Today I Want to talk about how UBS has been sued and fined over 250 million dollars for Credit Suisse's illegal crimes Credit Suisse allowed our chaos to synthetically short companies and failed to Margin Call them when they breach margin requirements causing giant losses. not just for Credit Suisse but for other major Banks too. So stay tuned and let's make some money. And now I'll drive straight in with the key information.

So Frank tweet is saying: the Federal Reserve Board announces a consent order and 268 million dollar fine for UBS group He for misconduct by Credit Suisse The misconduct involved Credit Suisse's unsafe and unsound counterparty risk management practices. With Archangos In 2021, Credit: Suite suffered approximately 5.5 billion dollars in losses because of the default of Arcados, an investment fund during Credit Suisse's relationship with Arcados. Credit Suites failed to adequately manage the risk posed by Arcados. Despite repeated warnings, the board is requiring Credit Suisse to improve counterparty credit risk management practices and to address additional long-standing deficiencies in other risk management programs at Credit.

Suites So I wonder which other clients they're allowing? off the hook with those bad risk management processes and I wonder which other clients they haven't yet margin called I wonder if it's any other market makers that we know, beginning maybe with C and ending in itadel. The board's action is being taken in conjunction with actions by the Swiss Financial Market supervisor Authority and the Bank of England's Prudential regulation Authority and the penalties announced by the board and the Pra total approximately 387 million dollars total. It Also says that Credit Suisse has a prime Services business mainly catering to hedge funds and institutional investors and the prime Services Risk Department Handle daily risk management tasks including setting margin rates, but Credit Suisse took no effective action to mitigate risks posed by our Kagos's portfolio. They also didn't obtain enough margin or collateral from Arcados and didn't effectively manage data quality for risk metrics.

Now I Want to briefly explain how a margin call works and how Credit Suisse failed to Margin Call Arcados and how that led to a giant loss not just for Credit Suisse but other Banks as well. Now I've shown a similar example of this for Citadel and that's why the numbers may seem slightly familiar, But let's assume okay, Gosp or Citadel has their own Equity of 50 billion dollars. They take on a 200 billion dollar margin loan from Credit Suisse or maybe it's from Bank of America or any other Prime broker that gives them a total portfolio value of 250 billion dollars for 50 billion of their own equity and 200 billion in margin loans, giving a leverage ratio of seven to one, the same as what Citadel uses. Now let's say Okay Goss as a result of bad investing takes on a 40 billion loss.

Let's say that's as a result of shorting AMC and GameStop during 2021.. now that 40 billion loss as you can see by following that line is absorbed entirely by okay Goss they're 50 billion dollars of equity takes a 40 billion dollar hit, and Credit Suisse doesn't lose a single penny. And theoretically, if our Kagos loses 50 billion dollars on an investment, they would still absorb 100 of that loss, which would wipe out their entire Equity value as soon as they lose 50 billion dollars and one cent. That is, when they should be margin called by Credit Suisse.

For example, if you or I are investing on margin and we take a loss that's the same size as our total cash balance or total account value, as soon as we exceed that by one cent, we are instantaneously margin called. No ifs, no buts, either deposit more cash or receive a margin call. But the problem here and why Credit Suisse and other Banks lost so much money is because they gave Arcados a lot of leeway and that may be exactly what is happening with Credit Suisse or Bank of America and with other hedge funds or market makers like Citadel For example, Arcados took a 60 billion. they've already lost the full 50 billion dollars of their entire Equity value and Credit Suisse took that 10 billion loss themselves.

They said, it's all right, we'll give you a bit of leeway. We'll take this 10 billion dollar loss, just try and invest and make it all back and pay us a bit extra on the side. But obviously, let's assume Arcados lost 100 billion dollars. Obviously their entire 50 billion dollar Equity value is already wiped out, so Credit Suisse has to brunt and bear the loss of 50 billion dollars.

Now, obviously, that is a massive loss, and this is exactly why Credit Suisse is being fined so significantly because they didn't margin called Arcados when they should have. Instead of absorbing that 50 billion loss by themselves, they let other Banks like Nomura and Goldman Sachs take some loss as well. Either way, they still went against policy and against regulations and allowed Arcados to continue investing even though they've failed at margin requirements and we're likely just taking some money under the table to let it slide. And as I said, this is possible or is likely exactly what is happening with other hedge funds as well.

Especially as this article literally says the board is requiring Credit Suisse to improve counterparty credit risk management practices and to address additional long-standing efficiencies in other risk management programs. so there is additional long-standing deficiencies with other clients now. Frank has also tweeted saying that AMC is still number one of 7720 companies worldwide for their cost to Borrowed fee. The AMC cost to borrow is still over a thousand percent, a thousand and twenty six percent.

