Today I Want to talk about how Citadel have so far been illegally escaping their margin calls, but how it won't be going on for much longer. I Also want to talk about the massive punishments that many of these hedge fund managers will soon be receiving. So stay tuned and let's make some money. And now I Want to dive straight in with the key information.

So Travis Tweet is saying: how does Citadel avoid the Margin Call Well read the section highlighted and read: So it says the company seeks to mitigate this risk by utilizing term financing Arrangements Basically saying that many other major Banks lend money to Citadel so Citadel can avoid those margin calls. He says it means they're using external loans to continue to hold their short positions now. I Do want to talk about the massive risk that this creates. But first, let's read exactly what said in Citadel's financial statements.

so: Under The Heading Liquidity and leverage risk It says CSG which is one of Citadel's entities targets to maintain a pool of excess liquidity at the company for various planned and contingent needs, including among others marked to Market losses on investments AK losses on their short positions changes in margin requirements as term financing facilities mature, increases in initial margin requirements by the Clearing Houses and members Capital activity. It says the company generally invests on a leveraged basis, which we know because we know that Citadel uses about a seven to one leverage ratio and they invest on that leveraged basis both through its financing and Loan arrangements and through the degree of Leverage typically embedded in the derivative financial instruments in which it invests, the use of Leverage can significantly magnify both gains and losses, Increasing the possibility of the company incurring a substantial loss and leverage through margin borrowings generally requires collateral to be posted with prime Brokers custodians and counterparties. This is obviously the capital they have to post for their leveraged trades, and if those leveraged trades go against them too badly, they do end up being margin called and effectively liquidate it. And obviously market value movements could result in a prime broker, custodian, or counterparty under their respective agreements, with the company having the right to reduce the value of such collateral or to acquire the posting of additional collateral.

AKA A margin call, potentially resulting in the issuance of a margin call and a liquidation. This could also result in a company having to sell assets or close out of short positions at a time when the company would not otherwise choose to do so. AKA a force liquidation. And here's the important part: The company seeks to mitigate this risk by utilizing term financing Arrangements AK loaning or borrowing other money from other external Banks as well as negotiating trading and financing.

Arrangements that include objective valuation methodologies and dispute rights. for valuation differences between the company and its prime. Brokers custodians and counterparties. they might be saying Tom What's a term financing Arrangement And how does that help set that out? Avoid those margin calls.

Well, a term financing Arrangement is a special type of margin loan that doesn't behave like a normal margin loan. Typically, when you invest on margin, you borrow money from your trading platform. Maybe it's Weeble or Robin Hood or TD Ameritrade or whatever platform you're using, but you borrow money from them and you invest using that money. And then if your account Falls below their maintenance requirements, you end up getting Margin Call and you're forced to sell off the position to repay their money back.

But a term financing arrangement provides borrowers with a lump sum of cash up front in exchange for specific borrowing terms. With this type of margin loan, borrowers agree to pay their lenders a fixed amount over a certain repayment schedule with either a fixed or floating interest rate. So this type of financing Arrangement Works more closely to the kind of financial instruments that Michael Brewery was taking out during the film. The Big Show Instead of the loan being valued against Citadel's open positions where they're taking Prof profits and losses, Citadel may just have to pay that monthly interest payment to continue taking out their margin loan that way Citadel won't traditionally get margin called under the normal terms as long as they can continue to meet that repayment schedule.

Now, that's obviously significantly more risky for those lenders, because it means they can't forcibly Margin Call Citadel if their total position value drops below the maintenance requirements. Because obviously, as long as Citadel continues to meet their repayment obligations, they technically haven't defaulted on a loan. But obviously, it's a lot more risky because if Citadel ends up going bankrupt, they can't reclaim the full value of their loan back. Actually, they lose every single penny.

So instead of just simply forcibly liquidating Citadel for their 50 billion dollar position, the entire 350 billion dollar fund ends up being liquidated. Citadel loses their 50 billion dollars and the lending Bank Likely Bank of America because they finance most of Citadel's margin loans, loses everything. Which is that, 300 billion dollars. So this way, Bank of America wouldn't just be recognizing a 10 billion loss like Credit Suisse had with Arcados, they'd be recognizing a 300 billion dollar loss is obviously significantly more risky for those lenders if Citadel's entire fund ends up being margin called.

So this is why I think Citadel has so far been able to avoid their margin calls. It's because their loans don't work like normal margin loans. There's no Citadel being down 10 or 15 percent and a bank comes knocking and says Citadel Sorry guys, it's time to be liquidated. Please close out of all of your positions.

We lend the money for over 80 of your positions, and because your account has decreased by say 10 or 15 or 20 percent, it's now time to margin called. So sorry guys, pay up. Citadel can continue to dwindling down their account past 20, 30, 40, 50, and so on. And they don't get margin called because they're under these specific special term financing.

