CFTC Charges MF Global Trader With 'Banging the Close' - Four Years Ago

Bart Chilton and the CFTC have charged an MF Global Trader with 'banging the close' in the palladium and platinum markets, four years ago.

Four years is a long time. That is about the time they started their intense investigation into the silver market manipulation that has been slow cooking like a pork shoulder in a smoker. We can't hardly wait.

Not to appear too cynical, but this sounds like the local sheriff shaking the doughnuts off his shirt and arresting a graffiti artist when people start complaining about the wide open graft and corruption plaguing the county in drugs, gambling, prostitution, and murder.

Banging the close? A couple of the Big Banks have been banging the metals markets like rhinos in heat almost every day.

I am sure this action will frighten Wall Street into righteous compliance with the law. And the muppets may be heartened by it.

Or at least that is what those whose minds are in the Beltway culture think.

Reuters
Ex-MF Global trader charged with manipulation
By Christopher Doering
Mar 14, 2012 6:25pm EDT

(Reuters) - The U.S. Commodity Futures Trading Commission said on Wednesday it charged a former MF Global broker with attempted manipulation of palladium and platinum futures prices during a two-year period on the New York Mercantile Exchange.

The CFTC complaint alleges that Joseph Welsh, while working for the firm, used a manipulative scheme commonly known as "banging the close" between at least June 2006 through May 2008 on no fewer than 12 separate occasions to alter prices.

Banging the close occurs when a trader acquires a substantial position leading up to the closing period, and then offsets the position before the end of trading to try to manipulate closing prices.

"We have some new manipulation authority" under the Dodd-Frank financial reform law enacted in 2010, said Bart Chilton, a Democratic CFTC commissioner, speaking at the Futures Industry Association annual meeting in Boca Raton.

"We're looking at all our authorities, including our new manipulation authority, and we're going to use them as aggressively as we can," continued Chilton, who was not speaking directly about this case...

Gold Daily and Silver Weekly Charts - Bonus Army and Business Plot

Another bear raid.

As a reminder this is the big 'triple witching' option expiration for stocks this week. The miners are fair game.

As you may recall, there was a significant amount of civil unrest in 1932, which was a presidential election year.

The Bonus Army of WW I veterans occupied Washington until they were forcibly dispersed by the US military led by Douglas MacArthur. The veterans had been encouraged in their peaceful occupation by Smedley Butler, Major General of the US Marine Corp.

Butler later testified in 1934 that he had been approached by several powerful industrialists who asked him to bring the Bonus Army back to Washington and take the government by force of numbers from then President Franklin Roosevelt, in a scheme that was known as The Business Plot.

This reminds me of the co-opting of the Tea Party, which started as a protest against TARP and the bank bailouts, by today's monied interests.

Fortunately our modern day Herbert Hoover is not so much the liquidationist as his business friendly predecessor.

Obama understands the need for bread, and Wall Street supplies the circuses.

But if history rhymes once again, this could be a long, hot summer.

SP 500 and NDX Futures Daily Charts

Just another glorious day in the Pax Americana.

At least we have the Republican primary for comic relief. 

I heard one of the funniest lines of the season so far from Chris Matthews.

"When you watch footage of Mitt Romney on the campaign trail in Mississippi and Alabama, he looks like Prince Charles on a royal tour of New Guinea."

It is remarkable how the Party and their Media ignore Ron Paul. I don't think he has the traction to run as a Third Party candidate, but there is always room for hope.

Currency Wars: Are American Derivatives Dealers Leaving Europe?

Or possibly being invited to leave?

It is probably nothing, but I could not help but notice that Mr. Greg Smith, who has famously resigned from Goldman Sachs and company, was

"an executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa."

Perhaps in addition to the anger he felt in the spoiled climate of his firm, Mr. Smith was also disgusted that the greed of Goldman had gotten their wings clipped, and gotten them effectively tossed off the continent.  There is no more disgruntled employee than one who works hard, and see the foolish decisions of his management needlessly ruin it.  I remember talking to traders and brokers in the 1970s who cursed the foolish greed of the higher ups that had driven the public from the markets and left them scratching for a living.

And just the other day, we had the somewhat terse, and very quiet, announcement from the CFTC that the CME was vacating their license to be a clearing broker for derivatives in Europe located in the City of London.

March 13, 2012

CFTC Vacates CME Clearing Europe Limited Registration as a Derivatives Clearing Organization

Washington, DC—At the request of CME Clearing Europe Limited (CMECEL), pursuant to Section 7 of the Commodity Exchange Act, the Commodity Futures Trading Commission issued an Order on March 13, 2012, vacating the registration of CMECEL as a derivatives clearing organization.

Is the European leadership doing something behind the scenes to clamp down on the rampant speculation and fraud in the paper derivatives market that has almost wrecking their economy?

Probably too good to be true.

But I am also thoughtful about the recent moves in Germany and Switzerland to audit and even repatriate their gold from the States where much of it has been kept in trusting custody these many years, fearing that perhaps it has been re-hypothecated.

All a part of the currency war, perhaps. And it is notoriously hard to see what's what when the fog of war descends.