Another shoe drops in the FX fraud manipulation conspiracy

FX is quite literally, a rigged game.  Not like the stock market, well not exactly.  FX has been, a game of 'how many numbers am I holding behind my back?' and the guess is always wrong!  As we explain in Splitting Pennies Understanding Forex - FX is rigged.  But that doesn't mean there isn't opportunity!  One just needs to understand it.

From Law 360:

French bank BNP Paribas was fined $350 million by the New York State Department of
Financial Services for lax oversight in its foreign-exchange business that
allowed “nearly unfettered misconduct” by more than a dozen employees involved
in exchange rate manipulation, officials announced Wednesday.



From 2007 through 2013, a trader on the bank’s New York desk, identified in the
consent order as Jason Katz, ran a number of schemes with more than a dozen
BNPP traders and salespeople on key foreign exchange trading desks to
manipulate prices and spreads in several currencies, including the South
African rand, Hungarian forint and Turkish lira, officials said.



He called his group of traders a "cartel" and they communicated in a
chat room called "ZAR Domination," a reference to the rand’s trading
symbol, according to the consent order. The group would push up the price of
the illiquid rand during New York business hours when the South African market
was closed, moving the currency in whichever way they chose, and thus
depressing competition, officials said.



Katz also enlisted colleagues at other banks to widen spreads for orders in
rands, increasing bank profits and limiting competition at the customer’
expense, the order says. Some of the traders engaged in illegal coordination
and shared confidential customer information, officials said. As part of a
cooperation agreement with prosecutors, Katz pled guilty in Manhattan federal court in
January to one count of conspiracy to restrain trade in violation of the
Sherman Act.



“Participants in the foreign exchange market rely on a transparent and fair
market to ensure competitive prices for their trades for all participants,”
Financial Services Superintendent Maria T. Vullo said in a statement. “Here the
bank paid little or no attention to the supervision of its foreign exchange
trading business, allowing BNPP traders and others to violate New York state
law over the course of many years and repeatedly abused the trust of their
customers."



BNP Paribas, which employs nearly 190,000 people and has total assets of more
than €2.1 trillion (approximately $2.36 trillion), said in a statement that the
$350 million fine will be covered by existing provisions. It said it had
implemented a group-wide remediation initiative and cooperated fully in the
investigation.



“The conduct which led to this settlement occurred during the period from 2007
to 2013. Since this time, BNP Paribas has proactively implemented extensive
measures to strengthen its systems of control and compliance,” the bank said in
its statement. “The group has increased resources and staff dedicated to these
functions, conducted extensive staff training and launched a new code of
conduct which applies to all staff.”



Three BNPP employees were fired, seven more resigned and several others were
disciplined for misconduct or supervisory shortcomings in relation to the
probe, the order says.



Katz’s attorney, Michael Tremonte of Sher Tremonte LLP, did not respond Wednesday to a call seeking
comment.

But really, what's another $350 Million in the grand scheme of things for BNP?  Just another day's profits in the FX market.

This probe isn't new; regulators have been looking into FX rigging for years.  And practically, the fine won't make any customers whole - it will just shore up the coffers for the NY State department of financial services.  With inflation out of control, they need the money.  

For a detailed breakdown of this virtual monopoly 'they' have on the global financial system, checkout Splitting Pennies Understanding Forex.

DeVere, firm targetting UK expats, said to face SEC probe

NEW YORK -- Wherever there are British expats with money, there’s a DeVere Group office not far away. And in many of those places, the company’s aggressive sales tactics or high fees have drawn the attention of regulators.

Now the financial advisory firm, which says it has attracted $12 billion in assets, including more than $500 million in the US, is under investigation by the Securities and Exchange Commission, according to five former employees informed of the probe by management before they left. About half of the salesmen in DeVere’s New York office have quit or been fired in recent weeks, they say.

Among the irregularities, according to the former employees: The firm for years charged upfront commissions on some investments, even though its SEC registration didn’t allow such fees. Three of the former employees, all of whom asked for anonymity out of fear of retaliation, said some salesmen had cocaine and other drugs delivered to fuel their high-pressure cold-calling. The former employees said the SEC probe concerns compliance issues and has intensified in recent months.

George Prior, a spokesman for DeVere, dismissed questions about the probe and the allegations of former employees, saying he wouldn’t discuss “unsubstantiated rumours or speculation”. Judy Burns, a spokeswoman for the SEC, declined to comment.

