How The Biggest Banks Get Away With Fraud

Summary

This video delves into the manipulation of Exchange Traded Notes (ETNs) and the fraudulent practices of financial institutions. It discusses how issuers profited from declining ETN values, misrepresenting their performance, and how whistleblower Rob's complaints to the SEC reveal major flaws. The video also connects this fraud to broader financial corruption, including past scandals like Bernie Madoff and the global housing crisis. Rob plans to release a detailed mathematical proof exposing how he mirrored these actions for large profits. The video urges regulators to address these issues and protect investors from such deceit.

Takeaways

• 😀 Leveraged and inverse ETNs and ETFs have been manipulated, resulting in billions in profits for issuers while harming investors.
• 😀 ETNs are debt securities on the issuer's balance sheet, and as their prices drop, the issuers profit from this decline.
• 😀 These financial products failed to track their underlying indexes properly, with inverse products not reflecting the expected inverse performance.
• 😀 The SEC was warned in advance about these issues through whistleblower complaints, but it took years for the problems to be acknowledged.
• 😀 A massive financial fraud was orchestrated through the manipulation of leveraged and inverse ETNs, with issuers profiting at the expense of investors.
• 😀 Credit Suisse's ETNs were particularly implicated, and many were delisted after causing significant financial harm.
• 😀 The whistleblower (Rob) predicted the collapse of these products and provided evidence to the SEC, including mathematical models of the fraud.
• 😀 The SEC imposed fines on the involved parties, but this was seen as insufficient, given the scale of the manipulation.
• 😀 The case highlights broader systemic issues in the financial system, including market rigging, fraudulent financial products, and insufficient regulatory oversight.
• 😀 Rob is preparing a white paper to further explain the mathematics behind the fraud, aiming to expose the full extent of the manipulation and its consequences.

Q & A

What is the primary issue Rob is addressing in the video?

Rob is highlighting potential fraud and manipulation within leveraged and inverse exchange-traded notes (ETNs), which are financial products that may have been improperly tracked, leading to significant profits for the issuers while causing losses for investors.

What specific problem did Rob identify with the inverse performance of ETNs?

Rob noticed that inverse ETNs, which should have mirrored the performance of their paired products, were not doing so accurately. For example, if one product lost 10%, the inverse product should have gained 10%, but this did not happen, suggesting mispricing or manipulation.

How did Rob become involved in exposing this issue?

Rob became involved after noticing discrepancies in how ETNs were being tracked and how their performance was inconsistent. He submitted two whistleblower complaints to the SEC, the second of which was in January 2020, shedding light on the problems.

What was the outcome of Rob's whistleblower complaints so far?

As of now, some of the ETNs mentioned in Rob's complaints, especially those from Credit Suisse, have been delisted. However, the full impact of the complaints is still unfolding, as these investigations tend to take years to progress.

Why does Rob compare the ETN fraud to Bernie Madoff’s Ponzi scheme?

Rob compares the ETN fraud to the Bernie Madoff Ponzi scheme because, like Madoff's fraud, the issues with ETNs were initially overlooked. However, once the fraud became undeniable, it gained widespread attention, much like Madoff’s scandal did after it collapsed.

What does Rob plan to submit in his third whistleblower complaint?

In his third whistleblower complaint, Rob intends to provide a mathematical proof or white paper that explains the fraudulent activities he believes are taking place. This document will describe the mathematics behind the fraud and how issuers of ETNs have been able to generate large profits.

What broader issues does the script highlight beyond the ETN problem?

The script touches on broader financial market corruption, including interest rate rigging, market manipulation, the creation of fake financial instruments, and the role of banks in causing crises such as the housing market crash and the 2019 currency exchange scandal.

What does the video suggest about the SEC's role in regulating financial markets?

The video suggests that the SEC has been slow to act on these issues, similar to other major financial scandals. It calls for more vigilance from regulators and urges them to dive deeper into the investigation of fraudulent practices like those surrounding ETNs.

What are the potential implications of Rob’s claim of 40% annual returns?

If Rob's claim of generating 40% annual returns is true, it raises significant concerns about the legitimacy of his profits. Such returns could be a result of market manipulation or other unethical practices, which regulators should thoroughly investigate.

What is the intended purpose of the video according to the script's conclusion?

The video aims to raise awareness about the corruption in the financial system, specifically focusing on the ETN fraud. It encourages regulators and others with influence to investigate the issues presented and to take action to protect investors.