Market Manipulation on BTPs

The Trani Court in Italy decided to open a formal investigation against Deutsche Bank and its management related to the perceived misbehavior of the German financial institution in the spring of 2011 when the bank seems to have sold its position  in BTPs (market manipulation).

2011 has been the year when the spread of the Italian Treasury paper reached its top level the autumn. Only the intervention of the ECB (world famous “whatever it takes”, a new rap song is coming) and the change of premier in Italy stopped the markets scare (since then all Italian premiers have been selected among non-elected names).

The court is opening the investigation against this supposedly relevant seller of Buoni Poliennali del Tesoro. The board of the bank, up to now, must have been very pleased with the results created with a very simple transaction by a team of its employees which just earned their salaries by doing what they are payed to do (buy low, sell high).

The level of self-perceived financial sophistication by this now becoming world known court seems to be so high that it is also investigating on the potential misbehavior by the international rating agencies when they lowered the credit rating of the Republic of Italy, to the point of calling to their office as a witness Mr. Barack Obama (date and time is not yet known).

This story is showing at least two missing actors:

– manipulation is normally a crime calling for an intervention by Consob (the Italian equivalent of the USA SEC, or the Geman Bafin);

–  the biggest seller at that time (but still today) of Italian paper on the market is rumored to be the Republic of Italy itself!

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