Securities Industry Commentator by Bill Singer Esq

May 13, 2020


http://www.brokeandbroker.com/5219/finra-arbitration-severance-barclays/
As the pandemic sweeps across the financial services industry, trading floors are eerily quiet, desks are bereft of men and women, offices are darkened -- and much of what passes for doing business is conducted from home. In a recent FINRA Intra-Industry Arbitration case, we see the shadow of COVID cast a long and dark presence over our industry. We have a former Barclays derivatives trader with a nearly 16-months-old employment dispute waiting to be heard by FINRA arbitrators. We have an arbitration hearing conducted by ZOOM. 

https://www.bloomberg.com/news/articles/2020-05-11/goldman-hsbc-staff-return-to-work-as-hong-kong-eases-curbs?srnd=premium
As reported in part in the Bloomberg article:

In Hong Kong, Citigroup Inc. is planning to install plastic partitions in some work stations as it ramps up office staff. At Bank of China's Beijing hub, the staff kitchen is closed, forcing employees to take turns getting boxed lunches for their colleagues. Morgan Stanley has recalibrated the elevator in its Hong Kong skyscraper for faster rides and fewer passengers.

https://www.bloomberg.com/news/features/2020-05-13/new-book-shares-more-details-on-trader-blamed-for-flash-crash?srnd=premium
Can you believe that it's now the tenth anniversary of the infamous Flash Crash? It seems like only yesterday when on May 6, 2010, the S&P 500 index crashed 5% within minutes. I remember watching it unfold on my Level II screen. I remember that feeling in the pit of my stomach. My, how time flies when you're having fun, getting hammered in the markets, and going stir-crazy after weeks of social distancing and self quarantining. The Bloomberg article offers an excerpt from the upcoming: "Flash Crash: A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History," by Liam Vaughan, published by Doubleday on May 12, 2020.
https://www.amazon.com/Flash-Crash-Trading-Manhunt-Mysterious-ebook/dp/B07WH9YDM8/ref=sr_1_1?dchild=1&keywords=flash+crash&qid=1589364839&sr=8-1

In telling the tale of Nainder Singh Sarao, a 36-year-old day trader who traded from his bedroom in his parents' home, and the individual who is often credited (or discredited) with being Mrs. O'Leary to the cow that purportedly kicked over the lamp that burned Chicago to the ground -- except in Vaughan's book, we learn that:

In 2016, Sarao struck a plea deal with U.S. authorities, agreeing to tell the authorities everything he knew in exchange for a more lenient sentence. The information he provided on the dark arts of electronic trading proved so useful that the government incorporated it into its detection software, helping to lead to spoofing convictions for more than a dozen traders from banks, hedge funds, and high-frequency trading firms. In recognition of his cooperation and a diagnosis of Asperger's, Sarao was spared jail in January, sentenced instead to a year under house arrest-a month before the entire world went into lockdown. More painful for him, Sarao was also banned from trading during the kind of wildly careening markets he relished. This is the story of how Sarao first discovered his knack for playing that game.

Cramer: Elon Musk is 'dead right' to reopen Tesla's auto manufacturing plant in California (CNBC by Matthew J. Belvedere)
https://www.cnbc.com/2020/05/12/cramer-elon-musk-is-dead-right-to-reopen-telsa-california-plant.html
As reported in part by CNBC's Belvedere:

"I think he's dead right," Cramer said, in reaction to Musk saying that Tesla restarted production at its Fremont factory on Monday, in violation of a county coronavirus mitigation order against reopening nonessential businesses.

Bill Singer's Comment:  Dead right? Truly a poor choice of words by Cramer. If Musk is "dead wrong," does Cramer understand that there will be corpses? I respect both sides of the debate. If the restart of Tesla production occurs too soon, men and women on the assembly line will die -- and/or they will bring the infection home and kill their spouses and children. If the restart occurs too late to save the company and its employees, that too is a tragedy, albeit a different one. When all is said and done, it may well be that death is the price for re-opening our economy. Such may be the Hobson's Choice that is the only solution before us. Just don't forget that when choosing between the lesser of two evils, the choice is still for an evil. My guess is that cooler heads will prevail. The County will likely extend some olive branch. The State will likely broker a deal. Like I said -- everyone seems to have the same goal but some folks prefer to stamp their feet like petulant children. And looming large over this all is the haunting fear that we should always be careful what we wish for.

SEC Obtains Judgments Against Florida Men in Ponzi Scheme Action (SEC Release)
https://www.sec.gov/litigation/litreleases/2020/lr24816.htm
In response to a Complaint filed in the United States District Court for the Southern District of Florida
https://www.sec.gov/litigation/complaints/2019/comp-pr2019-239.pdf but without admitting or denying the allegations, Frank Bianco consented to the entry of a final judgment permanently enjoining him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder; and, Bianco agreed to pay $443,997 in disgorgement and prejudgment interest, and a $920,825 civil penalty. Relief Defendant Suzanne Bianco (Frank Bianco's wife) consented to the entry of a final judgment ordering her to disgorge on a joint and several basis with Bianco $49,751, representing the amount of investor funds Bianco paid her, plus prejudgment interest. Previously, the Court entered a default judgment against Neil Burkholz for violating the antifraud provisions of Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder; and, accordingly, he was permanently enjoined and ordered to pay $429, 580 in disgorgement and prejudgment interest plus a $920,825 civil penalty. As alleged in part in the SEC Release:

