Category: zerohedge

Did China’s “Batwoman” just sicken the world’s newest “Batman”?

The actor reportedly sickened with COVID-19 on the set of the new “Batman” movie – officially titled “The Batman” – is none other than start Robert Pattinson himself, according to Vanity Fair. The actor tested positive, prompting Warner Bros to suspend filming in the United Kingdom.

The unidentified person is “isolating in accordance with established protocols,” Warner Bros. said in a statement. “Filming is temporarily paused.”

According to Bloomberg, the suspension is “a sign of the challenges facing Hollywood as more shows and movies attempt to resume production.” The pandemic brought the industry to a grinding halt in March, and many projects are still on hold.

The key tentpole for WB was supposed to be a key litmus test for Hollywood, as studios re-start production on their biggest projects. WarnerBros has already pushed back its release date until Oct. 2021, from June, since producers say it needs another 3 months to finish filming.

Very few blockbusters have resumed filming since the pandemic went global in March. “Jurassic World: Dominion” was the first major movie to restart, and has been filming at Pinewood Studios in the UK since July as Universal Pictures takes steps to ensure a coronavirus-free environment.

For those who didn’t closely follow the “conspiracy theories” about COVID-19 originating in a Wuhan laboratory, the “Batwoman” is a scientist who has studied coronaviruses for years at the Wuhan Institute of Viroloy, the Biosafety Level 4 lab that’s been flagged by US intelligence as the possible source of SARS-CoV-2, a narrative that the mainstream media typically goes out of its way to label as “unequivocally false”,

Once could argue that in this outfit, she looks a little like Batman villain “Mr. Freeze”.

The Department of Justice will is preparing to slap Google with an antitrust case over the next several weeks, according to the New York Times – which insists, based on five sources, that Attorney General Bill Barr “overruled career lawyers who said they needed more time to build a strong case against one of the world’s wealthiest, most formidable technology companies.”

The Times is suggesting, based on leaks, that Barr is rushing the case for political purposes and the charges are premature.

The Google case could also give Mr. Trump and Mr. Barr an election-season achievement on an issue that both Democrats and Republicans see as a major problem: the influence of the biggest tech companies over consumers and the possibility that their business practices have stifled new competitors and hobbled legacy industries like telecom and media. -NYT

Some 40 lawyers working on a DOJ antitrust inquiry into Google parent Alphabet were reportedly told to wrap up their work by the end of this month, according to three of the five leakers, who we’re guessing are part of the 40-lawyer team – as “most of the 40-odd lawyers who had been working on the investigation opposed the deadline.” Others said they would not sign the complaint, while several left the case over the summer.

Some argued this summer in a memo that ran hundreds of pages that they could bring a strong case but needed more time, according to people who described the document. Disagreement persisted among the team over how broad the complaint should be and what Google could do to resolve the problems the government uncovered. The lawyers viewed the deadline as arbitrary.

While there were disagreements about tactics, career lawyers also expressed concerns that Mr. Barr wanted to announce the case in September to take credit for action against a powerful tech company under the Trump administration.

But Mr. Barr felt that the department had moved too slowly and that the deadline was not unreasonable, according to a senior Justice Department official. –NYT

Barr has shown a “deep interest” in the Google investigation, requesting regular briefings on the DOJ case, and “taking thick binders of information about it on trips and vacations and returning with ideas and notes.”

The Times notes that antitrust action against Google has bipartisan support from a coalition of 50 states and territories, though Democrats and Republican state attorneys general conducting their own investigations are split on how to move forward.

Republicans have accused Democrats of slow-walking the work in order to bring charges under a potential Biden administration, while Democrats have accused Republicans of wanting Trump to receive credit – a disagreement which could limit the number of states participating in prosecuting the Silicon Valley giant.

When the Justice Department opened its inquiry into Alphabet in June 2019, career lawyers in the antitrust division were eager to take part. Some within the division described it as the case of the century, on par with the breakup of Standard Oil after the Gilded Age. It also offered a chance for the United States to catch up to European regulators who had been aggressive watchdogs of the technology sector.

