Tag: DOJ (Page 1 of 2)

DOJ Attempts to Weed Out Crime with 75% Reduction in Fines

Market News: DOJ Offers 75% Reduction in Fines to Companies that Admit Crime.
Market News: DOJ Offers 75% Reduction in Fines to Companies that Admit Crime.

[Bloomberg] The Justice Department will recommend as much as a 75% reduction in fines for companies that voluntarily report wrongdoing to the government and fully cooperate with investigations.

Even companies that don’t voluntarily disclose wrongdoing but still fully cooperate with investigations could still get a 50% reduction off the low end of the guidelines for fines, the head of the department’s criminal division said Tuesday.

“The policy is sending an undeniable message: come forward, cooperate, and remediate,” Assistant Attorney General Kenneth Polite said in a speech at Georgetown University Law Center.

Polite made it clear that cooperators seeking declination will be held to a higher standard than your average or even gold-standard cooperator — the cooperation must be “truly extraordinary.” 

The Justice Department will distinguish extraordinary cooperation by assessing the immediacy, consistency, degree, and impact of the cooperation.

Prosecutors will expect companies to cooperate immediately, consistently tell the truth, and hand over evidence that the DOJ otherwise would not be likely to obtain, such as quick access to electronic device images, audio/video recordings, trial testimony, and other kinds of cooperation that “produces results.”

The policy also covers corporations conducting business internationally, as the changes will apply to all corporate matters handled by the Criminal Division, including all Foreign Corrupt Practices Act (FCPA) cases nationwide.

Notably, the new policy is the third in a trilogy of Department of Justice memoranda addressing the prosecution of corporate misconduct and setting forth revised policies concerning the effect of cooperation by companies that have engaged in wrongdoing.

Years of Ongoing Investigations

The new policy was announced to further Deputy Attorney General Lisa Monaco’s October 2021 memorandum directing the creation of a Corporate Crime Advisory Group within the Department to recommend guidance concerning, in part, the nature of a company’s dealings with the government required to receive cooperation credit in resolving company misconduct, and to consider revisions and reforms to the Department’s approach to corporate crime prosecution.

The new policy also follows less than five months after the issuance of a memorandum further clarifying the Department of Justice’s policy against seeking a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and timely and properly remediated the conduct at issue in the absence of aggravating factors and directing all department components, including the 93 U.S. Attorney’s Offices across the country, to review its policies on corporate voluntary self-disclosure and ensure it has a publicly available written policy.

At the same time, the September 2022 memorandum emphasized DOJ’s commitment to “strong corporate criminal enforcement.”

Polite likely had these pronouncements in mind as he concluded his speech. He entreated corporations to “come forward, cooperate, and remediate,” and to join the Department of Justice as allies in the fight against crime.12 But he also warned: “Failing to take these steps, a company runs the risk of increasing its criminal exposure and monetary penalties.”

Related Article: Citadel Under Investigation by DOJ

Source(s): Bloomberg.

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“King of Block Trades” Is Being Targeted by the DOJ

DOJ Targeting King of Block Trades
DOJ Probe Update: DOJ Targets King of Block Trades CaaS Capital Management Hedge Fund

King of Block Trades, CaaS is now one of the hedge funds being investigated by the DOJ.

The last hedge fund we heard was being investigated was Citadel, which was confirmed by Bloomberg.

Since then, we’ve had no update until now.

And we’re going to bring you up to date with the market news.


Welcome to Franknez.com – hedge funds are lining up one by one in a massive investigation being conducted by the DOJ. Here’s the latest update.

Let’s dive right into it!

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Who is the “King of Block Trades”?

Wall Street

The King of Block Trades is the name dubbed to the hedge fund CaaS by Bloomberg.

So, then who is CaaS?

CaaS (Capital as a Service) is a New York-based hedge fund with over $650 million in assets under management.

Block trading is when financial institutions sell one another a ton of stock through negotiations rather than through an electronic venue.

While block trading is not illegal, market activity proves the misuse of this strategy could be at large.

Morgan Stanley and Goldman Sachs are two of the biggest banks currently being investigated for connections to block trading and colluding with hedge funds.

CaaS managed to establish close ties with Morgan Stanley only two years of opening.

Prospective investors say CaaS has boasted to them of quickly becoming one of the biggest U.S. funds dedicated to block trading, getting a first look at deals and gaining entry to virtually every IPO in the country, Bloomberg.

The firm saw a 76% return its first year in business.

Now the hedge fund is one of many being scrutinized in a sweeping U.S. probe into how Wall Street firms handle large orders.

