Posted by Karl Denninger
You just knew they wouldn’t play by the rules, right?
Investment bankers in the U.S. have begun using equity derivatives to convert restricted shares paid as bonuses into cash, side-stepping new guidelines on remuneration which were designed to prevent bankers cashing out for at least three years, according to a headhunter.
The bankers are using over-the-counter equity derivatives strategies such as call options, put options and collars to monetise their shares now, albeit at a discount to what they would receive if they waited for the restrictions to lift.
The purpose of these rules was to insure that the banksters were actually promoting sustainable operation of the business instead of looting people, which could detonate the company’s share price before they could cash out.
So instead they’re taking a sizable haircut.
What does this tell you about the “sustainability” of their practices?
And why over-the-counter derivatives? They’re bilateral and thus there is no exchange record of what they’ve done.
Time to break up these banks right damn now folks. Break ’em all up, shut ’em down, stop this crap right now.
Oh, and if you’re in the markets? That’s the clearest indication I’ve ever seen that the very people inside know that it’s all going to blow up.
Before they could otherwise cash their bonuses out.
Ignore the actions of those on the inside at your peril.