Alphabet was an obvious antitrust target. Through YouTube, Google search, Google Maps and a suite of online advertising products, consumers interact with the company nearly every time they search for information, watch a video, hail a ride, order delivery in an app or see an ad online. Alphabet then improves its products based on the information it gleans from every user interaction, making its technology even more dominant. –NYT

According to the report, Google controls roughly 90% of web searches worldwide, and has been accused of unfair practices because its search and browsing tools are standard on phones with its Android operating system. They also dominate online advertising – capturing about 1/3 of every dollar spent.

Three people familiar with the case say the DOJ has compiled “powerful evidence of anticompetitive practices.”

Read the rest of the report here.

Though we doubt the broader public needed convincing, this is a significant milestone nonetheless, also after last month Trump shocked reporters by suggesting he could take a look at pardoning Edward Snowden: 

Seven years after former National Security Agency contractor Edward Snowden blew the whistle on the mass surveillance of Americans’ telephone records, an appeals court has found the program was unlawful – and that the U.S. intelligence leaders who publicly defended it were not telling the truth.

From the start supporters of Snowden and the journalists who assisted in breaking the story internationally, such as Glen Greenwald, Laura Poitras and others, said the NSA program was a massive violation of citizens’ 4th Amendment protections. 

National security state hawks, however, attempted to focus the story on Snowden himself, saying his ‘traitorous’ actions compromised American spies and assets abroad, and also that it was a boon to Washington’s enemies and rivals like Russia. 

“I never imagined that I would live to see our courts condemn the NSA’s activities as unlawful and in the same ruling credit me for exposing them,” Snowden said on Twitter.

Seven years ago, as the news declared I was being charged as a criminal for speaking the truth, I never imagined that I would live to see our courts condemn the NSA’s activities as unlawful and in the same ruling credit me for exposing them.

And yet that day has arrived. https://t.co/FRdG2zUA4U

— Edward Snowden (@Snowden) September 2, 2020

And the ACLU said “Today’s ruling is a victory for our privacy rights,” adding that it “makes plain that the NSA’s bulk collection of Americans’ phone records violated the Constitution.”

Crucially, the three judge panel on the 9th Circuit specifically credited Edward Snowden for exposing it, as Politico notes:

Judge Marsha Berzon’s opinion, which contains a half-dozen references to the role of former NSA contractor and whistleblower Edward Snowden in disclosing the NSA metadata program, concludes that the “bulk collection” of such data violated the Foreign Intelligence Surveillance Act.

If Trump were to move on pardoning Snowden, who is still a fugitive in Russia facing US espionage charges, this could actually help Trump make the argument politically, despite AG Barr recently saying he’d vehemently oppose such a pardon.

It was only a couple weeks ago that Trump said “I’m going to take a very good look at it” when asked about a possible Snowden pardon.

The president raised eyebrows and anxiety across the D.C. beltway with his unprecedented remarks: “There are a lot of people that think that he is not being treated fairly. I mean, I hear that.”

When CNBC and a handful of other media outlets reported that a deal to sell TikTok to an American suitor would be announced within days, if not hours, we almost immediately called bs. We reasoned that China’s decision to nudge its Department of Commerce to require ByteDance to obtain a license before it can sell TikTok’s core algorithm, a piece of technology that’s critical to the app’s appeal was deliberately done to push the deal past the Nov. 3 election, in an attempt to create political problems for President Trump.

Although they didn’t delve into the CCP’s motivation, one Wall Street analyst from Evercore ISI declared in a recent research note that TikTok would not be sold before the election, before walking readers through the steps that ByteDance must now take to receive a waiver from Beijing.

Evercore’s Donald Straszheim explained that negotiations have likely halted, as BD must jump through a series of carefully constructed hoops. While Straszheim doesn’t expect Beijing to scuttle the deal, he wouldn’t be surprised if the app “goes dark” in the US, like it did in India, as President Trump’s promised ban takes effect. An executive order handed down three weeks ago would force Apple and Google to remove TikTok from their app stores, among other restrictions.

As of Sept. 3, Straszheim said, TikTok negotiations appear to have hit pause, which is necessary so BD can follow through with the procedures outlined by Beijing and the Chinese Department of Commerce.