“A high quality, results-driven service for our clients is always at the forefront of the firm’s focus,” Mr Prior said in an email, adding that the company was conducting a “strategic review”.

‘Massive Opportunity’

Nigel Green, a British stockbroker, started DeVere in Hong Kong about 15 years ago. He previously had worked at offshore brokerage Britex International, which ran into trouble when a high-yield fund it had been selling stopped paying investors, according to reports in the Financial Times. DeVere bought Britex in 2002, International Money Marketing reported.

Mr Green expanded to the Middle East and Europe, and then to Shanghai, Tokyo, Thailand and Africa, according to promotional videos posted on YouTube. DeVere says it now has 80,000 clients in more than 100 countries.

“When I went abroad, I was really shocked, it was a massive opportunity,” Mr Green said in a video posted on YouTube in 2016. “Today people want international advice.”

Mr Prior, the spokesman for Mr Green, declined to make him available for an interview.

Attractive Pitch

DeVere opened its US outpost in 2012. It hired mainly young British men to pitch their countrymen on the tax benefits of moving their pensions overseas. Former employees say they spent most of their time cold-calling and sending messages on LinkedIn.

The salesmen had an attractive pitch. Under British law, some workers who had retirement savings in the UK could move them overseas and avoid taxes they’d have to pay when they withdrew the money.

There were a lot of fees. In addition to an annual management fee, DeVere would charge a fee on the pension transfer that could be as high as 7%, spread over several years, three former employees said. Clients who transferred pensions would have to decide how to invest the money, giving DeVere salesmen another chance to earn fees.

Among the investments DeVere sold in the US were structured notes from banks including Goldman Sachs Group Inc. and Morgan Stanley, according to the former employees. These investments, a form of derivatives, are a way to bet on the stock market. One Goldman note offered an 11% return if three indexes all went up by a designated date. DeVere received a 4% upfront commission, the former employees said.

Collecting Commissions

Because DeVere registered with the SEC as an investment adviser, not as a brokerage, its employees aren’t allowed to collect commissions.

“If you receive transaction-based commissions then you need to be registered as a broker-dealer,” said Seth Taube, a former SEC enforcement official who’s now a lawyer at Baker Botts LLP in New York.

DeVere didn’t respond to questions about commissions. In 2014, Benjamin Alderson, then head of the New York office, told International Adviser about SEC regulations: “You cannot be anything but squeaky clean or it will show.”

Andrew Williams, a spokesman for Goldman Sachs, said the bank terminated its distribution relationships with DeVere last year, declining to say why. Mark Lake, a Morgan Stanley spokesman, declined to comment.

Zip Line

DeVere employees who did well made a lot of money. The firm had about 50 US salesmen at its peak, and the top tier made more than $500,000 a year, former employees said. The best performers were invited to DeVere’s Christmas party in London. At the 2015 event at the Grosvenor Hotel, Mr Green, DeVere’s founder, descended to the stage on a zip line amid fireworks, and the former lead singer of the Pussycat Dolls performed, the employees said.

Mr Green, a trim and diminutive man, visited New York every few months. An employee would be assigned to bring a kettlebell to his hotel room for his morning workouts. Some former salesmen said he reminded them of the sinister nuclear-plant owner Mr Burns from “The Simpsons”.

Three of the former employees said they would drink booze out of paper cups during the day when Mr Green wasn’t watching. Younger guys were sent downstairs to buy drugs from delivery men. Most of the misbehaviour stopped around 2015, the former employees said. Salesmen who worked at DeVere more recently said they hadn’t seen anything untoward.

In 2015, one of DeVere’s few female employees sued for sexual harassment, saying salesmen made vulgar and racist comments about her husband, a black professional football player. The New York Post published a story about the lawsuit with the headline “I worked in real-life ‘Wolf of Wall Street’ den: NFL player’s wife”. Mr Prior, the DeVere spokesman, said at the time that the allegations were “false and incredulous”. The case was settled out of court, though the former employee, Philippa Okoye, has since filed a second lawsuit alleging she wasn’t paid.

Singapore Sanction

DeVere has a history of run-ins with regulators. In 2008, a Singapore subsidiary was fined for using unlicensed advisers and selling insurance products outside its licence mandate, according to a statement by the city-state’s regulator. The firm closed the office that year.

