(9 am. – promoted by ek hornbeck)
Usually they get away with …
Usually they trade their knowledge, for money or power, and no one notices —
But not always:
Insider-Trading Ring Bust May Fuel Hedge-Fund Concern
By David Scheer – March 2, 2007
March 2, (Bloomberg) — The U.S. government’s accusations that Morgan Stanley, UBS AG and Bear Stearns Cos. employees were central figures in an insider-trading ring illustrate why regulators and lawmakers are suspicious of Wall Street’s relationship with hedge funds.
Prosecutors in New York and Washington yesterday brought criminal charges against 13 people, claiming that an executive at UBS and a former compliance lawyer at Morgan Stanley tipped off hedge-fund traders and brokers to new analyst ratings and secret takeover talks. Bear Stearns was home to at least four professionals who traded on information leaked from inside the two firms, according to a complaint filed by the Securities and Exchange Commission.
White Collar Crime, is not any less heinous, because they commit it with a Keyboard, instead of a Handgun. Yet more often than not, in the Wild West of electronic casinos, these criminals can make “a killing”, without having to pull that trigger themselves … without ever having to worry about ever facing their “day in court” …
Through clever inventions like “naked short selling” or gigantic “put options”, these modern day bandits, can place their electronic bets, and drive a company completely out of business, in a matter of weeks. It happens again and again, as Hedge Funds place their Billions in Bets, against a company succeeding — and thus Leverage them right out of existence, using 30 to 1 Margin calls.
There are reasons, WHY Hedge Funds (those Mutual Funds for Millionaires) fight “tooth and nail”, to keep their Trade strategies from ever seeing the light of day … (because often they are actually Betting against America succeeding! …Hmmm? I wonder how many Hedgies the $400 Million Rush-man, has his greasy mitts into?)
Bringing Down Bear Began as $1.7 Million of Options
By Gary Matsumoto – Aug 11, 2008
In a gambit with such low odds of success that traders question its legitimacy, someone wagered $1.7 million that Bear Stearns shares would suffer an unprecedented decline within days. Options specialists are convinced that the buyer, or buyers, made a concerted effort to drive the fifth-biggest U.S. securities firm out of business and, in the process, reap a profit of more than $270 million.
Whoever placed the bet used so-called put options that gave purchasers the right to sell 5.7 million Bear Stearns shares for $30 each and 165,000 shares for $25 apiece just nine days later, data compiled by Bloomberg show. That was less than half the $62.97 closing price in New York Stock Exchange composite trading on March 11. The buyers were confident the stock would crash.
“Even if I were the most bearish man on Earth, I can’t imagine buying puts 50 percent below the price with just over a week to expiration,” said Thomas Haugh, general partner of Chicago-based options trading firm PTI Securities & Futures LP. “It’s not even on the page of rational behavior, unless you know something.”
“That trade amounted to buying a lottery ticket,” said Michael McCarty, chief options and equity strategist at New York-based brokerage Meridian Equity Partners Inc. “Would you buy $1.7 million worth of lottery tickets just because you could? No. Neither would a hedge fund manager.”
So what if another company fails, as collateral damage, in the Wild West shoot out — that’s just life, in the 21st-century Global Marketplace! … It’s a Brave New World Order out there — we better get used it!
If only there were an honest Sheriff in town, to restore “Peace and Order” for the little guys. If only he could put the “fear of consequences” back into the mix, for the Robber Barons. … Enter one such Sheriff: Eliot Spitzer — but just how long will it be, before the dust flies, and they come gunning for him?
Hedge Funds and Insider Trading
NY Times – January 22, 2007
A truism of investing is that to beat the market consistently, an investor must either take above-average risk or trade on inside information. That inevitably casts a cloud over hedge funds, which exist to beat the market. Many fail, sometimes spectacularly so. But many succeed. The question is, How?
The Wall Street Journal reported that Eliot Spitzer was asking just that question. Shortly before he resigned as New York’s attorney general to become the governor, Mr. Spitzer opened investigations into whether employees at companies including Best Buy and Circuit City had improperly given nonpublic information to hedge fund managers.
Two research firms, the Gerson Lehrman Group and Vista Research, a unit of McGraw Hill, are also under investigation. They specialize in matching up people who have information — say, middle managers — with clients who crave information, like hedge funds managers. The firms collect fees from hedge fund clients and pay sources as consultants.
Sounds like a clear-cut racket. Hedge Fund Payolla for Insider info. (kind of sounds like Mobster.com for Wall Street gangsters, doesn’t it?)
Thank goodness, Spitzer is on the Case —
Correction — that Spitzer WAS on the Case!
Besieged by scandal, Eliot Spitzer resigns
By Aaron Siegel – March 12, 2008
Amid widespread calls for his resignation, Eliot G. Spitzer, the one time “Sheriff of Wall Street” announced that he will step down as governor of New York state
Mr. Spitzer, who served as New York’s attorney general from 1999 to 2006, made his name by going after individuals and companies for violations ranging from insider trading to securities fraud.
Some of the individuals he targeted included former American International Group Inc. chairman and chief executive Maurice “Hank” Greenberg, former New York Stock Exchange chairman Richard Grasso, and former NYSE board member and Home Depot co-founder Kenneth Langone.