“ByteDance is preparing documents for Chinese authorities,” Evercore wrote. This is required to obtain a “letter of intent for export license” which the company must obtain before “substantive” talks can take place.

Straszheim expects ByteDance will file with Commerce Sept. 7. That in turn will kick off the “within 30 days” clock for approval or disapproval (this is 30 working days, so with with weekends and holidays off, the end is Oct. 27).

He added that Oct. 27 is the “latest possible day of ruling on ByteDance intention to sell”. While a decision could come earlier, Evercore doubts that very much.

Then, once an agreement is signed, the Dept. Commerce in China will still require a final ruling and review. That should take another 15 days, which would move us past the Nov. 3 election.

Teenagers beware: With Trump again insisting that Sept. 15 is a hard deadline for a sale, Straszheim fears that the app will “go dark” during the run-up to the election, forcing many influencers to migrate to Instagram.

But – fortunately for ByteDance – as the US deal talks stall in the US, a group of bidders is emerging to make an offer for ByteDance’s shuttered India business. India barred the app on national security grounds, one of more than 100 Chinese apps that have been barred by Narendra Modi’s nationalist government, as relations between the world’s two most populous countries deteriorate. Now, SoftBank, with its shares suddenly riding high again after the WeWork fiasco, is reportedly working on assembling a deal group to take a run at BD’s India business, according to Bloomberg.

Anybody who thinks Trump won’t ban the app should look at what’s happening in India, even as BD sues the administration in the US in a legal challenge that could let it off the hook.

To much fanfare, the DOL this morning reported that in the week ended Aug 29, there were “only” 881K new initial jobless claims filed, better than the 950K expected, down from 1.01 million the week prior and the lowest since the covid lockdowns.

The Trump admin was quick to praise these numbers which coming just one day before the suddenly important payrolls report, suggest that August payrolls would be far better than whisper numbers.

There is just one problem: the latest claims report was nothing more than the latest goalseeked government propaganda, boosted this time by a brand new “seasonal adjustment.”

As Goldman explains, the DOL switched from a multiplicative to an additive seasonal factor in this release. If one had applied the historical, multiplicative, seasonal factor, the seasonally adjusted initial claims would have decreased by only 17k to 994k, 44k worse than expected.

Stripping away the seasonal adjustment factor entirely revealed an even uglier picture, as actual initial claims rose from 826K to 833K, a level that has been virtually unchanged for the past 4 weeks.

Furthermore, due to the unprecedented disruption from the covid shutdowns, it is bizarre why one would seek to “seasonally smooth” a historic outlier event which has no precedented in history, and certainly no recurring seasonal component. 

And while a state-by-state drilldown showed a modest improvement, with claims decreasing by 12k in Florida, 6k in Georgia, and 5k in Michigan, they soared by 41k in California. These are real claims, not statistically smoothed for political purposes.

It gets worse: when looking at the initial applications under the separate federal Pandemic Unemployment Assistance program  which targets the self-employed, gig workers and others who don’t typically qualify for state programs, here the number jumped by about 152,000 to 759,000, led almost entirely by an increase in California, and some 86% of the entire traditional Initial Claims print.

Meanwhile, on an NSA basis, continuing claims fell by 765k to 13,104k last week, yet applying a multiplicative seasonal adjustment (i.e., the one that was replaced) implies that seasonally adjusted continued claims increased by 368k to 14,860k.

Separately, when adjusting for biweekly filing schedules in Florida and California, Goldman estimates the level of continuing claims was also slightly higher at 13,389k, while for the week ended August 29, initial Pandemic Unemployment Assistance (PUA) claims increased by 152k to 759k.

Finally adding across all the various continuing jobless claims categories, where pandemic benefits have emerged as the biggest component with nearly 15 million in claims between Pandemic Unemployment Assistance and Pandemic Emergency Claims, the total number of persons claiming benefits across all programs rose by 2.2 million, from 27.0 million to 29.2 million. This number was unadjusted so there was no politically-biased jiggering that the DOL could apply to it, although we should note that figure has been likely inflated by states counting multiple retroactive weeks by one person instead as multiple people.

Putting it all together, Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez said that “It’s very difficult to make any hard conclusions about what one particular week’s worth of data means” adding there’s “still quite a huge amount of people out there that are receiving benefits.”