In Hong Kong, a former DeVere subsidiary was fined HK$3.1 million ($398,000) last year for breaches including using unlicensed advisers and failing to hand over information to a local regulator. Mr Green had already acquired another firm, Acuma Hong Kong Ltd., and he uses that brand in the city now instead of DeVere.

DeVere is on a list of firms published by Japan’s regulator that aren’t authorised to solicit investors. It was on a similar list in Thailand, though it isn’t anymore. Its UK subsidiary stopped providing some pension advice this year amid a regulatory review. DeVere has blamed some problems on scammers using its name.

South Africa’s Financial Services Board is also investigating DeVere, according to Nokuthula Mtungwa, a spokeswoman for the agency. Ross Pennell, a former manager of DeVere’s Cape Town office who said he’s been contacted by the regulator, said the probe concerned fees and disclosures. He said clients weren’t told about some of the commissions they were paying or that some investments locked up their money for years.

“In my experience, DeVere was sometimes more focussed on making sales than actually giving proper financial advice,” Mr Pennell said in an interview.

After leaving DeVere in 2014, Mr Pennell sued the company over an unpaid bonus and other money he says he was owed. He said he then received threatening anonymous phone calls, and a mobile phone message with what appeared to be surveillance photographs of his wife and children. He reported the threats to South African police, who determined there wasn’t enough evidence to pursue the matter. A judge ruled in favour of Pennell in the pay dispute this month, but DeVere is appealing.

Pension Warning

An SEC investigation may not be the biggest threat to offshore advisers like DeVere: In March, the UK government imposed a 25% tax on some pensions transferred overseas. The UK Financial Conduct Authority also posted a warning on its website in January about the risks of pension transfers, such as advisers who recommend high-risk investments or scams.

DeVere said in a May 13 press release that its strategic review will involve a corporate restructuring and should be completed by the end of the month. The company sold its Bahamas operation to its managers and has been busy this year setting up new businesses. It got an investment-banking licence from Mauritius, an island east of Madagascar, opened a private bank on the Caribbean island of St. Lucia and started a “global e-money app” that it says will rival traditional banks.

“Banking as we have known it until now is finished,” Mr Green said in an April 10 press release announcing the app.

http://www.bangkokpost.com/business/world/1255574/devere-firm-targetting-uk-expats-said-to-face-sec-probe

Timeshare Fraud - the hot new securities fraud

Every now and again we at Elite E Services stumble upon business models in the course of our operation that are sometimes interesting but alarming at the same time - in this case, timeshare fraud.  After having our head held under water by combination of ugly circumstances (tough regulation making business impossible but at the same time losing millions to Forex fraudsters which ironically the regulations failed to stop); we are sensitive on fraud - especially that which does not appear to be on the surface!  And as markets evolve, so do fraud models.. 

With the conviction of stock lending fraud master and citizen of Boca Raton Florida Jeffrey Spanier, stock lending fraud is on the way out:

SAN DIEGO – Jeffrey Spanier, a 51-year-old former owner of Amerifund Capital Finance, LLC located in Boca Raton, Florida, was convicted by a federal jury today for his role in an elaborate stock-loan fraud scheme in which executives and shareholders of publicly traded corporations collectively lost over $100 million when the stock they pledged as collateral for loans was immediately sold in order to fund the loans.

Why this is a good example though - this fraud was perpetrated at the highest levels.  Victims of this fraud included the who's who of Wall St., corporate executivies, ultra high net worth individuals, and even Bono (

This may have to be a multi-part series as we uncover this new type of fraud which may be the next big 'securities fraud' as what we are looking at - appears to be unregistered securities.  Let's start with a short history of what a timeshare is and how we got where we are.  

Long ago, before the dinosaurs, the Johnson family wanted to share their lake cottage with the Smith family for the summer, and asked them to kick in for the repairs of the old dock.  Or something like that.  And then it became a business - of course starting from the infamous Fort Frauderdale, Florida (during this time Boca Raton was still a swamp, inhabitied only by IBM and some Japanese..)

The first timeshare in the United States was started in 1974 by Caribbean International Corporation (CIC), based in Fort Lauderdale, Florida. It offered what it called a 25-year vacation license rather than ownership. The company owned two other resorts the vacation license holder could alternate their vacation weeks with: one in St. Croix and one in St. Thomas; both in the U.S. Virgin Islands. The Virgin Islands properties began their timeshare sales in 1973 with owners Hillie Meyers, Don Saunders, and Arthur Zimand.