Sad, that the Sheriff of Wall Street had his moral indiscretions, that the ever watchful eyes of the electronic grid, could pin on him, and run him out of town, in total disgrace.
I doubt that Spitzer, was the first Power Player, with such a weakness; I doubt he will be the last, either. Of course those others, know how to read the “Elliot Example” — they know when to keep their mouths shut … lest they suffer a similar disgrace. (Congress critters better than anyone, know what kind of personal files are kept!)
Of course one Congressman, does seem to care about the facts, more than reputation. He constantly refuses to play the Washington Power game of Musical Chairs and Currying Favor. And it seems he doesn’t much like what Insiders Traders, have gotten away with either … especially on one grander scale:
Kucinich to investigate 9/11 attacks
24 Feb 2008
Congressman Dennis Kucinich says he will conduct an investigation into the insider trading that took place prior to the 9/11 incident.
Kucinich said that he had personal questions particularly regarding American Airlines and United Airlines stock.
He said the bizarre record-level of trades indicated prior knowledge of the September 11th attacks adding that this was what had initially caught his attention.
Uh oh, here we go. I bet they silence him soon. … “What’s that DK, you’ve seen a UFO once, can you tell all of America about that experience? We’re all dying to hear about it.” (wink, wink.)
Say bye bye, to your Credibility, Dennis, it’s been nice, knowing ya …
Dennis, you know, sometimes there is a time and place for “little white lies” — and I think you just missed your cue.
Still Kucinich, was onto something … perhaps some other brave citizens, will pick up on the trail of evidence, while they still can?
by Michael C. Ruppert – April 22, 2002
The documented pre-Sept. 11 insider trading that occurred before the attacks involved only companies hit hard by the attacks. They include United Airlines, American Airlines, Morgan Stanley, Merrill-Lynch, Axa Reinsurance, Marsh & McLennan, Munich Reinsurance, Swiss Reinsurance, and Citigroup.
To quote 60 Minutes from Sept. 19, “Sources tell CBS News that the afternoon before the attack, alarm bells were sounding over unusual trading in the U.S. stock options market.”
It is hard to believe that they missed:
– A jump in UAL put options 90 times (not 90 percent) above normal between Sept. 6 and Sept.10, and 285 times higher than average on the Thursday before the attack. [CBS News, Sept. 26]
– A jump in American Airlines put options 60 times (not 60 percent) above normal on the day before the attacks. [CBS News, Sept. 26]
– No similar trading occurred on any other airlines. [Bloomberg Business Report, the Institute for Counterterrorism (ICT), Herzliyya, Israel citing data from the CBOE]
– Morgan Stanley saw, between Sept. 7 and Sept.10, an increase of 27 times (not 27 percent) in the purchase of put options on its shares. [ICT Report, “Mechanics of Possible Bin-Laden Insider Trading Scam,” Sept. 21, citing data from the CBOE].
– Merrill-Lynch saw a jump of more than 12 times the normal level of put options in the four trading days before the attacks. [Ibid]
These trades were certainly noticed after the attacks.
“This could very well be insider trading at the worst, most horrific, most evil use you’ve ever seen in your entire life… This would be one of the most extraordinary coincidences in the history of mankind if it was a coincidence,” said Dylan Ratigan of Bloomberg Business News, interviewed on Good Morning Texas on Sept. 20.
I really didn’t want to go there — Conspiracy Theory land — because I generally like to see the best in people (even the prior administration). But sometimes, you just got to go where the facts lead … Sometimes you just have to ask, Who, What, When, Where, and Why?
Why do Insider Traders, always to seem to get away with it, with no accounting, with no hard scrutiny? No investigation into who made out like Bandits, from so much human tragedy?
Are the Wizards of Wall Street, still lurking in the shadows, planning the next Big Thing, that will make THEM their next 100 Billion? Will they get away with it Scott-free, the next time too?
Regarding the dreaded CT’s taboo (and Tattoo):
Sometimes, when you DO see Smoke — you SHOULD assume that somewhere, there’s a Fire still burning!
That’s just common sense.
Hopefully, Sheriffs of noble character, will stand up again, and ask the Hard Questions — because afterall the “bad guys” really DO belong in jail.
Too bad the Power Elite, don’t jump up and down, and say “Hey were over here, come and get us!” (they do everything in their Power to avoid being noticed)
With those Electronic Bandits of the Global Marketplace, sometimes, you need to turn over a few rocks, until you see what scurries out …
Even Insiders, are forced to face the light of day, sometimes …
How much money was involved? Andreas von Bülow, a former member of the German Parliament responsible for oversight of Germanys intelligence services estimated the worldwide amount at $15 billion, according to Tagesspiegel on Jan. 13. Other experts have estimated the amount at $12 billion. CBS News gave a conservative estimate of $100 million.
Not a single U.S. or foreign investigative agency has announced any arrests or developments in the investigation of these trades, the most telling evidence of foreknowledge of the attacks. This, in spite of the fact that former Security and Exchange Commission enforcement chief William McLucas told Bloomberg News that regulators would “certainly be able to track down every trade.”
It’s a damn shame, that “finding the truth”, was yet another silent casualty of 9/11.