The Latest Spin From The NY Press; Are Whistleblowers In Danger?
Location: Blogs Bob O'Brien's Sanity Check Blog
Posted by: bobo 7/2/2006 3:04 AM
Someone sent me an article that appeared in Barron's over the weekend - that august publication that managed to pretend that there was no issue at Refco for months, and which credulously parrots the hedge fund party line at every turn - almost as often as the WSJ, but that's another story...
The article, written by Michael Santoli, contained typical misstatement we've come to expect from the NY financial press. It is only noteworthy because of the stunning amount of info that exposes the lie in the words:
"IT'S HARD TO MISS THE IMPATIENT hunt for scapegoats around the Street, and perhaps it says something about the mood among investors and the public at this market moment.
Last week saw hedge funds placed on mock trial in a congressional hearing room (see Roundtable Rascals?3), a venue once reserved for investigating treasonous acts or criminal enterprises. The forum featured several critics casting ominous but vague charges about the funds' rapacious tactics and nefarious motives.
(Funny, but with an average 3.4% return this year through June 20 for a broad Merrill Lynch hedge-fund index, just how ingeniously evil can hedge-fund managers possibly be?)
Earlier in the week came news that a couple of trading firms were suing several major brokerage houses, charging them with abetting "naked" short selling -- that is, selling shares short without first arranging to borrow them. This practice is improper, but the suggestion that the largest brokers are conspiring to encourage it indicates a certain inflated sense of grievance among those thrashing for villains to blame when their stocks go down."
A certain inflated sense of grievance.
Huh.
I suppose that the author didn't see the recent FOIA data showing that OSTK, one of the more visible players in this drama, had 25% of its float FTDs. That's 12.5% of all outstanding shares.
I wonder what level of "improper" trades in one's company's stock would result in "justified" grievance, if 12.5% being FTDs is causing an "inflated" sense of grievance? On one day, 107% of all the trading in OSTK was FTDs. Is that enough to cause justified grievance? Or is no amount of fraud worthy of Barron's acceptance of justified grievance?
Just another in a long string of NY press corps absurdity.
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I was chatting with a friend this weekend, and we were speculating as to the actual level of danger whistleblowers and high profile players in this crisis are actually in.
Is a Gary Aguirre in more danger now of being hit by a bus, or having his plane go down, or choking on something, or dying of auto-erotic asphyxiation, or committing suicide by firing two bullets to the back of his head, than he was two weeks ago?
These are huge stakes being played for now. And it is looking like Wall Street is in real danger of being exposed.
Recall from the Pecora hearings that Anaconda Mining President James Ryan passed away under mysterious and sudden circumstances before he was ever able to take the stand, as did Percy Rockefeller - his longtime illness apparently became too much for him, fortuitously before he could testify.
Given that history tends to repeat itself, what is the likelihood that an Aguirre, or a Patrick Byrne, or an Easter Bunny, could suffer from bad luck?
We've already seen the SEC threaten Aguirre with civil and criminal charges, and we've seen Patrick now being probed by the SEC.
I know it is far fetched, but I wonder aloud how far the bad guys will go to make their problems and critics and whistleblowers disappear?
If I was Aguirre, or any other whistleblower, or even Byrne, I'd be watching my back. Less than lilly-white players have been known to operate on Wall Street, and I sense that this wouldn't be the first time a key player was harmed to send a message - recall the whistleblower in the mutual fund frontrunning case being hit in the face with a brick by an unknown assailant. Odd things can happen to those who take on the power structure.
I hope they aren't downplaying the level of personal risk involved in going against Wall Street. There is historical precedent for concern...
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Chris Byron reprises his article from a year or so ago, wherein he calls for the SEC to be dismantled.
We apparently agree on something.
And the WSJ has a 2 page special on Refco, and how a ton of money was lost and hidden. Or rather, that is what it purports to report on - but nowhere does anyone explain what the exact nature of the bad debt was, or how precisely it was lost - this after a ton of ink, and two writers on the case.
It's wild that one of the bigger frauds can still be covered up like this - someone is STILL running interference over who did what to whom, and precisely what it was that was done.
No doubt the Journal feels that they have now done their final summary of the story, and can put it to rest.
How unexpected that Refco would ultimately be swept under the rug, in plain view, by the media lackeys of Wall Street?
On a somewhat related note, I do so love when these articles about hedge funds say they are "lightly regulated" - and some even point out that they are already heavily regulated, in that they are required to obey federal securities laws.
How dishonest can you get?
That is like saying that hedge funds are exactly as regulated as the Easter Bunny, in that I have to obey securities laws as well.
What a load of hogwash.
Who do they think is buying this pap? I mean, really...
Copyright ©2006 Bob O'Brien
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