Yes, 30 million certainly qualifies a “quite a huge” number.

Authored by Michael Snyder via TheMostImportantNews.com,

We are not going to know the winner of the presidential election on the night of November 3rd.  Sadly, we almost certainly won’t know the winner the next day either. 

In fact, it may be many weeks before a winner is formally declared. 

Laws have been passed all over the country to make voting by mail much easier, and it is being very heavily promoted in many states.  It is being projected that at least 83 percent of all U.S. voters will be eligible to vote by mail in November, and that is an astounding number.  If all of those people actually did vote by mail, more than 190 million votes would go through our postal system.  But of course many people will continue to show up in person and vote the old-fashioned way.  We will get the results from those that vote in person on election day very rapidly like we normally do, but it may take a very long time before all of the mail-in votes are tallied. 

As I will explain in this article, this has the potential to create some enormous problems.

It is being generally assumed by the political “experts” that Trump will do very well among those that show up in person to vote and that Biden will do very well among those that vote by mail.

If that assumption is true, some Democrats are warning that it could look like Trump will win the election based on the results that we are given on the night of November 3rd, but once all of the mail-in votes are counted Biden will actually be the true winner.

Specifically, this is a narrative that Democratic pollster Josh Mendelsohn is now pushing heavily.  According to a “scenario” modeled by his firm, the results on election night could show Trump winning 408 electoral votes…

“We are sounding an alarm and saying that this is a very real possibility, that the data is going to show on election night an incredible victory for Donald Trump,” HawkFish CEO Josh Mendelsohn said in an interview with Axios on HBO.

One scenario modeled by Mendelsohn’s polling firm even shows Trump prevailing in the Electoral College on election night, winning 408 electoral votes compared to just 130 for Democratic presidential nominee Joe Biden.

Could you imagine the euphoria of Trump supporters if this is what the numbers actually show on the night of November 3rd?

Everyone would be talking about a “Trump landslide” and there would be wild dancing in the streets in many red states.

But Mendelsohn is anticipating that only about 15 percent of all mail-in votes will be counted by election night, and he believes that once all of the mail-in votes are counted that Biden will be declared the true winner…

That scenario accounts for the idea that just 15 percent of mail-in votes will be counted by election night. In that event, the model suggests, Biden could prevail days later — if counting goes smoothly — by 334 electoral votes to 204 for Trump.

“When every legitimate vote is tallied and we get to that final day, which will be some day after Election Day, it will in fact show that what happened on election night was exactly that, a mirage,” Mendelsohn said.

I don’t even want to imagine the uproar that would be created if such a scenario actually played out.

Even if there was no vote fraud, and even if every single vote was counted accurately, tens of millions of people would still be absolutely convinced that the election was stolen from Trump.

And even Mendelsohn is admitting that the outcome he is projecting would “shake the losing side’s faith in the integrity of the election”.

Personally, I think that mail-in voting is such a bad idea no matter which party it favors.  It opens up so many opportunities for potential vote fraud, and the delay in getting the results is very bad for our nation.

I believe that we will see some precincts in some swing states with a voter participation rate of more than 100 percent this year.  In other words, I believe that in some precincts the number of votes cast will actually outnumber the true number of actual voters.

Let’s keep a close eye on the results as they come in throughout the month of November and see if I am actually correct.  In my opinion there is going to be quite a bit of monkey business going on with mail-in ballots, and President Trump has been greatly concerned about mail-in ballots as well.  In fact, on Wednesday he once again expressed his concern that the upcoming election could be rigged…

Wednesday: Trump retweeted an article from a conservative publication that raised questions about the impact of mail-in voting on the upcoming election and added his own editorial comment. “Rigged election?” he asked.

I have always believed that voters should be required to vote in person as much as possible and that paper ballots should always be used.  Those two measures alone would certainly not completely fix our system, but they would definitely go a long way toward restoring integrity to the voting process.

As it stands now, we are heading into a nightmare election.  We all know that it is exceedingly unlikely that Trump will concede on election night, and Hillary Clinton continues to insist that Joe Biden should not concede under any circumstances…

In a rare joint interview with American Urban Radio Washington Bureau Chief April Ryan, Hillary Clinton added to her demands that Democrat Joe Biden not concede on election night, and Bill Clinton suggested that Trump will reinforce the White House to keep officials from pulling him out on Inauguration Day.

