Wall Street traders now openly emulating mafioso

Michele Sindona, a key figure in Vatican Bank money laundering during 1980's
Michele Sindona, a key figure in Vatican Bank money laundering via offsetting futures trades during the 1980’s

Gosh, it’s so inspiring to see Wall Street traders emulate a crooked ploy devised in the 1970’s by Michele Sindona, presumed mafioso and architect of the Vatican Bank scandal of the 1980’s, as documented in Nick Tosches’ biography of him, “Power on Earth.”

Sindona invented the offsetting futures trades in different institutions scam as a way to launder money. So let’s give a big salute to those Wall Streeters who now finally acknowledge their true roots by copying the master!

Here is a guaranteed way to get paid well if you work on Wall Street. Find a best friend at a competing bank or hedge fund and take opposite sides of the same large bet.

In one year’s time one of you will have a huge profit and get paid well. The other person will have lost and perhaps be fired.

The sum of both your profits will be zero, but the sum of what you get paid will be positive. Split the pay.

There is one teensy snag with this strategy though. Sindona died in his prison cell after drinking poisoned coffee, a traditional Italian organized crime method of killing someone. Oopsie.

(If you’re wondering how the scam works, here’s a simplified explanation:

Trader A at Institution A buys $10 billion in dollar futures on 3/7/13.

Trader B at Institution B sells $10 billion in dollar futures on 3/7/13.

It doesn’t matter what the dollar does. When the contracts expire, one side will have a loss and the other will have a gain. The trader who wins gets a big bonus and splits it with his pal.

Sindona didn’t care which side won either. No money was actually lost because the trades offset each other and transaction costs were minimal. The side with the profit had freshly-washed money, ready to be sluiced someplace else.)