Posts
Is
The US Preparing To Blame The Next Market Crash On "Russian
Spies" And HFT?
27
January, 2015
As reported
yesterday,
in a surprise announcement late in the day, and shortly before the
S&P downgraded Russia to junk (perhaps as part of the fine-print
of its $1.5 settlement with the DOJ for daring to downgrade the US in
2011), the US Department of Justice announced it had busted
a Russian spy ring in New York City,
where at least one of the three people was said to be involved with
finance and potentially, capital markets.
Specifically,
the DOJ
announced "charges
against Evgeny Buryakov, aka “Zhenya,” Igor Sporyshev and Victor
Podobnyy in connection with Buryakov’s service as a covert
intelligence agent on behalf of the Russian Federation (Russia) in
New York City, without notifying the U.S. Attorney General of
Buryakov’s status as an agent of Russia, as required by federal
law. Buryakov was placed under arrest earlier today in Bronx,
New York, and is scheduled to appear before U.S. Magistrate Judge
Sarah Netburn in federal court in Manhattan later today. Sporyshev
and Podobnyy no longer reside in the United States and have not been
arrested.
By virtue of their prior positions in the United States on behalf of
Russia, both of them were protected by diplomatic immunity from
arrest and prosecution while in the United States."
On
the surface this sounds like your plain vanilla diplomatic
escalation, in which a lowly spy, or rather alleged spy, is exposed
to show the displeasure of the host regime toward the opposing
country, an action which will surely result, within 24-48 hours, in a
comparable arrest of a US spy in Russia.
And
yet, reading through the complaint we were dumbfounded when we
encountered the following exchange:
On or about May 21, 2013, IGOR SPORYSHEV, the defendant, called EVGENY BURYAKOV, a/k/a "Zhenya," the defendant, to ask for BURYAKOV's help in formulating questions to be used for intelligence-gathering purposes by others associated with a leading Russian state-owned news organization (the "News Organization").
From my training and experience, I know that the News Organization has been publicly identified by former SVR agents as an organization that is sometimes used by Russian intelligence to gain access to and gather intelligence under the cover of the news media.
During the May 21, 2013 telephone call between EVGENY BURYAKOV, a/k/a "Zhenya," and IGOR SPORYSHEV, the defendants, which was intercepted by the FBI, the following exchange occurred:
EVGENY BURYAKOV ("EB"): Hello?
IS: Hello Evgeny.
EB: Hey.
IS: Can you talk? . . I need help.
EB: Aha.
IS: [The News Organization] wants very much, I don't know how it came down from the top, but they need three questions with regard to the New York Exchange. What would be interesting to us. Can you help write something?
EB: It's a difficult question. . I need to think.
IS: Can you think of something in fifteen minutes?
EB: Fifteen minutes?
IS: Yes.
EB: I'll try. . . . Should I call you?
IS: Yes, call me.
EB: If you will not pass by me?
IS: No, I will not.
* * *
Approximately 20 minutes later, IGOR SPORYSHEV, the defendant, called EVGENY BURYAKOV, a/k/a "Zhenya,"the defendant, and the following conversation, which was intercepted by the FBI, occurred:
EB: Well, I thought about it. I don' t know whether it will work for you but you can ask about ETF. . . . E-T-F. E, exchange.
IS: Yes, got it.
EB: How they are used, the mechanisms of use for destabilization of the markets.
IS: Mechanism - of - use - for - market - stabilization in modern conditions.
EB: For destabilization.
IS: Aha.
EB: Then you can ask them what they think about limiting the use of trading robots. . . . You can also ask about the potential interest of the participants of the exchange to the products tied to the Russian Federation.
* * *
Based on my training, experience, and participation in this investigation, I believe that, in this conversation, IGOR SPORYSHEV, the defendant, asked for, and obtained from, EVGENY BURYAKOV, a/k/a "Zhenya," the defendant, questions of interest to the Russian economic intelligence community that were to be used by others associated with the News Organization.SPORYSHEV began the conversation by asking for help ("I need help") . SPORYSHEV said that a request came down from leadership, which I believe to be a reference to the SVR leadership, to pass three questions regarding the New York Stock Exchange to the News Organization ("[The News Organization] wants very much . . . it came down from the top, but they need three questions with regard to the New York Exchange")
In a notable departure from every other intercepted conversation involving these two men, IGOR SPORYSHEV, the defendant, made it clear in this call that the two men did not have time to meet in person to discuss this intelligence assignment. Rather, SPORYSHEV asked EVGENY BURYAKOV, a/k/a "Zhenya," the defendant, to get back to him within "fifteen minutes" ("Can you think of something in fifteen minutes?"). BURYAKOV then suggested he would call SPORYSHEV back but only if SPORYSHEV was unable to meet in person (IS: "Yes, call me."; EB: "If you will not pass by me?") . I believe that this time pressure is the reason that this particular intelligence assignment was relayed over a telephone line rather than in person.