Banks make extra fees from block trading

Morgan Stanley

Morgan Stanley can earn extra fees helping hedge funds cash out, offering shares to investment firms with desks handling blocks, as well as specialized shops such as CaaS, deemed the King of Block Trade.

Market participants say that some traders have been known to bet against shares after getting calls from these bankers.

This prompts the question of whether the trade acted on non-public information, also known as insider trading.

The financial system has a variety of rings where everyone involved has to benefit, even if it causes system risk to the market.

This is what regulators are looking into.

A little more background on CaaS


CaaS was founded in May of 2019 by Frank Fu.

Born in Shanghai, he came to the U.S. where he earned a bachelor’s degree in research and engineering, and a master’s in financial engineering.

He later landed at Susquehanna International Group, where he spent two years trading options.

Some of you might recall Susquehanna is one of the top 10 financial institutions shorting AMC Entertainment.

He then moved to hedge fund Laurion Capital Management.

Looking for additional ways to make money, he started wading into block trades around 2012.

Within a few years, he established himself as one of the top rainmakers at the firm and a key player in providing liquidity to banks.

The King of Block Trades has told prospective investors they had ties to about 30 banks. 

When Goldman Sachs, Morgan Stanley, and Credit Suisse were forced to sell billions of dollars of shares from the Archegos incident, Fu was there to buy.

 A regulatory filing showed CaaS scooped up more than $440 million of the stocks that Archegos had been betting on.

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DOJ launches an expansive criminal investigation

DOJ Targets Muddy Waters for Flooding Market with Fake Orders

DOJ Targets Hedge Fund for Flooding Market with Fake Orders
Hedge Fund Under Investigation for illegal short selling strategies

The Justice Department is targeting Muddy Waters for flooding the market with fake orders.

This ongoing investigation is one of the many probes targeting hedge funds for illegal short selling strategies.

After the ‘meme stock’ frenzy early last year, retail investors have been demanding the SEC investigate hedge funds after they removed the buy button specifically for ‘meme stocks’.

AMC and GME stock continue to be heavily shorted today weighing in at a high +20% short interest each.

Will regulators release the pressure suppressing these stocks to create a short squeeze?

That’s what we’re here to find out.


Welcome to Franknez.com – if you’ve been actively demanding for change in the markets, your voice has finally sparked it. Here are the effects a year later.

Let’s dive right into it!

Short-seller Carson Block receives FBI search warrant

DOJ investigates Muddy Waters for flooding market with fake orders
DOJ investigates Muddy Waters for flooding market with fake orders

The Founder of Muddy Waters Research was served with a search warrant by an FBI agent.

Muddy Waters Research is a hedge fund based in San Francisco, California with $227 million AUM.

Federal prosecutors are investigating whether short sellers conspired to drive the prices of stocks down.

The DOJ is looking at hedge funds to identify illegal trading tactics in the markets.

We’ve seen tactics such as naked shorting, high dark pool trading, and OTC trading just to name a few.

Gary Gensler just announced on a Bloomberg exclusive that 90%-95% of retail market orders do not get processed through the lit exchange.

This real problem allows short sellers to abuse the tools they have at their disposal.

Who will give retail investors 90%-95% of their return?

Hedge fund under investigation for “spoofing”

Spoofing is the term given to a tactic that illegally ploys fake orders into the market in to drive the share price of a stock down.

Millions of retail investors have noticed spoofing during intraday trading in both AMC and GME stock for over a year now.

The buy-to-sell ratio has shown us that short sellers are using this tactic to end trading days on red even when 80%-90% of the orders were bought for.

Retail investors have been buying and holding these stocks en masse but for months now the price charts don’t correspond to the demand.

Spoofing is a technique that has suppressed AMC and GameStop’s share price for more than a year now.

While short selling in itself is not illegal, hedge funds have overleveraged their power ever since retail became a real competition.

Hedge funds such as Mudrick, Anchorage, and Archegos are a few who threw in the towel.

Citadel Securities received a $1.2 billion lifeline from Sequoia and Paradigm early this year too.

The hedge fund lost billions last year betting against ‘meme stocks’.

DOJ investigates hedge fund for “scalping”

Muddy Waters Hedge Fund under investigation
Muddy Waters Hedge Fund under investigation

Scalping is a term used when short sellers cash out their positions without disclosing it.

By not disclosing it, the share price of a security does not surge.

The DOJ is investigating hedge funds for this illegal short selling tactic.

If hedge funds have indeed been using scalping to suppress ‘meme stocks’, then this too would make a lot of sense.

