Two “uh-oh” stories:
This is why I am making a deal to take actual delivery of physical silver (coins and ingots) rather than let another party hold it.
I worked on Wall Street in the 90’s, and there is nothing the big investment banks ever do that is so unethical as to surprise me. Although the financial industries are very heavily regulated, the big players are much smarter than the regulators. This particular story is not only an example of the big banks outfoxing the regulators, it is a meta-example of how the fox always gets to guard the henhouse — because the players on the committee to regulate derivatives were there precisely because they had created systems so complex that only they could understand them. Normally the government would, as a condition of a bailout, toss out everyone involved in the collapse and replace them with new and untainted managers, who could be counted on to exist. Now everyone who understands the market is implicated, so they get to give themselves a pass. (Not strictly true: as the story makes clear there are smaller, scandal-free players who are still large banks who would like to be at the table, but the big guys managed to get there first and be in a position to exclude the others by further obfuscation and denigration.)