.”

It was a pointed statement, coming as it did from the highest-ranking military officer of the U.S. as he voluntarily stepped down from his position.

—

Notes:

https://www.c-span.org/video/?530826-2/outgoing-joint-chiefs-staff-chair-mark-milley-speaks-farewell-ceremony

https://int.nyt.com/data/documenthelper/6990-milley-memo/fc4fb1c4459fbdbc87a7/optimized/full.pdf#page=1