Jake Zamansky

About the Author Jake Zamansky

Jacob H. Zamansky is the principal of Zamansky LLC, a leading securities arbitration and class action litigation firm in New York which represents both individuals and institutions in structured note, complex securities, hedge fund, and employment-related arbitrations and litigations. He is one of the country's foremost authorities for investors claiming broker wrongdoing, or for brokers claiming wrongful termination or other misconduct by their employer. Mr. Zamansky was at the forefront of recent efforts to "clean up" Wall Street. In 2001, he successfully sued former Merrill Lynch analyst Henry Blodget on behalf of a New York pediatrician misled by Blodget's stock research. The case's successful resolution was the catalyst for New York Attorney General Elliot Spitzer to investigate the conflicts of interest on Wall Street and resulted in the well-reported $1.4 billion Global Settlement, which included many of the biggest names on Wall Street. More recently, Mr. Zamansky is one of the leading litigators and opinion leaders of the subprime mortgage crisis and the related hedge fund collapses, as well as on the misconduct associated with the wide sale of complex structured products to retail investors, representing both investors and mortgage borrowers who were defrauded by Wall Street firms and mortgage lenders.

Wall Street’s Shameful Commodities Market Play

Wall Street banks, which never stopped raking in money despite their key role in causing the 2008 global financial collapse, are at it again.

The latest round of big bank hijinks is hurting the American consumer where it hurts, right in their pocketbooks. Big Wall Street banks are manipulating the prices of commodities like aluminum and copper, and their price rigging activities and Orwellian trading strategies are driving up prices of the commodities that millions of average Americans use every day.

A US Senate report on commodities-market activities released last week underscored the role Wall Street was playing in skewing the commodities markets to its favor. The report accused major banks such as Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) of “being so powerful they were able to influence prices, gain trading advantages and put the broader financial system at risk by entering volatile businesses such as uranium trading and coal production,” according to a Wall Street Journal report by Christian Berthelsen and Ryan Tracy.

What’s more, Wall Street is creating a scenario in which it can shoot itself in the foot again, just as it did in the mortgage-backed securities crisis. Senator Carl Levin, Democrat of Michigan, who chairs the U.S. Senate Permanent Subcommittee on Investigations, said it had “found substantial evidence that these activities exposed major banks to catastrophic risks that are poorly understood. They are raising costs and uncertainty for the end users of commodities, which hurts American manufacturers and consumers.”

The Wall Street banks “built up voluminous inventories of aluminum, copper and other commodities,” which the Senate report found “often exceeded regulatory limits on the size of commodity holdings. It portrays banks straying far beyond their traditional business lines to dabble in lucrative but risky activities that posed legal and financial threats to the firms,” according to The WSJ.

The Senate Report cited that Morgan Stanley held 55 million barrels of oil storage capacity, enough supply for nearly three days’ worth of US consumption, and Goldman Sachs reportedly engaged in “merry-go-round” transactions involving aluminum for its own financial gain.

The metal would simply be transferred from warehouse to warehouse in such transactions, driving up the price by keeping it off the market and away from the consumer. Meanwhile, Goldman, notorious for creating ways to play both sides of a trade, also generated revenue through a subsidiary that owned the warehouses that held the aluminum.

The Senate report also cited that Deutsche Bank (NYSE:DB), in September 2010, asked for delivery from a warehouse of 100,000 tons of aluminum in a single transaction. That was “the largest withdrawal in the history of the global market for physical metal at the time,” according to The WSJ. “The wait time for clients hoping to get their metal ballooned from 20 days to four months.”

It is likely that these banks dealt a blow to Joe Sixpack as the 2010 aluminum shortage “drove up aluminum prices and prompted complaints to lawmakers from major aluminum consumers like MillerCoors,” the nation’s leading beer manufacturer.

Once again, Wall Street fails to get it. The street’s reckless behavior in the housing bubble caused millions of Americans to suffer substantial losses in their life savings and retirement accounts. Now, the street is profiting through commodities at the expense of the average American, and creating incredible stress in a still fragile US economy.

Who out there can stop these guys?

Senator Levin to the rescue.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, blogger Jake Zamansky has a total average return of 4.1% and a 67% success rate. Jake Zamansky is Ranked #2503 out of 4020 Bloggers

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