AVZ Discussion 2022

[Bin59]

Brokers Get Unfair Profits From Lending Stock, Pension Funds Say​

Bill Alpert
July 7, 2022 2:00 am ET

A federal magistrate recently recommended class-action status for an antitrust suit concerning share loans.

SPENCER PLATT/GETTY IMAGES

Five of Wall Street’s biggest brokers are a step closer to defending class-action claims that they conspired to wring unfair profits from the nearly $2 trillion dollar market for stock loans.

A successful class-action case could crimp profits at the prime brokerage units of defendants Goldman Sachs (ticker: GS), Morgan Stanley (MS), UBS (UBS), the J.P. Morgan unit of JPMorgan Chase (JPM), and the Merrill Lynch unit of Bank of America (BAC).

On June 30, Manhattan federal magistrate judge Sarah Cave recommended class-action status for an antitrust case in which a trio of pension funds allege the big brokers run a cartel that extracts unfair profits from stock lending. Stock loans are a key part of the short sales and options trades carried out by hedge funds, as well as a profit source for pension and mutual funds.

When a hedge fund wants to short the shares of a particular company, it first borrows those shares from long-term investors such as investment firms, pension and endowment funds and insurance companies. The prime brokers sit between borrower and lender and have exclusive knowledge of both share inventories and trading strategies. The suit alleges that they abuse this position.
For investment giants like BlackRock or Fidelity that manage America’s pensions and savings, lending shares has become an important source of revenue and one of the reasons they have been able to reduce fees on mutual funds. If the suit is successful, these firms could get even more revenue from share lending.

Stocklending is one of the last, large over-the-counter financial markets in theU.S., and its opacity has been called “a market failure” by the U.S. Securities and Exchange Commission. “This asymmetric information between those in the centre of the lending market and those on the periphery may lead to inferiorterms for those on the periphery,” said the SEC in December, when it proposed new reporting requirements on stock loans.

The prime broker defendants abused their central positions to skim profit from bothlenders and borrowers, says the antitrust complaint filed by three pensionfunds in Manhattan’s federal district court in 2017. The defendant brokersconspired to freeze out challengers that had tried to introduce transparentpricing and central clearing to the stock loan business, says the complaint,which cites conversations in which brokerage executives compared themselves tothe five crime families of the New York mafia. When one of the stock-loanstart-ups pitched his product in 2008, the complaint quotes a securitiesclearing executive as responding: “This sounds great, but who’s going to startyour car in the morning?”

If U.S. District Judge Katherine Polk Failla follows last week’s recommendationfor class-action certification, the three funds that brought the suit—the IowaPublic Employees’ Retirement System, the Orange County Employees’ RetirementSystem and the Sonoma County Employees’ Retirement System—could seek damages onbehalf of hundreds of others.

Representingthem are legal teams led by Daniel Brockett, of Quinn Emanuel Urquhart &Sullivan, and Michael Eisenkraft, of Cohen Milstein Sellers & Toll. Thelawyers have gotten billions from the big banks in settlements of otherclass-action suits over the banks’ behavior in the markets for credit default swaps, bond markets and mortgage-backed securities.

“We’re pleased with Judge Cave’s ruling on class certification,” said Brockett, “and look forward to continued litigation against the banks to maximize recoveries for the benefit of class members.”

When asked about the allegations in the antitrust suit, Goldman Sachs and UBS declined to comment. Morgan Stanley, J.P. Morgan and Merrill Lynch didn’t respond.

Credit Suisse Group
(CS) was also named in the original complaint, but after exiting the prime brokerage business in the wake of the Archegos CapitalManagement debacle, Credit Suisse settled the stock loan suit for $81 million, without admitting to the allegations.

The brokers deny that their stock loans violate antitrust law, and unsuccessfully sought to have the case dismissed. In a day-long hearing before Judge Cave inApril, lawyers for the prime brokers asserted that stock-lending over -the-counter structure helped pension funds find borrowers forless-sought-after stocks, and helped hedge funds get hard-to-borrow stocks. A more transparent stock loan market would threaten the confidentiality of short sellers positions, said the brokers.

In April’s hearing, the pension fund plaintiffs pointed to several overseas markets that introduced central clearing and public pricing to securities lending. In the U.S., public platforms for trading securities like U.S.Treasuries have trimmed clients’ transaction costs. Economists working with the plaintiffs told Judge Cave that the prime brokers’ grip on stock lending had damaged pension funds by at least $5 billion, and hedge funds by over $2billion.