“Do not concede under any circumstance because I believe the other side is going to cheat and sneak and try everything they possibly can,” said Hillary Clinton in the “#COVID Conversations” interview broadcast via Instagram.

So we are probably going to have to wait for weeks before every vote is finally counted.

And then if it is still very close, there will probably be legal challenges which will have to work their way through the courts.

If things are tight enough, we may not have a formal winner until some time in 2021.

No matter who ends up being victorious, I believe that the election of 2020 is going to be a nightmare for America.  It is likely that we will see vote fraud on a scale that we have never seen before, millions of those on the losing side will probably never accept the final result as legitimate, and the chaos caused by a contested outcome could result in even more violence in our streets.

We will see what happens, but right now I have a very, very bad feeling about what is going to happen in November.

Hilton Times Square is the latest causality of the virus-induced downturn that has crushed the global hospitality industry.

A filing with the New York State Department of Labor on Aug. 31 said the iconic 478-room hotel situated on 234 West 42nd Street would ‘permanently close’ on Oct. 1.

WSJ reached out to Sunstone Hotel Investors Inc., the real estate investment trust which manages the hotel for more color on the upcoming closing. 

A Sunstone spokesperson responded in an emailed statement by indicating the filing to New York state officials “was not intended to imply that there is a permanent closure.”

The spokesperson said the filing was intended to inform state officials that layoffs would be seen in the coming months as a result of the closing, adding that a “definitive reopening date has not been determined or established and will be impacted by negotiations with our lender, as well as market conditions.”

Last month, Sunstone revealed in an SEC filing that it had missed several months of mortgage payments on the property. The REIT has at least $77 million mortgages coming due on the property in November. It wrote down the value of the property by $107.9 million, to $61.3 million.

The closure of the hotel is an ominous sign of how the virus pandemic has wrecked not just the New York City hotel market but the worldwide travel industry. 

A slow recovery is expected for the worldwide hotel industry, with a full recovery not expected until the midpoint of the decade. Readers may recall as travel and tourism remains in a bust cycle, the next Big Short, or Big Short 3.0, is CMBX 9. This is what we wrote:

… with CMBX 6 now done, keep a close eye on CMBX 9. With its outlier exposure to hotels which have quickly emerged as the most impacted sector from the pandemic, this may well be the next big short.

CMBX 9 has the highest concentration of hotel loans with 16.7%…

Could the closure of Hilton Times Square be the domino that ripples across the industry? 

After being forced to close his fund, Marble Ridge Capital, after a Jeffries trader and former Navy SEAL reported his dubious conduct to Jeffries General Counsel, who informed the authorities, prompting the trader to record some seriously incriminating and embarrassing phone calls, It looks like Daniel Kamensky is finally in custody.

Prosecutors in New York announced Thursday afternoon that Kamensky had been arrested and charged with securities fraud, obstruction of justice and extortion for allegedly trying to rig a bidding process involving bankrupt Neiman Marcus as Marble Ridge bid to supply the floundering retailer with a high interest loan.

The news was expected. Just last week, in a Houston courtroom, lawyers for Neiman Marcus pressed a judge to order Marble Ridge to pay out more than $50 million into an escrow account so that Neiman could collect the money promised from the firm before Marble Ridge dissolves. 

More than a week ago, we reported the salacious story of Kamensky’s downfall.  Joe Femenia, the head of distressed-debt trading at Jefferies Financial Group, is the man who, per court filings, taped conversations that brought down Kamensky and his hedge fund down. The proverbial crap hit the fan after Kamensky urged Femenia to not submit a bid for part of the bankrupt retailer, nicknamed “Needless Markups”.

Legal filings show Kamensky telling Femenia to “Stand DOWN”. Probably not a bright thing to say to a Navy SEAL…

When Kamensky realized that he had made a “grave mistake”, and tried to fix things, he only made things worse for himself.

By the time Kamensky urged Femenia, on a second phone call, to “treat the conversation off the books” and to “change his recollection” of how their first call went, Fermenia was recording.