How we got to where we are today follows the same path of all industries; fuelled by Fed policy of cheap money, an expanding real estate market, retiring rich baby boomers, and all the other favorable demographics.  But what insiders in this industry learned quickly was that, they were really selling the dream.  It was possible to sell the nothing, the artificiality.  "Real" estate is just that - it's real.  Timeshare owners don't really 'own' anything, if you read the agreements - it's a contract to pay, an obligation - in perpetuity.  Every time share contract is different but in no case is there actual ownership of 'real estate' - you may own the 'rights' to a 'membership' but if it cannot be 'sold' then what kind of ownership is that really?  What they learned was that the profit here was all in the sizzle, not in the steak - and if they could enhance the sizzle to be 99% and serve Grade B flank steak, they'd have a winning model to become very rich, which was borderline legal.  While the timeshare industry itself is 'legal' and in some states there are 'regulations' - many of the tactics they use, contracts they offer, are illegal.  Many of the 'salespeople' they hire, have criminal records for financial fraud.  In fact, the FTC currently has hundreds of criminal investigations against timeshare companies, timeshare resale scams, timeshare fraud, and related illegal activities.  Similar to how the Forex fraud we saw had nothing to do with Forex, many of these frauds have nothing to do with timeshares.  People are so desperate to sell their obligations, when a scammer calling from Mexico says he can 'resell' your timeshare (which is practically impossible) hopeful victims wire thousands of dollars to the foreign bank account with little respute.  Doesn't sound like a lot of money for a scam, but - multiplied by the 10 Million timeshare owners out there, this can add up to millions of dollars for the fraudsters.

When you 'buy' a timeshare 'contract' it's sort of like a debt, you are obligated to pay and if you die, your children will inherit the payments.  Sounds a lot like a bond!  Yes, these are unregistered securities.  The 'exchange' as they call it, RCI, is an unregistered exchange.  There are issues with the SEC, the CFTC, the states, and possibly even anti-trust issues.  Some of these issues are starting to be talked about in the financial media:

Summary

• Analysts upgrading HGV are not considering the 'dark side' of this industry.
• Potential liabilities can spring up anytime that can change this tune.
• Angry customers complain, which can soon become lawsuits, with deleterious consequences.

About half of the big timeshare companies are public companies, so here's where the biggest issues lie.  Because public companies are required to follow rules such as disclosure rules that don't apply to private companies.  So this may be where we see the first complaints.

Really what it comes down to, is a broken model.  Not all timeshares are frauds - but in an inflationary environment, is such a model - fraud removed - profitable anymore?  It's like the Series 7 stockbroker, who used to charge a percent of the trade - now anyone can place their own trade for $9.99 or less whilst sitting in their bathrobe petting their cat.  The timeshare model is a broken bricks and mortar model from the past, it's dead like the shopping mall is dead, just like Amazon is killing retail stores, new upstarts that remain to be seen (still do not exist) will cannabalize this rotten model.  In the meantime, there's a lot to be decided in court.

Even according to industry 'official' statistics, about 17% of timeshare owners are not happy.  Although Diamond is now private and bigger companies have 'cleaned up' their act, reports of false imprisonment, fraud by trickery, misleading sales statements, and outright refusals to comply with customers requests, and just a few of the things still going on.. just read sites like this Consumer Reports (RCI): 

We see no reason to sign up for RCI except to give the company money. We are new members who tried to use RCI for the first time. We wanted to visit El Dorado Suites, Riviera Maya, using our exchange. Through RCI, we have to pay a $399 fee for a mandatory 7-day visit. RCI requires we also pay a $2500 "Mandatory all inclusive" fee for the El Dorado. So that's the cost of our RCI membership, plus a $399 fee, plus a $2500 all-inclusive fee. Curious, we logged into El Dorado's home page and found we could sign up for the exact same vacation, not using RCI, for a total cost of $2200, also all-inclusive. So the all-inclusive fee alone is more than the actual cost of staying at the El Dorado Suites, without having ever met an RCI salesperson.

...