You can see the next largest companies in terms of cost to borrow are only at 600 and 500. AMC is still maintaining this crazily high cost a borrow fee of over a thousand percent and I actually found that really really interesting because I was wondering when AMC's Costa borrow started to rock it this month or last month and how long has it remained elevated for? We can see from this chart again from Frank the AMC Costa borrow started to run all the way back on the 3rd of July when the cost to borrow reached nearly 900. So that basically means so far, the AMC cost of RFP has stayed at or around a thousand percent now for 23 days. Obviously, prior to the Third July, it was still around 100 or 200 percent, but that is smaller than a thousand percent.

So let's just take the days where it stayed at or around a thousand percent with a thousand percent cost to borrow fee. That means these hedge funds and institutions are paying 2.7 interest per day to borrow AMC shares. Multiplying that out by 23 days is 62.1 interest so far. Literally, in the month of July, these hedge funds have lost 62 percent of their entire short position or all of the money they put into that short position just by borrowing AMC shares.

So if this AMC cost to borrow fee stays elevated for another 20 days, On top of that, the shorts will have lost 100 of their entire short position. Cash input: I Guess if you factor in weekends, it's something like only 15 days so far. So in another 20 or 40 days including the weekends, this cost to borrow fee will exceed 100 of their total short position. If they spent 5 five billion dollars shorting AMC then by mid to late August or early September they would have lost the entire 5 billion dollars.

So far, these hedge funds are expecting AMC to go bankrupt literally in the next 10 days to make a 100 profit on their short position. If it doesn't go bankrupt in the next 10 or 20 days, they start losing money now. Robert has also tweeted about the Shields trying to convince you to sell AMC shares around a hundred dollars per share again. I Think this comes after the article from yesterday where Goldman Sachs gave AMC a price target of 175 dollars.

This was either a to try and convince you to buy options now wasting that options premium or trying to slowly convince you to sell at 175 dollars per share instead of holding longer. They're trying to bait you into thinking 175 dollars is the maximum and trying to bait you into selling early And that seems exactly what these comments on YouTube are trying to do. We're already seeing comments saying AMC's new floor is now just 100 saying we want this to end Already saying these hedge funds are very intelligent people and we should not be greedy and we should be happy with a hundred dollars per share. Saying that Lou vs Wall Street is right and we should probably sell at just one hundred dollars again.

this is just more shell comments trying to convince you to sell your AMC shares either now or to sell your shares early during the squeeze. Obviously I can't tell you what price to buy and what price to sell at or tell you when to buy and when to sell that needs to be up to you. But I do believe AMC can go higher than 100 per share, especially when we look back at Volkswagen back in 2008, especially when you then factor in the Volkswagen was not likely synthetically shorted and was not likely synthetically shorted for the previous two full years. But as I said, obviously, it needs to be your decision when to sell.

I've only suggested in the past to sell in multiple different bracket price points, so you don't miss the squeeze entirely. Maybe you have different brackets between one hundred and fifty thousand dollars per share where you sell multiple times up during the squeeze. And on top of that, Travis's tweet is saying a lot. Like I said, this is why they don't want the conversion and reverse stock split.

He said naked short sellers sold AMC and that fictitious fake AMC share created another fake ape share. and that is why the naked short sellers cannot deliver that created AMC share and also won't be able to deliver that created ape share when it converts into AMC chat. Gbd says if there are Naked Short sellers involved in their preferred Ecwid units before the conversion, they would have sold the units without actually holding them or locating them upon the conversion of the preferred Equity units to common stock. the Naked Short sellers are now obligated or obliged to deliver the equivalent number of common shares they had previously sold.

However, since they never owned or borrowed the preferred Equity units they sold, they may not have the corresponding common shares to deliver. Basically saying that for every synthetic Ape share that has been created, that will basically create another synthetic AMC share during conversion and increase the number of Ftds. Again, increasing those Fdds leads to a further increased cost to buy fee, leading to just even more expenditure for these shorts. As Chat GPT says, it says, the Naked Short sellers may fail to deliver the required number of common shares on the settlement day, and this failure to deliver can result in regulatory actions, not likely penalties again, not likely, or other legal consequences which it would do if the SEC wasn't paid off.

But if the Naked Shorter sellers cannot deliver the common shares they sold, the buyers of those shares May request forced buy-ins. This means that the buyer's broker will purchase the common shares on the open market to fulfill the delivery obligation, and the Naked Short sellers will be responsible for any losses incurred in the process. Now, this part here is actually quite interesting because it basically means for any FDD created or for any additional FTD created The Naked Short seller is 100 responsible for any and all losses incurred and needs to pay for those shares and the borrow fees and for the FTD as well. Again, just way more expenditure for these shorts that they already cannot handle.

As I've said, we already have this crazy cost of our fee that these shorts already cannot handle over a thousand percent, which is obviously leading to even more Banks giving hedge funds and market makers more and more leeway, creating even more losses. When the squeeze eventually happens, the amount of money Bank of America will lose when Citadel collapses will make Credit Suite and Arcados look like peanuts. But guys, be sure to let me know what you think down in the comments below. As always, guys, be sure to ding that notification Bell because that way you'll be alerted when I put a new video.

Cheers.