IGOR SPORYSHEV, the defendant, then called EVGENY BURYAKOV, a/k/a "Zhenya," the defendant, back to supply a particular line of questioning for use by the News Organization. Specifically, BURYAKOV said the News Organization could ask about how the New York Stock Exchange ("NYSE") used exchange-traded funds or "ETF"; potential limits on the use of high-frequency, automated trading systems ("trading robots") ; and the potential interest among NYSE members to products tied to Russia ("products tied to the Russian Federation").
Based on my training and experience, and my familiarity with this investigation, I believe that neither defendant' s cover position - banker (EVGENY BURYAKOV, a/k/a "Zhenya," the defendant) and a Trade Office representative (IGOR SPORYSHEV, the defendant) - involves providing assistance to Russian journalists. Nor do their covers explain why the two men would be engaging in a discussion about crafting questions that "would be interesting to us" and that the News Organization representatives should put to New York Stock Exchange employees.
Absurdity
of the entire exchange aside, because when one "spy" ask
another "spy" whether he "can
ask about ETF. . . . E-T-F. E, exchange... How they are used, the
mechanisms of use for destabilization of the markets" to
which the other replies with "Mechanism
- of - use - for - market - stabilization in modern conditions"
and is promptly corrected "For
destabilization"
and when the first one further inquires about "what
they think about limiting the use of trading robots",
it simply reeks of a scripted conversation.
Worse,
when the supposed originator of this line of inquiry is none other
than the modern KGB i.e., the Foreign Intelligence Service, i.e. the
SVR, because as the FBI special agent on the case says "SPORYSHEV
said that a request came down from leadership, which
I believe to be a reference to the SVR leadership, to pass three
questions regarding the New York Stock Exchange to the News
Organization",
one has to wonder if the Russian KGB couldn't just open a blog - say
this one - or even read a book - say that of Michael Lewis' - to
understand all they need to know about just how "robots"
and "E-T-Fs" destabilize markets. No, they had to use a
network of spies to get to the bottom of just how rigged the market
is.
So
we will leave aside questions of
just what this supposed spy bust is supposed to achieve,
with the FBI having now exposed a ground-level apparatchik, who
clearly knows nothing and
needs pointers on "trading robots", and ending the FBI's
ability to trail his activities in the future as well as to
potentially get to his superiors - which is always the main
prerogative in spy cases such as this one - one thing has become
abundantly clear: the scapegoating plan for the "blame game"
once the next, devastating, market crash takes place, will be simple:
first, blame the E-T-Fs and the "trading robots" for the
destabilization (but not the central banks, never the central banks),
and then, just to kill all birds with one stone: blame
it on the Russian spies.
Sadly,
yes: bad B-grade movie scripts from the 80's is just how one would
describe the current administration (complete lack of) imagination
and foresight. Then again, what else can one expect when none other
than the president relied on the "stupidity of the American
voter" to pass his career-defining "Affordable" Care
Act?
* *
*
The
full complaint in the case of "Attorney
General Holder Announces Charges Against Russian Spy Ring in New York
City"
can be found here, and in the embedded document below.
Hands
up anyone who believes Jen
Psaki.
US State Department, Russian Officials Hold No Talks on
Spy Scandal
US
State Department spokesperson Jen Psaki said Tuesday that no
discussion had been held between the State Department officials and
the officials in Russia in the past 24 hours regarding the arrest of
Russian citizen Evgeny Buryakov.
27 January, 2015
WASHINGTON,
January 27 (Sputnik) — US State Department officials had no
discussions with their Russian counterparts, regarding the arrest of
Russian citizen Evgeny Buryakov on suspicion of conspiracy to act as
an unregistered agent of a foreign government, the Department’s
spokesperson told journalists on Tuesday.