Althoughthe antitrust plaintiffs seek damages on behalf of the hedge fund industry, notevery fund wanted part in the case. Pretrial discovery was stalled for monthsin 2020, when lawyers representing 22 hedge funds told the court they fearedtheir proprietary trading strategies would be exposed in the stock loan recordsthe plaintiffs were getting from the prime brokers. Anonymizing procedures wereestablished, but even then, seven large quant funds opted out of thecase—including Citadel LLC, Two Sigma Investments, Renaissance Technologies,and D.E. Shaw.

Writeto Bill Alpert at william.alpert@barrons.com

 

[Frank]

Imagine you were in the DRC Government and had been dealing with AVZ for the past five years now, from rehabilitating roads, to assisting in the polio vaccination programs to the latest $25million AUD for early works and drilling exploration. You had seen their commitment to employing the locals to help fix up these roads for the oncoming wet season and seen them assist the artisanal miners on the concession, you had read the companies presentations and paid particular attention to their social responsibilities and there social engagement to ensure the community benefits.

Now imagine in comes the Chinese who backdoor into the project stealing from the government (AVZs offer was far superior). The same Chinese who are becoming increasingly known for cheating the DRC out of royalties, taxes and handing out snacks.

Are you going to back the company who has solely progressed this project to the stage of construction, or are you going to back those who offer snacks and are known for cheating your country out of its $$.

It seems like a bloody no-brainer

*Fyi, fwiw, I see where,

Heads of FBI and MI5 raise fresh alarms about Chinese economic espionage ​

‘It’s the Chinese government that poses the biggest long-term threat to our economic and national security,’ Wray says in London speech ​

The head of the FBI and the leader of Britain’s domestic intelligence agency raised fresh alarms Wednesday about the Chinese government, warning business leaders that Beijing is determined to steal their technology for competitive gain.

FBI Director Christopher Wray reaffirmed longstanding concerns in denouncing economic espionage and hacking operations by China as well as the Chinese government’s efforts to stifle dissent abroad, but his speech was notable because it took place at MI5’s London headquarters and alongside the agency’s director general, Ken McCallum, in an intended show of Western solidarity.

The remarks also showed the extent to which Wray and the FBI regard the Chinese government as not only a law enforcement and intelligence challenge, but are also attuned to the implications of Beijing’s foreign policy actions.

“We consistently see that it’s the Chinese government that poses the biggest long-term threat to our economic and national security, and by ‘our,’ I mean both of our nations, along with our allies in Europe and elsewhere,” Wray said.

McCallum said the Chinese government and its “covert pressure across the globe” amounts to “the most game-changing challenge we face.”

“This might feel abstract, but it’s real and it’s pressing,” he said. “We need to talk about it. We need to act.”

A spokesman for the Chinese embassy in Washington, Liu Pengyu, rejected the allegations from the Western leaders, saying in an emailed statement to The Associated Press that China “firmly opposes and combats all forms of cyber attacks” and calling the accusations groundless.

“We will never encourage, support or condone cyber attacks,” the statement said.

In a nod to current tensions between China and Taiwan, Wray also said during his speech that any forcible takeover of Taipei by Beijing would “would represent one of the most horrific business disruptions the world has ever seen.”

Last week, the U.S. government’s director of national intelligence, Avril Haines, said at an event in Washington that there were no indications Chinese President Xi Jinping was poised to take Taiwan by military force, but she did say Xi appeared to be “pursuing the potential” for such an action as part of a broader Chinese government goal of reunification of Taiwan.

After the appearance with his British counterpart, Wray said that he would leave to others the question of whether an invasion of Taiwan was more or less likely after Russia’s invasion of neighboring Ukraine.

But, he said, “I don’t have any reason to think their interest in Taiwan has abated in any fashion” and added that he hoped China had learned what happens “when you overplay your hand,” as he said the Russians have done in Ukraine.

The FBI director said there are signs the Chinese, perhaps drawing lessons from Russia’s experience since the war, have looked for ways to “insulate their economy” against potential sanctions.

“In our world, we call that behavior a clue,” said Wray, who throughout his speech urged caution from Western companies looking to do business in or with China.