I’d love to know your thoughts in the comment section of the blog below.

BREAKING: Citadel Under Investigation by Department of Justice

Will retail finally see price surges?

Retail investors want their assets to reflect the price of the true demand in the market.

*Regulators must lift the suppression imposed on stocks and let the share price run its natural course based on its supply and demand.

This is what activists must demand of our regulators.

Several short squeeze plays are bound to take off once hedge funds and market makers are prohibited from using predatorial strategies under law.

Read: Regulators are taking Morgan Stanley and hedge funds to court

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Citadel Pulls $2 Billion From Gabe Plotkin’s Melvin Capital

Citadel pulls $2 billion from sinking hedge fund Melvin Capital
Melvin Capital – Gabe Plotkin – Citadel pulls $2 billion in investments

Citadel just pulled $2 billion from Melvin Capital after the hedge fund has failed to recover from shorting ‘meme stocks’ last year.

Melvin Capital lost $6.8 billion in January of 2021 and has not been able to get out of the trenches since.

Now Citadel is fleeing a sinking ship.

Should this be a warning to short sellers shorting AMC and GameStop?

Let’s find out.


Welcome to Franknez.com – smart money might not be so smart after all. So called ‘meme stocks’ continue to leave an imprint on Wall Street. Will they be able to get out of this mess?

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Citadel loses confidence in Melvin Capital

Ken Griffin's Citadel pulls $2 billion from Melvin Captial
Ken Griffin’s Citadel pulls $2 billion from Gabe Plotkin’s Melvin Capital

Citadel also lost billions last year shorting AMC, so it comes as no surprise their reason to pull back from Gabe Plotkin’s Melvin Capital.

The hedge fund also imposed tight restrictions on its clients leading into the new year.

Citadel’s customers were given an ultimatum to either stay with the hedge fund otherwise coming back would prove to be difficult.

Ken Griffin also received a $1.2 billion lifeline from partners Sequoia and Paradigm in January this year.

This was the first time Citadel had ever received private funding.

With Melvin Capital down another $2 billion it seems it’s only a matter of time before this hedge fund caves into default.

The hedge fund initially held $12.5 billion in AUM.

It lost more than half last year and with Citadel pulling their investment things aren’t looking so good for the short seller.

Hedge funds that closed in 2021

Last year we saw a few hedge funds shut down including, Archegos, Anchorage Captial, and Mudrick.

Anchorage Capital closed after an 18 yearlong streak.

The short seller had 4 million puts of AMC stock before it closed last year.

Do you think Melvin Capital is next?

Leave a comment at the end of the article.

Will hedge funds survive?

Citadel pulled Gabe Plotkin’s Melvin Capital from deep waters in 2021 but now leaves them to sink or swim.

Hedge funds are currently facing deep scrutiny from both retail investors and regulators.

The DOJ is taking Morgan Stanley, Goldman Sachs, and numerous other hedge funds to court.

Citadel is one of the short sellers currently being investigated by the Department of Justice according to a Bloomberg report.

The SEC and DOJ are looking into the following:

  • Communication between banks and hedge funds
  • Proof of ‘Bear Raids’
  • Spoofing
  • And several other market manipulation tactics

Hedge fund Muddy Waters was already raided by the FBI earlier this year for flooding the market with fake orders to drive stock prices down.

Corporate media has been quiet about the incidents since they too may be under investigation for colluding with hedge funds on negative publicity campaigns.

The community has called out mainstream media for deleting articles online on AMC and GameStop.

Would you be surprised if they too came under investigation?

What are regulators doing about hedge funds and short sellers?

what are regulators doing about hedge funds - SEC

The SEC just released a market transparency proposal report outlining rules that will lift suppression on ‘meme stocks’ from short seller manipulation.

Hedge funds betting against AMC and GameStop will fall if these rules are enforced.

Regulators are looking to micromanage short sellers and track their every move when it comes to creating a short sell in the market.

You can read a more in-depth overview of the proposals here.

If these proposals go through, surging share prices will cause ‘meme stocks’ to squeeze shorts from their positions.

The SEC warns short sellers of “short squeeze” risks in the report.

Despite the progress, many retail investors aren’t fully convinced, though more seem to be giving the SEC the benefit of the doubt now.

Whether you believe regulators will take appropriate action or not, you cannot deny hedge funds are in serious trouble.

Citadel bailed out Gabe Plotkin’s Melvin Capital last year but is now taking their investment back to keep afloat.

What do you think is next for hedge funds?

Leave a comment below.

Read: SEC warns hedge funds of “short squeeze” risks in new report

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