I have been with RCI approx 12yrs. My previous issues have been the fact that they charge for unused points... Live and learn. My complaint is that I had to cancel a reservation. It's unfortunate but situations do arise and plans have to get changed. I cancelled 5-days prior to my check-in date. RCI WILL NEITHER REFUND NOR CREDIT my charge of $99.00! They say they have a 24-hour 'grace period'. I feel this is a major RIP-OFF to consumers and extremely bad business practice. I have contacted them by email, customer service and 'blabbering' supervisor. I was told "they have to keep the lights on" in order to provide their service. Well, RCI, my lights need to be on as well!! BUYER BEWARE.

You get the idea.  One can spend a weekend reading these, it does make more interesting reading than outright financial fraud, but eventually it will make you want to vomit.  You can't call this a business model - you have to call it 'fraud' or 'scam' because it's like that.  If normal companies operated like this, they'd be shut down.  Imagine walking into Wal Mart and instead of their 'no questions asked' return policy they argued with you and told you there was a 'grace period' or some such nonsense, there would be riots, boycotts - Wal Mart would be no more.  90% of business operates like that.  The only exception is software sales because practically, once you 'download' the software you can copy it and there's no way to prove that you didn't.  Other than that - and some other rare exceptions, you can't lock people in a room for 8 hours without their permission.  Readers - this is a time-bomb waiting to explode!  How can we profit from it?  Short the stocks; (HGV) (WYN) (VAC) et al   

If you own a timeshare and want out, there are only a few lawfirms who are actually law firms who can do this for you, like this one Fortis Law Group PLC.  There are also hundreds of scam companies claiming to be 'timeshare resale experts' who even have 'licenses' to do this - but beware - this is a scam too!  This industry is filled with fraud from one end of the business cycle to the other.  It can only be explained by George Carlin, with this clip:

We know what we have to do.  Let's get working!

For a detailed breakdown of how the financial system works (in reality - not how it is supposed to work) - checkout Splitting Pennies Understanding Forex.

Visit our sponsor Please Order It.com

Hilton Grand Vacations Due For Grand Reality Check

Summary

Analysts upgrading HGV are not considering the 'dark side' of this industry.

Potential liabilities can spring up anytime that can change this tune.

Angry customers complain, which can soon become lawsuits, with deleterious consequences.

There's no dispute that Hilton Grand Vacations Inc (NYSE:HGV) has been doing well over the past few weeks. But, and it's a big but, most of this buying has been fueled by analyst reports, such as this one:

Nomura reiterated their buy rating on shares of Hilton Grand Vacations Inc in a research note published on Friday morning. The brokerage currently has a $43.00 price target on the stock.

We all know how this goes; a huge Wall St. bank has to unload a fund position so they ask their buddies in the analysis department to publish a buy or hold rating on the issue which they know will be good for a few points. Of course it doesn't always happen that way, but the conflict and potential for conflicts should not be ignored by investors. Many investors already don't pay attention to what the analysts say, or else Seeking Alpha wouldn't be so popular!

Read the entire article at Seeking Alpha https://seekingalpha.com/article/4073367-hilton-grand-vacations-due-grand-reality-check 

Trading Fortunes Depend on a Mysterious Antenna in an Empty Field

It was an odd transaction from the outset: $14 million, double the going rate, for a 31-acre plot of flat, undeveloped land just west of Chicago. In the nine months since, the curious use of the space has only added to the intrigue. A single, nondescript pole with two antennas was erected by a row of shrubs. Some supporting equipment was rolled in. That’s it.

But those aren’t ordinary antennas. And the buyer of the property isn’t your typical land investor. It’s an affiliate of a company called Jump Trading LLC, a legendary and secretive trading firm that’s a major player in some of the most important financial markets. Just across the street, it turns out, lies the data center for CME Group Inc., the world’s biggest futures exchange. By placing its antennas so close to CME’s servers, Jump may be trying to shave maybe a microsecond -- one-millionth of a second -- off its reaction time, potentially enough to separate a winning from a losing bid in trading that takes place at almost the speed of light.

It’s the latest, and perhaps boldest, salvo in an escalating war that’s being waged to stay competitive in the high-speed trading business. The war is one of proximity -- to see who can get data in and out of CME the quickest. A company called McKay Brothers LLC recently won approval to build the tallest microwave tower in the area while another, Webline Holdings LLC, has installed microwave dishes on a utility pole just outside the data center.

“It tells you how valuable being just a little bit faster is,” said Michael Goldstein, a finance professor at Babson College in Babson Park, Massachusetts. “People say seconds matter. This is microseconds matter.”

