Circling back to Merrill Lynch – 2008…
ZeroHedge, Jun 26, 2019 – Excerpts:
On Tuesday [Jun 25, 2019] after the close, the CFTC announced that Merrill Lynch Commodities (MLCI), a global commodities trading business, agreed to pay $25 million to resolve the government’s investigation into a multi-year scheme by MLCI precious metals traders to mislead the market for precious metals futures contracts traded on the COMEX (Commodity Exchange Inc.). The announcement was made by Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office…..
As MLCI itself admitted, beginning in 2008 and continuing through 2014, precious metals traders employed by MLCI schemed to deceive other market participants by injecting materially false and misleading information into the precious metals futures market.
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Federal Reserve emergency lending – Merrill Lynch & Co.
Excerpt:
“Merrill Lynch & Co.‘s stock surged 30 percent after the New York-based securities firm announced an agreement to sell itself to Bank of America Corp. in September 2008. The deal didn’t stop the firm’s liquidity from shrinking by about $27 billion in three days that month, according to internal Federal Reserve Bank of New York documents. In the ensuing weeks, the firm drew as much as $62.1 billion from the Federal Reserve’s Primary Dealer Credit Facility, Term Securities Lending Facility and single-tranche open market operations. After the takeover closed on Jan. 1, 2009, Charlotte, North Carolina-based Bank of America let Merrill’s Fed loans roll off while increasing its own liquidity draws from the central bank.”
Peak amount of debt on 09/26/2008: $62.1B
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Merrill Lynch engaged in a high-stakes leveraged speculation gambit which blew up when the subprime default wave hit and the mortgage backed securities (MBS) warehoused on their balance sheet plunged in value. They were subsequently rescued by the Fed, to the lively tune of $62.1 billion.
Additional background information on some of the investment practices engaged in by ML over several years immediately preceding the $62.1B secret bailout:
DealBook-NYTimes reported on January 25, 2011: “Merrill Lynch Settles S.E.C. Fraud Case”
Merrill Lynch “agreed to pay $10 million on Tuesday to settle fraud accusations by securities regulators.”
“The Securities and Exchange Commission had accused Merrill of fraud, saying that the firm misused private information from its customers to place trades on its own behalf and that the firm repeatedly charged its customers trading fees without their knowledge.”
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