Arrangements Providing Citadel makes their monthly payment on time. they don't get liquidated because they're not in default of the agreement. but it obviously creates this massive massive risk that when Citadel comes down, it doesn't just bring down Citadel. It likely brings down Bank of America as well.

And now, part of the reason why Citadel has also been able to escape is because Vanguard has been loaning out every single share that they own. As Hang Loose tweeted, he said Vanguard owns 51 million AMC shares, but they've lent out every single share that they own. They currently have zero voting power in the AMC company even though they're the largest shareholder, and this screenshot really shows exactly what's happening. Obviously, Vanguard holds 51.297 million shares, but can only vote with 155 000 shares because Vanguard is pretty much lending out every single share of the 51.3 million shares they hold.

Hang loose asks the question saying if you lend out your shares, do you lose voting power and the answer says that shareholders of companies are able to exercise some amount of voting power when new policies are proposed. However, you won't have shareholder voting rights when your shares of stock in that company are online. Vanguard doesn't have any voting rights whatsoever because obviously they're lending out every single AMC share. But you can see from the passing of time that Ken Griffin is becoming more and more stressed.

Biotech Moose tweeted the timeline of Citadel's AMC Shore These photos are unaltered and date verified because they're taken directly from Bloomberg interviews or public appearances and he said this is what massive stress looks like in the last two years. Ken Griffin's face obviously, between January 2019 and January 2021, which is a two-year period, looks fairly unchanged, but then from January 2021 on to January 2023, Ken Griffin looks like he's aged almost 10 or 20 years. In that time, Ken Griffin has gone from having practically zero wrinkles and being a very moderate or sporty way to an overweight, wrinkled mess. And I think the reason why Ken Griffin has aged so much in the last two years is because he knows exactly what's going to happen when he gets caught for his illegal crimes.

We've just seen a fund manager getting 13 months in prison for a 100 million dollar Ponzi scheme and even though you may say that 30 months in prison sounds like a long time, his co-conspirator David Hugh was sentenced to a 12-year term in July. Now the reason why Martin received such a significantly smaller term was due to his health issues. If he was perfectly healthy, he would have also received a 12-year term as well. So that basically means that Ken Griffin Citadel is likely facing at least 12 years in prison because his fraud is many multitudes the size of 100 million dollars.

He says. the co-founder of an investment advisory firm based in New York was sentenced on Wednesday to 13 months behind bars. He appeared guilty in April admitting that he conspired to defraud investors in funds managed by his firm, and he did that by over are valuing distressed loans and creating bogus documents and fake loans that we use to hide losses. Now, overvaluing distressed positions sounds exactly like what Ken Griffin Citadel Securities is doing right now.

As I said, he's likely not telling Bank of America the lenders just how bad his position truly is. and as long as he's meeting those monthly interest payments, nobody raises an eyebrow. But right now Citadel is down heavy and has likely lost a large portion of Bank of America's money and obviously not just Bank of America's money, but also Citadel's investors money as well. And another reason as to why Silva received such a significantly smaller sentence is because he also flipped on his co-founder and actually provided critical help in unraveling the scheme.

So even though he was effectively a whistleblower, he's still receiving 13 months in prison. But obviously that's nothing compared to the co-conspirator receiving 12 years in jail. And I'm sure something else that is making Ken Griffin very very stressed is the fact that Ape is still number one of Yahoo's most shorted stocks list. Now this is really interesting because Ape, per the actual figures, doesn't have a very high short interest.

AMC seems to be the stock that has a much higher legal short interest, but even though Ape has a very low legal short interest, it still ranks number one on top of Yahoo's most shorted stocks. Even though stocks like Carvana and Bed Bath and Beyond have short interest or legal short interests of well over 50 percent, Ape still outranks them. Maybe heaven forbid the legal short interest of Ape is actually wrong, and that many more shares of Vape are being shorted compared to the legally disclosed figure. And finally, Credit Suisse Also posted some updated information from my video earlier.

Credit Suisse has just had one of the worst quarterly earnings calls possible. They announced their 1.4 billion dollar quarter for loss, bringing their total loss for 2022 to 7.9 billion dollars. Management is also expecting a a substantial full year loss for 2023 as well. Where the substantial means more than eight billion dollars lost in 2023, or just simply, maybe six billion or five billion is still going to be a massive massive loss for another year running.

As a result, the credit Suite stock was down 13 and at its worst, was nearly setting a new all-time low. But guys, be sure to let me know what you think down in the comments below. And as always, guys, be sure to ding that notification Bell because that way you'll be alerted when I upload a new video Cheers!.