Platform Shoes

Traders have long fought ferociously to gain an edge, even to the point of wearing ultra-high platform shoes to stand out in the era when they shouted and waved their hands to execute an order. The dubious fashion was mercifully ended in 2000 by CME’s predecessor, the Chicago Mercantile Exchange, which cited a rash of injuries in banning shoes with soles higher than 2 inches.

The battle for speed was later waged over fiber-optic cable and then, within the past decade, microwave technology, which can convey data in nearly half the time.

Jump Trading declined to comment, but in Aurora it appears that it, too, was reacting to competitors in the latest round of jockeying. In October 2015, McKay Brothers, a company that sells access to its microwave network to high-speed traders, leased land diagonal to the CME data center, under the name Pierce Broadband LLC, according to DuPage County property records.

Last month, the county gave McKay approval to erect a 350-foot high microwave tower that could be 600 feet closer to the data center than its current location, records show. Two trading firms, IMC BV and Tower Research Capital LLC, own minority stakes in McKay. Co-founder Stephane Tyc said his firm may never build the tower but it would be part of the firm’s continual efforts to speed transmission time. 

Utility Pole

Then there’s Webline Holdings. In November 2015, it was granted a license to operate microwave equipment on a utility pole just outside the data center, according to Federal Communications Commission records. Webline has licenses for a microwave network stretching from Aurora to Carteret, New Jersey, where Nasdaq Inc.’s data center is located. Messages left for Webline were not returned.

Last year, the Jump Trading affiliate World Class Wireless purchased the 31-acre lot for $14 million, according to county records. “They paid probably twice as much as it’s worth,” said David Friedland, an executive director in commercial real estate firm Cushman & Wakefield’s Rosemont, Illinois, office. “I don’t see anyone else paying close to that price.”

The license for the transmission dishes is held by a joint venture between World Class and a unit of KCG Holdings Inc., a trading firm that Virtu Financial Inc. is acquiring.

Fiber Cable

It’s unclear which firm is now closest to CME servers. Trading data first leaves CME computers via fiber cable, and then to nearby antennas that send it by microwave to other towers until it reaches New Jersey, where all the major U.S. stock exchanges house their computers. The moves in Aurora are intended to reduce the time that the data is conveyed through cable.

Sending data back and forth between the U.S. Midwest and East Coast allows high-frequency traders to profit from price differences for related assets, including S&P 500 Index futures in Illinois and stock prices in New Jersey. Those money-making opportunities often last only tiny fractions of a second.

There may be a simple way to avoid the skirmishing among traders. A microwave tower could be installed on the roof of the CME data center to eliminate the need for jockeying around the site. The exchange is indeed looking at allowing roof access, along with CyrusOne Inc., the company that bought the data center last year, CME said in a statement. Traders being traders, however, they may continue to battle, this time for the most advantageous position on the microwave tower itself.

“We are confident the CME can provide an alternate and better solution which offers a level playing field to all participants," said McKay’s Tyc.

https://www.bloomberg.com/news/articles/2017-05-12/mysterious-antennas-outside-cme-reveal-traders-furious-land-war

ALERT: Euro impending collapse, but don't worry - FX is simple

Forex is the most simple market in the world.  As we explain in our book Splitting Pennies - Forex is the underpinning of the world's financial system.  Although it is also the least understood market, there's nothing 'sophisticated' about FX.  Take a dollar, exchange it for a euro.  The rate changes - exchange it back.  Simple!  Trading money.

There is no '2 day settlement' in Forex, a custodian, there's no Reg D, no Reg NMS - there's no HFT front running your orders, there's no 'order types' - there's no exchange rules (because there's no exchange).  Actually, when you strip away the complexities of most markets like securities, bonds, real estate, commodities, FX is many times over the most simple market.  

Understandably, the securities market is the most widely promoted to investors because of the potential for making high returns from participating in corporate ownership (and thus ownership of profits).  But securities are a derivative.  Investors don't really own the companies - they own the shares.  And actually to be technical, they don't own the shares too - they are controlled by a huge custodian DTCC.  The securities, bond, and futures markets are the core of modern capitalism.  But they aren't a necessity, they are an abstration and thus - have complex rules.  Or to say differently - the banking system needs the real economy - the real economy doesn't need the banking system.

