Phaedrus,
In reading through the documents, it sounds like Bass went to the SEC early in 2015. The SEC was already investigating- I think that started in 2014.
According to UDF’s documents Hayman went to the government throughout 2015. Then they pitched their story to the Wall Street Journal. Even though the government had been looking into UDF for over a year by then, they didn’t act. You can read emails between the WSJ and Bass- the WSJ wasn’t buying the ponzi story either. Bass was frustrated with the WSJ reporter based on the emails.
Around late November there was discussion between Lewis and Bass about how expensive the short is costing Hayman. So it appears that when Hayman couldn’t get the government to act, they went public, first with the anonymous posting on Harvest. And then publishing their own website. They discussed how to make sure their efforts translated into a stock price decline. They didn’t talk about just shedding light on what they thought was a problematic situation.
So, to answer your question, I think its possible that without Bass’ aggressive tactics, the FBI wouldn’t have raided the office. That is extremely rare, there is no need unless they really were believing Bass’ ponzi theory. Normally, they would use subpoenas to gather info. I doubt there would been a raid. Bass made the FBI look foolish.
Regarding the Wells notice, all a Wells notice indicates is that the SEC plans to file some sort of claim of wrongdoing. It gives a company a chance to tell their side of the story before actual charges. Wells notices are fairly common and wouldn’t normally cause the type destruction that occurred to UDF. Now, seeing the actual charges, it seems that UDF presented a strong case and the actual charges were not that significant compared to the allegations.
All the charges said were essentially, the company should have recognized the Buffington losses sooner and they should have had better disclosure that money multiple funds can be used in the same deal. And that when that happened, it should have been made clear that some of the dividends from III came from IV’s investment in a deal.
Also, Bass didn’t just stop with meeting with the government. He went public with his website, Harvest posting, backdating articles once his website was up, interfered with UDF’s accountants/auditors, interfered with the banks, contacted local mayors in municipalities where Centurian was trying to get approval for developments where UDF was the lender, attacked Centurian, etc. He also lobbied the Nasdaq to influence UDF getting delisted so that the shares would trade again on the pinksheets where he could cover. The efforts seem like a total and complete effort to take down a company. Rather than just sharing his research.
If he had just met with the government and posted a website with his research reports, I don’t think the fall out would have been that bad.
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