“Not
that I am aware of, no,” Jen Psaki said when asked if there has
been any discussion between the State Department officials and the
officials in Russia in the past 24 hours, stressing that they have
been in contact with the Department of Justice.
On
Monday, federal prosecutors in New York charged Buryakov, Igor
Sporyshev and Victor Podobny on suspicion of acting as unregistered
agents of a foreign government. On the same day, Buryakov was placed
under arrest and appeared before US Magistrate Judge in Manhattan
federal court.
Sporyshev
and Podobnyy no longer reside in the United States — they had left
the country before criminal charges were brought against them.
“While
they were here, they both had immunity and cannot be arrested,”
Psaki noted. “Typically, when individuals are no longer here, it’s
no longer applicable.”
“What
I can confirm for in this case is that a request for a waiver of
immunity was not a factor,” the spokesperson concluded.
According
to the US Department of Justice, Sporyshev said he was a Russian
trade representative, while Podobny said he served as an attache to
Moscow’s mission to the United Nations.
On
Tuesday, Russia’s Vnesheconombank confirmed that Buryakov served as
a deputy representative of the bank in New York.
The
next hearing on the case is scheduled for February 9. Buryakov who is
facing up to 15 years in prison, but said he would not plead guilty.
The
Russian consulate general in New York said Tuesday that Russian
diplomats will visit Buryakov on Wednesday.
Spokesman
for the Russian Foreign Ministry Alexander Lukashevich said Tuesday
that the United States has not provided any evidence to support the
charges against three Russian nationals, and that US authorities have
used the favored tactic of creating spy scandals, although the
relations between the two countries are already tense.
Moscow
on ‘spy scandal’: No grounds for arrest, US stoking ‘anti-Russian
feelings’
RT,
27
January, 2015
Russia’s
Foreign Ministry has demanded the immediate release of Evgeny
Buryakov, the Russian bank employee arrested for espionage in New
York on Monday, and says the accusations against him and two of his
fellow countrymen are “groundless.”
“We
are getting the impression that the US is resorting to its favored
tactic of creating a spy scandal. Relations between Russia and a
hostile Washington have long been suffering a difficult period.
Obviously thinking, the worse it is, the better, the US has launched
another wave in its anti-Russian campaign,”Foreign
Ministry spokesman Aleksandr Lukashevich said in Moscow.
39-year-old
Buryakov, who worked for the New York office of Russia’s
Vnesheconombank (VEB), faces up to five years in jail for his part
in “a conspiracy to act
in the United States as an agency of a foreign government without
first notifying the Attorney General.”
“We
demand a halt to the string of provocations against Russian
officials, orchestrated by the US secret services. We also request
immediate consular access to Buryakov, as well as meticulous respect
for his rights as a Russian citizen, and his release,” Lukashevich
said.
Working
outside any official diplomatic capacity – under “non-official
cover” –
Buryakov was labeled an “extremely valuable intelligence asset”
in FBI statements released this week, following an investigation that
reportedly began back in 2010.
The
two officials who allegedly assisted him were Igor Sporyshev, a
government trade representative, and Victor Podobnyy, who served as
one of Russia’s attaches to the UN. Both face charges of up to 10
years, but have diplomatic immunity
and have left the country anyway.
“No
evidence has been presented that would back up these
accusations,” Lukashevich
said.
FBI
documents detail allegedly tapped conversations between the three. In
one, Podobnyy and Sporyshev supposedly complain that their lifestyle
does not match up to depictions of James Bond. In another, they
reportedly discuss best strategies for recruiting college students to
work for the SVR, Russia’s foreign intelligence service.
In
2014, FBI also set up a meeting with a fake investor interested in
opening a casino in Russia. During the interview with Buryakov,
he "demonstrated his
strong desire to obtain information about subjects far outside the
scope of his work as a bank employee."
Buryakov’s
lawyer has sought bail for him, while the other two men, presumably
currently in Russia, have not commented on the charges.
The
last comparable operation against purported Russian spies in the US
took place in 2010, in which Anna Chapman and nine other “sleeper
agents” were fingered by the FBI. Coincidentally, the records of
the latest bust show that Sporyshev commented that the expelled
agents from 2010 “weren’t
doing s**t”at
the time of their arrests.
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