[B]urkholz, Bianco, and their companies Palm Financial Management and Shore Management Systems solicited investors by falsely representing that their proprietary options trading strategies were highly profitable. In reality, as alleged in the complaint, the defendants invested less than half of investor funds and those investments resulted in near-total losses. The complaint alleged that the defendants misappropriated the remaining funds by using them to repay other investors and by transferring approximately $880,000 of investor funds to Burkholz, Bianco, and their spouses for personal use. According to the SEC's complaint, the defendants sent false reports to investors to conceal their fraudulent conduct and give the investors the false impression they were generating positive returns.

https://www.sec.gov/news/press-release/2020-110
In a Complaint filed in the United States District Court for the Southern District of Florida
https://www.sec.gov/litigation/complaints/2020/comp-pr2020-110.pdf, the SEC charged investment adviser TCA Fund Management Group Corp. and its affiliate TCA Global Credit Fund GP Ltd. ("TCA-GP") with violating the antifraud provisions of the federal securities laws. The Court granted the SEC's request to appoint Jonathan E. Perlman as receiver over the TCA, TCA-GP, and the TCA funds.  As alleged in part in the SEC Release:

[TCA] improperly recognized revenue in order to fraudulently inflate net asset values and performance for several funds it managed, resulting in the funds always reporting positive returns.  TCA allegedly distributed promotional materials to current and prospective investors that included the inflated asset values and false performance results.  According to the complaint, the funds' reported net asset value of $516 million as of November 2019 was inflated by at least $130 million.  TCA and TCA-GP also allegedly distributed monthly account statements to investors falsely representing monthly returns and investment balances based on the inflated asset values.  The complaint further alleges that the funds paid inflated management fees to TCA and inflated performance fees to TCA-GP.

My $1.75 Million Irrevocable Compensation Payment (A Securities Industry Commentator Exclusive from Bill Singer, Esq.)
In the midst of all the horror and sadness of the ongoing COVID pandemic, I received great news. As you will see from the below email, I am the recipient of $1.75 million from the United Nations. I'm usually a skeptic, but having re-read the electronic missive several times, I'm thinking that it's the real deal. After all, who would put $1.75 million on a VISA card and send it to a complete stranger? 

I'll freely admit it. I was a tad suspicious of the bona fides of my windfall until I noted that the actual sender of the email was the "United Nations Monetary Unit," which, as we all know, is one of the world's leading monetary units and has won many, many awards for monetary uniting across the globe. As if that wasn't enough proof of the honest-to-goodness nature of my bonanza, the UN's Monetary Unit is cleverly using the return email address of "jerryjerry514@yahoo.com." Some might find that sender-address troubling. Not me. First off, Mr. Jerry Jerry is clearly a very busy guy -- what with 514 separate email addresses. Also, let's not gloss over the fact that most international Monetary Units -- well, at least the serious ones -- all use a Yahoo.com email account. 

Some of you might laugh and muse that I am an idiot -- my wife does as much. When I told her that a veritable financial bonanza had been bestowed upon me, she mumbled something about another bull-shit spam fraud. I dunno. After all, the email does note that the Mr. Jerry Jerry and his colleagues had "discovered with dismay that your payment has been unnecessarily delayed by corrupt officials of the Bank in an attempt to swindle your fund." You can't make something like that up -- can you? Similarly, Visa doesn't issue ATM cards to everyone. Course not. You'd have to have at least a Yahoo.com account and prove that you're with a reputable organization like the United Nations Monetary Unit. As you can see, I've done my due diligence. 

I'm going to end this commentary now so that I can promptly contact Mrs. Maria Angels, who is the Director of International Payment; and, I'm going to endeavor to furnish her with the requested information in order to facilitate the issuance and delivery of my ATM Visa Card. 

IRREVOCABLE COMPENSATION PAYMENT OF US$1,750,000.00 VIA ATM VISA CARD
FROM: United Nations Monetary Unit

IRREVOCABLE COMPENSATION PAYMENT OF US$1,750,000.00 VIA ATM VISA CARD
We have actually been authorized by the newly appointed Minister of finance and the governing body of the United Nations Monetary Unit to investigate the unnecessary delay of your payment. During the course of our investigation, we discovered with dismay that your payment has been unnecessarily delayed by corrupt officials of the Bank in attempt to swindle your fund which has lead to so many losses from your end and unnecessary delay in the receipt of your payment.

The United Nations and the International Monetary Fund (IMF) has chosen to pay out all the unpaid contract, inheritance and lotto winning claims by Companies and individuals to 150 Beneficiaries from U.S.A, Europe, Canada, United Arab Emirates, Bahrain, Qatar, Saudi Arabia, South America, Australia and Asia and Africa Continent through ATM Visa Card as this is a global payments technology that enables consumers, businesses, financial institutions and governments to use digital currency instead of Cash and Cheques.

We have arranged your payment to be paid to you through ATM Visa Card and this will be issued on your Name and shall be posted directly to your address via DHL or any courier services available in your country. Upon your contact with us, the sum of US$1,750,000.00 will be credited into the ATM Visa Card and this will enable you to withdraw your funds in any ATM Machines in your country with a minimum withdrawal of US$5000.00 per day. Your limit can be increase to any amount upon your request.
In this regards, you are to contact and furnish the requested information to the Directorate of International Payment and Transfer with the followings;

1. Your Name:
2. Country :
3. Age and Sex:
4. Occupation :
5. Mobile Telephone:
6. Delivery Address:
7. Id Card Identification:

Endeavor to furnish the above information to the officers below forth issuance and delivery of your ATM Visa Card;

MRS. MARIA ANGELS
Director of International Payment

We required your urgent response to this email as directed to avoid further delay.
Yours faithfully,
UNITED NATIONS Public Information Office