Government Destroyed Documents Regarding Pre-9/11 Put Options
by ilene - June 15th, 2010 2:28 pm
SEC: Government Destroyed Documents Regarding Pre-9/11 Put Options
Courtesy of Washington’s Blog
On September 19, 2001, CBS reported:
Sources tell CBS News that the afternoon before the attack, alarm bells were sounding over unusual trading in the U.S. stock options market.
An extraordinary number of trades were betting that American Airlines stock price would fall.
The trades are called "puts" and they involved at least 450,000 shares of American. But what raised the red flag is more than 80 percent of the orders were "puts", far outnumbering "call" options, those betting the stock would rise.
Sources say they have never seen that kind of imbalance before, reports CBS News Correspondent Sharyl Attkisson. Normally the numbers are fairly even.
After the terrorist attacks, American Airline stock price did fall obviously by 39 percent, and according to sources, that translated into well over $5 million total profit for the person or persons who bet the stock would fall.
***
At least one Wall Street firm reported their suspicions about this activity to the SEC shortly after the attack.
The same thing happened with United Airlines on the Chicago Board Options Exchange four days before the attack. An extremely unbalanced number of trades betting United’s stock price would fall — also transformed into huge profits when it did after the hijackings.
"We can directly work backwards from a trade on the floor of the Chicago Board Options Exchange. The trader is linked to a brokerage firm. The brokerage firm received the order to buy that ‘put’ option from either someone within a brokerage firm speculating, or from one of the customers," said Randall Dodd of the Economic Strategy Institute.
U.S. investigators want to know whether Osama bin Laden was the ultimate "inside trader" — profiting from a tragedy he’s suspected of masterminding to finance his operation. Authorities are also investigating possibly suspicious trading in Germany, Switzerland, Italy and Japan.
On September 29, 2001, the San Francisco Chronicle pointed out:
"Usually, if someone has a windfall like that, you take the money and run," said the source, who spoke on condition of anonymity. "Whoever did this thought the exchange would not be closed for four days.
"This smells real bad."
***
There was an unusually large jump in purchases of put options on the stocks of UAL Corp. and AMR Corp. in the three business days before the
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Arrogance Defined: Goldman Sachs
by ilene - June 9th, 2010 2:35 am
Here’s Karl Denninger’s thoughts on Goldman Sachs’s data dump on the FCIC.
Arrogance Defined: Goldman Sachs
Will someone just break these bastards up – or close them down?
“We did not ask them to pull up a dump truck to our offices and dump a bunch of rubbish,” said Angelides, 56, who previously served as California’s treasurer. “This has been a very deliberate effort over time to run out the clock.”
I wonder if there’s an obstruction charge in here somewhere.
Another source says that Goldman dumped five terabytes of data on the FCIC. To put this in perspective that’s something on the order of five hundred full-length DVD movies. That sort of "data dump" is clearly intended to obstruct investigation and is the sort of tactic sometimes employed in civil litigation when one is trying to prevent the actual discernment of something important by burying it under 100 tons of what amount to chatter over whether the janitor was banging one of the secretaries.
This is the sort of arrogance that I find flatly unacceptable – and so should both Congress and others. It appears the FCIC does, which is a good thing. It also appears that Goldman badly miscalculated in their belief they could pull this crap and get away with it.
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Goldman has a many-year history of simply pissing on people who claim to come to them with regulatory requirements. Remember, it was Henry Paulson, then their chief, who came to the SEC and "asked" for the leverage limits that formerly bound them to be removed. When he was told "no" in 2000, he waited a bit and came back in 2004, and this time got what he asked for.
After this he was "rewarded" with the Treasury Secretary position.
Both Bear Stearns and Lehman Brothers failed with leverage more than double the former legal limits – limits they could not have exceeded but for Henry Paulson’s "request."
Put another way, neither of those firms would have failed but for Paulson’s act.
That puts a bit of a different color on the financial mess, doesn’t it?
Perhaps the FCIC will examine that factor in the lead-up to the explosion in our financial markets that began in 2007…..
Hope springs eternal!
Picture via Jr. Deputy Accoutant
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77 Fraud, Money Laundering, Insider Trading, and Tax Evasion Investigations Underway Regarding TARP
by ilene - January 31st, 2010 5:17 pm
My belief is the benefits of TARP and the entire alphabet soup of lending facilities was not as stated by Bernnake and Geithner, but rather to shift as much responsibility as quickly as possible on to the backs of taxpayers while trumping up nonsensical benefits of doing so. This was done to bail out the banks at any and all cost to the taxpayers. – Mish
77 Fraud, Money Laundering, Insider Trading, and Tax Evasion Investigations Underway Regarding TARP
Courtesy of Mish
Inquiring minds are reading the SIGTARP Quarterly Report To Congress. The report is a massive 224 pages long. I will do my best to condense it down to the critical highlights involving Fraud, Money Laundering, Insider Trading, etc.
Let’s start with the SIGTARP mission, then the findings.
Mission
SIGTARP’s mission is to advance economic stability by promoting the efficiency and effectiveness of TARP management, through transparency, through coordinated oversight, and through robust enforcement against those, whether inside or outside of Government, who waste, steal or abuse TARP funds.
Let’s dive into the 224 page report and see how well TARP, and the alphabet soup of lending facilities met their stated goals.
On the positive side, there are clear signs that aspects of the financial system are far more stable than they were at the height of the crisis in the fall of 2008. Many large banks have once again been able to raise funds in the capital markets, and some institutions — including some that appeared to be on the verge of collapse — have recovered sufficiently to repay their TARP investments years earlier than most would have predicted. These repayments and the sales of the warrants associated with them have meant that Treasury (and thus the taxpayer) has turned a profit on some of the individual TARP investments; as a result of these repayments, among other positive developments, it now appears that the ultimate cost of TARP to the American taxpayer, while still substantial, might be significantly less than initially estimated.
Mish: The idea that there are "profits" is fictitious. It’s effectively praising making 10 cents on a dollar while not counting hundreds of $billions lost on AIG and Fannie Mae, and ignoring $300 billion worth of loan guarantees at Citigroup still in effect.
Moreover, the only reason banks…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.