How do these abstract markets drive inflation?  Here's how.  QE doesn't directly go into the economy.  However, by keeping interest rates low, both in real terms and buy the Fed's various asset purchase programs - it means money has never been cheaper.  With cheap money, it's easy for i-banks to borrow at zero or near zero rates, invest in any index at 2x or 4x leverage and get their 20% - 40% per year with virtually no risk (that is, no seen risk - there is huge tail risk that one day the market will collapse, which it will for sure, like the big bubble that it is.)  

The 'stock markets' have become so intertwined with the real economy, they have made themselves a necessity.  Like a virus that has taken over a host, now it would be practically impossible to kill the market without affecting the overall economy.  All of this has become so complicated, with so many involved parties - it has become a giant spider web.

On the topic of the Fed and their direct stock market alleged manipulation, consider the following.  The Fed is owned by the member banks.  The Fed gives it's QE to the member banks, almost all of which are now publicly traded companies.  Here's where the paper trail begins for the 'conspiracy crowd' about the Fed being owned by nefarious 13 families:  Public disclosure rules mean that anyone can lookup what's going on at Bank of America (BAC).  Hiding significant information at public companies is very difficult, and becoming more and more difficult with the digitization of records, communications, and basically all aspects of business, which by the way is all 'doubled' and recorded on a network level by ATT (T) another public company - and stored in an NSA database.  America Inc. is technically a corporation and the states such as South Carolina are more like countries (hence the name 'states') - although you can't buy and sell shares of America Inc. you sort of can, it's called immigration - citizens of USA are sort of like shareholders.  And there's a short side too, record numbers of US Citizens are giving up their citizenship.  So, does the Fed manipulate the stock market?  It's not a fair question, because Fed ownership and operations are completely intertwined with the stock market.  During the time when the Fed was created, America was just passing the wildcat banking era, where there were thousands of private banks.  Do not confuse 'private banking' with a 'privately owned bank' - private banking is discreet services for rich people who may want to hide their assets or not let others know how rich they are.  Privately owned banks are nearly non-existant in the USA today, for a number of reasons - mostly caused by generational wealth transfer and generally a trend towards the institutionalization of assets.  What does that mean?  It means that 100 years ago, things were in YOUR name, if you were JP Morgan or Andrew Carnegie.  Today, it's all in tax havens, the Carnegie foundation, trust funds, and almost nothing is in YOUR name.  That includes banks, which are mostly publicly traded and thus, publicly owned.  The individual has become obsolete.  

So all these tendencies, make the market so complicated it's even confusing to describe.  

All this drama created by Nixon is really in the eye of the beholder - this idea of 'economic collapse' is a fantasy promulgated by religious types in armaggedon style packaging, as if the Earth will explode and burn in a big singularity event.  The reality is that 'economic collapse' is happening every day, simply that only some of us notice it.  

Forex simply guages the tides as they ebb and flow, EUR/USD rate changes, but not really that much.  Brexit gave us a 9% move which is huge for FX but not really statistically significant in the grand scheme of things.

Take a look at EUR/GBP for last 10 years:

This is a monthly chart.  You can see why FX is not interesting for the general public.  But it takes a lot less time to understand FX than the stock markets.  FX is simple.

As we head into a potential complete meltdown of the Euro, and tomorrow's NFP, we're heading into an event that may change the face of FX forever.

Dear Trader,

With the upcoming second round of the French Presidential Election this weekend, we require that your account balance plus any open profit or loss covers at least 3% of the total notional exposure across all EUR crosses and EUR Equity Index CFDs by 4pm (UK time) Friday, 5th May 2017. Where the cover is lower than 3%, we may reduce your positions to increase the cover on your account before the market close.

Exit polls will be released prior to the market open on Sunday, 7th May 2017 and there is increased risk of wide spreads and large price gaps on the market open and through the night. Please ensure you are comfortable with the exposure on your open positions leading into the market close on Friday, 5th May 2017.

If you have any queries, please do not hesitate to contact Client Services by calling +44 20 3192 XXXX or emailing XXXXXX.

FX and CFDs are leveraged products that can result in losses exceeding your deposit. They are not suitable for everyone so please ensure you fully understand the risks involved.

Kind regards

LMAX Exchange

Client Services Team

To get a primer on what this FX is all about and how it's really more simple than any other market - checkout Splitting Pennies - Understanding Forex.