In one, Kamensky pleaded: “[I]f you’re going to continue to tell them what you just told me, I’m going to jail, OK? Because they’re going to say that I abused my position as a fiduciary, which I probably did, right? Maybe I should go to jail. But I’m asking you not to put me in jail.”

That’s not a great look.

The charges were brought by Audrey Strauss, the acting head of the Southern District of New York.

Here’s the full press release:

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that DANIEL KAMENSKY, the founder and manager of New York-based hedge fund Marble Ridge Capital (“Marble Ridge”), was charged in a Complaint in Manhattan federal court with securities fraud, wire fraud, extortion, and obstruction of justice.  KAMENSKY’s alleged criminal acts occurred  in connection with his scheme to pressure a rival bidder to abandon its higher bid for assets in connection with Neiman Marcus’s bankruptcy proceedings so that Marble Ridge could obtain those assets for a lower price.  KAMENSKY then attempted to persuade the rival bidder to cover up the scheme.  KAMENSKY was arrested today and is expected to be presented before Magistrate Judge James L. Cott this afternoon.

Acting Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Daniel Kamensky disregarded his fiduciary responsibility to unsecured creditors of Neiman Marcus – and broke the law – when he attempted to coerce a competitor to withdraw a higher bid for assets of the bankruptcy estate.  As further alleged, acknowledging the illegality of his actions, Kamensky then attempted to obstruct an investigation by trying to persuade the competitor to change his account of the coercion, telling the competitor that otherwise ‘this is going to the U.S. Attorney’s Office.’  As today’s charges show, Kamensky was right about that.”

FBI Assistant Director-in-Charge William F. Sweeney said:  “As alleged, Kamensky intentionally violated his fiduciary duty as a member of the Official Committee of Unsecured Creditors in the Neiman Marcus bankruptcy by preventing the sale of securities to an investment bank so he could acquire the same securities at a significantly lower price for his own fund.  In a conversation with an employee of the investment bank, Kamensky went as far as to say, ‘Maybe I should go to jail.’  Today, we’ve removed the ‘maybe,’ and forced him to answer for his conduct.”

As alleged in the Complaint unsealed today in Manhattan federal court:[1] DANIEL KAMENSKY was the principal of Marble Ridge, a hedge fund with assets under management of more than $1 billion that invested in securities in distressed situations, including bankruptcies.  Prior to opening Marble Ridge, KAMENSKY worked for many years as a bankruptcy attorney at a well-known international law firm, and as a distressed debt investor at prominent financial institutions.
The Neiman Marcus Bankruptcy.

Neiman Marcus, an American chain of luxury department stores with stores located across the United States, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) in May 2020.  At the outset of the bankruptcy, Marble Ridge, through KAMENSKY, applied to be on the Official Committee of Unsecured Creditors (the “Committee”) and was thereafter appointed to be a member of the Committee.  As a member of the Committee, KAMENSKY had a fiduciary duty to represent the interests of all unsecured creditors as a group.

During the bankruptcy process, the Committee had negotiated with the owners of Neiman Marcus to obtain certain securities, known as MyTheresa Series B Shares (the “MYT Securities”), and ultimately, the Committee was successful in coming to a settlement to obtain 140 million shares of MYT Securities for the benefit of certain unsecured creditors of the bankruptcy estate.  In July 2020, KAMENSKY was negotiating with the Committee for Marble Ridge to offer 20 cents per share to purchase MYT Securities from any unsecured creditor who preferred to receive cash, rather than MYT Securities, as part of that settlement.

KAMENSKY’s Fraudulent Scheme

On July 31, 2020, KAMENSKY learned that a diversified financial services company headquartered in New York, New York (the “Investment Bank”) had informed the Committee that it was interested in bidding a price between 30 and 40 cents per share – substantially higher than KAMENSKY’s bid – to purchase the MYT Securities from any unsecured creditor who was interested in receiving cash.
That afternoon, KAMENSKY sent messages to a senior trader at the Investment Bank (“IB Employee-1”) telling him not to place a bid, and followed those messages up with a phone call with IB Employee-1 and a senior analyst of the Investment Bank (“IB Employee-2,” and collectively the “Employees”).  During that call, KAMENSKY asserted that Marble Ridge should have the exclusive right to purchase MYT Securities, and threatened to use his official role as co-chair of the Committee to prevent the Investment Bank from acquiring the MYT Securities.  KAMENSKY also stated that Marble Ridge had been a client of the Investment Bank in the past but that if the Investment Bank moved forward with its bid, then Marble Ridge would cease doing business with the Investment Bank.