He said Western investments in China could collapse in the event of an invasion of Taiwan.

“Just as in Russia, Western investments built over years could become hostages, capital stranded (and) supply chains and relationships disrupted,” he said.

President Joe Biden said in May that the U.S. would respond militarily if China invaded Taiwan, offering one of the most forceful White House statements in support of Taiwan’s self-governing in decades.

The White House later tried to soften the impact of the statement, saying Biden was not outlining a change in U.S. policy toward Taiwan, a self-governing island that China views as a breakaway province that should be reunified with the mainland.

The embassy spokesman said the Taiwan issue was “purely China’s internal affair” and said when it comes to questions of China’s territory and sovereignty, the country has “no room for compromise or concession.”

“We will strive for the prospect of peaceful reunification with utmost sincerity and efforts,” the statement said, though it noted that China will “reserve the option of taking all necessary measures in response to the interference of foreign forces.”

www.marketwatch.com

Food for thought on the Road to Mining Manono

Frank

 

[Thunderpony]

Ok Thats enough chatter about alcohol during JULY ..struggling as it is
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Try weed.

 

[JAG]

 

[JAG]

 

[John25]

And as Nut said …we use to enjoy FOMO Friday …hope the next one brings up something

 

[BRICK]

View attachment 10892

He’s a fucken tool that bald headed knob.

 

[cruiser51]

And for the weekend...



For the for the German challenged team members, please use auto translate.

 

[JAG]

And for the weekend...



For the for the German challenged team members, please use auto translate.

 

[wombat74]

Question : How does 15% of AVZ's holding get terminated by a court of law ("according to Zijin ") and it not leak to the market ?

 

[MoneyBags1348]

I know this is off topic but goldman sucks just released another report saying oil will hit $140 a barrel and the Eurozone and UK will follow the US into recession. My opinion only but these arsewipes seem to be in bed with republican members of the US Supreme Court who are now making decisions to stop the US attempts to curb global warming as well as decisions on abortion. I don’t know who else believes in visualisation (like I do) but if everyone here could imagine a crater 100 miles deep opening up on the Earth’s surface and swallowing these cocks, the world just might be a better place

 

[Samus]

Question : How does 15% of AVZ's holding get terminated by a court of law ("according to Zijin ") and it not leak to the market ?

You talking about this Wombat?

"It has been learned that the transfer of a 15% interest in Dathcom between Dathomir and AVZ was terminated by a court of law upon Dathomir’s application, due to significant defects in the original transaction process. Dathomir still holds good legal title to a 15% interest in Dathcom."

World-class Manono Lithium Mine in the DRC to be developed soon, Zijin Mining holds a 15% interest in the project-News-Zijin Mining Group Co., Ltd.

Zijin News – Her Excellency Antoinette N'Samba Kal

www.zijinmining.com

 

[wombat74]

Yep .

 

[Samus]

Yep .

Begs a lot of questions and the subsequent answers that part.

 

[Bull Market]

Friday special today jag?

 

[JAG]

Happy Friday....I'm going for oysters

 

[JAG]

 

[Spikerama]

Happy Friday....I'm going for oysters

View attachment 10928

Well shuck me.

 

[wombat74]

Happy Friday....I'm going for oysters

View attachment 10928

Dont you mean: "Im going for the oyster" ????

 

[MoneyBags1348]

I would of much preferred their mothers had swallowed them to save us all the misery, but to me it's two evil fuckers of the same coin at the top (almost all over the world).

Let's be honest here, I'm here to make money off the bs global warming agenda, but EV's are not saving a single thing, they have a larger CO2 footprint than ICE cars (all things considered, mileage, mining etc etc etc, dem da facts), but I know the the agenda is too strong to not make some coin off it. Now if AVZ could imminently produce some bloody Lithium that'd be fantastic.

We are all here to make money, but if you think global warming isn’t happening or powering an ev off solar panels installed on your rooftop isn’t doing more good for the environment than filling your car up with petrol every week for years on end, then you’ve got me baffled. Maybe have a look at some of the oil producers in Canada as well as the US, see what’s going on and see if you think all those bi-products aren’t going into the atmosphere even before the fuel is put into ice’s and burned producing CO. I like your posts but you sound a little bit like the people that say coal seam gas wasn’t the reason for the flames that were coming out of the water in the lakes and people’s kitchen taps in the US.