The Investment Bank thereafter decided to not make a bid to purchase MYT Securities, and informed the legal adviser to the Committee of its decision.  The Investment Bank further told the legal adviser they made that decision because KAMENSKY – a client of the Investment Bank – had asked them not to.

Advisers to the Committee informed counsel for Marble Ridge of their call with the Employees, and after speaking with KAMENSKY, counsel for Marble Ridge falsely informed the advisers that KAMENSKY had not asked the Employees not to bid, but instead had told them to place a bid only if they were serious.  Later that evening, KAMENSKY contacted IB Employee-1 and attempted to influence what IB Employee-1 would tell others, including the Committee and law enforcement, about KAMENSKY’s attempt to block the Investment Bank’s bid for the MYT Securities.  KAMENSKY said at the outset of the call, in substance, “this conversation never happened.”  During the call, KAMENSKY asked IB Employee-1 to falsely say that IB Employee-1 had been mistaken and that KAMENSKY had actually suggested that the Investment Bank bid only if it were serious, and made comments including the following:  “Do you understand…I can go to jail?”  “I pray you tell them that it was a huge misunderstanding, okay, and I’m going to invite you to bid and be part of the process.”  “But I’m telling you…this is going to the U.S. Attorney’s Office.  This is going to go to the court.”  “[I]f you’re going to continue to tell them what you just told me, I’m going to jail, okay? Because they’re going to say that I abused my position as a fiduciary, which I probably did, right? Maybe I should go to jail. But I’m asking you not to put me in jail.”

During a subsequent interview with the Office of the United States Trustee, which was conducted under oath and in the presence of counsel, KAMENSKY stated that his calls to IB Employee-1 were a “terrible mistake” and “profound errors in lapses of judgment.”
After this series of events, Marble Ridge resigned from the Committee and has advised its investors that it intended to begin winding down operations and returning investor capital.

* * *

KAMENSKY, 47, of Roslyn, New York, is charged with one count of fraud in the offer or sale of securities, which carries a maximum sentence of five years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, one count of extortion and bribery in connection with a bankruptcy, which carries a maximum sentence of five years in prison, and one count of obstruction of justice, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Ms. Strauss praised the work of the FBI.  Ms. Strauss further thanked the Office of United States Trustee and the Securities and Exchange Commission for their cooperation and assistance in this investigation.  She added that the FBI’s investigation is ongoing.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Richard Cooper and Daniel Tracer are in charge of the prosecution.

The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

* * *

Source: DoJ

Authored by Martin Armstrong via ArmstroingEconomics.com,

The New York Times cheered Stalin and constantly reported that this was the way to the future.

Their top journalist, Walter Duranty (1884-1957), was their man in Moscow. The New York Times promoted him to be awarded the Pulitzer Prize for that reporting.

When Gareth Jones (1905-1935) in March 1933 reported this was all a lie, the truth finally began to appear.

It took the New York Times until 1990 to admit to fault in failing to report that there was a famine in Ukraine where Stalin killed so many people.

The New York Times wrote that their reporting on the Russian Revolution constituted “some of the worst reporting to appear in this newspaper.”

Duranty was doing this also to support Roosevelt’s New Deal. He helped install drastic progressiveness in taxation.

In 1932, the top marginal tax rate was increased to 63% during the Great Depression under the Republicans. It steadily increased, finally reaching 94% in 1944 on an income of over $200,000. Under Socialism, President Franklin D. Roosevelt signed the 1935 Act, which introduced the payroll tax on everyone. However, the Socialists marketed it as the “Soak the Rich” tax, but payroll taxed everyone but the rich who did not work for a wage. Today, the majority of low-income earners pay more in Social Security than they do in taxes.

Are we supposed to trust these people again?

The leftist media is continuously supporting the overthrow of our democracy.

They remain dishonest propaganda artists who threaten our very way of life. Once again, we have the media trying to convince us to surrender all our freedoms to create a better world that they dream of along with all other Marxists. They are once again doing everything in their power to destroy our freedoms.

Yesterday we explained that much of the bizarre moves seen in the market in recent weeks can be explained as an unprecedented  gamma “battle” between one or more funds who were aggressively bidding up calls to the point that VIX was surging even as stocks hit 9 consecutive all time highs, while dealers were stuck “short gamma” and in their attempts to delta-hedge the ever higher highs, would buy stocks thereby creating a feedback loop where the higher the market rose, the more buying ensued.

And, as Goldman pointed out this morning following our own observations on the matter yesterday, “each new high for the SPX has come with a higher VIX, and at 26.6 [ZH: make that 32 now] the VIX is now higher than it was at the SPX peaks of March 2000.”

Ahead of today’s market action, Larry McDonald’s Bear Traps report made some follow through observations on this clash between gamma shorts and gamma long, saying that “as we learned with Lehman, greed breaks things. It’s “high-noon” – the only character missing is Gary Cooper. We are witnessing a battle of wills, high speculation where colossal call buyers are forcing the street to get long more and more stock to hedge their upside risk. It’s the March capitulation selling in reverse. Just the way the street had to BUY downside protection in late March (because put buyers outnumbered call buyers 10-1). Today, they are being forced to BUY upside protection in SIZE (call buyers outnumbered put buyers 10-1).””

Just one day later, it appears that this historic gamma squeeze has finally broken and Gary Cooper has finally showed up, with both tech names and the broader market tumbling so perhaps the dynamic that defined the market for much of August is now over.

What happens next? To quote the same PM who a few days ago said that only Tesla matters in this market, well, he hasn’t changed his mind as the following note before the market opened confirmed:

2 things to watch: For convexity selling, the closes in the red for AAPL and TSLA were important. However, watch for confirmation tomorrow morning, further weakness would  trigger new incremental option related selling. Just keep an eye on Tesla, it leads everything and has the highest beta. For a rotation signal, I think KO and PEP, etc tell you something real happening…

Yet as some loose ends have been resolve, the real questions emerge and first and foremost is who was it that led this furious gamma charge higher, taking on virtually every dealer?

Once again, we quote the Bear Traps report which first thing this morning may have identified the culrpit behind the most bizarre market action since the Feb 2018 volmageddon:

“one large buyer has made a colossal splash in the market and the scent of greed has drawn thousands of other market participants into the dangerous game. Several clients in our institutional chat on Bloomberg have cited SoftBank as the original size buyer. We have NO IDEA if this is true, just that highly credible clients have made this reference several times over the last week.”

It is hardly unreasonable to imagine SoftBank, the “brains” behind such catastrophic investments as WeWork, WireFraud WireCard, and countless other failed “unicorns” would desperately try to Volkswagen not just a handful of tech names, but the entire market in the process. After all, Masa Son is desperate to deflect attention from the fact that as we put it last October, “SoftBank is the Bubble Era’s “Short Of The Century.” And if there is one thing that can salvage the Japanese VC titan’s reputation it is a second tech bubble which blows out the valuation of his countless (otherwise worthless) investments which form the backbone of SoftBank’s “AI Revolution” whatever that means.

Yet as while we seek further proof about the identity of the gamma grabber, spare a thought for everyone else that jumped on the bandwagon only to see their “get rich quick” fortunes turn to smoke. Here again is Larry McDonalds with the anticlimax:

It’s a high-stakes game of musical chairs, the ultimate greater fool theory moment. The colossal call buyer has thrown meat in the water and drawn in the sharks, but unfortunately thousands of Robinhood minnows at the same time. When the large players’ exit, the little guy and gal will be left holding the bag. As my first boss told me at Merrill Lynch in 1990, “In options Larry, they show it to you (lush $$ green premium), and then they take it away.”

One final thought: the HFT(s) that frontrun Robinhood traders giveth and taketh away, and today’s elevator down action demonstrates just how furious the selling is – and will be – courtesy of the algos who sense that a tidal wave of retail selling is about to hit.