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Entry: Bear Stearns Execs Absolutely Floored By Extent To Which They Were Able To Con Investors
posted by gdm
Jun 19, 2008 5:44PM
Generally I call BS on criminalizing failure, but I'm becoming convinced that truly doesn't apply here.
http://graphics8.nytimes.com/images/blogs/dealbook/cioffi_indictment.pdf
CIOFFI wrote an email to a colleague, stating that "I'm fearful of these markets. Matt [TANNIN] said it 's either a meltdown or the greatest buying opportunity ever, I'm leaning more towards the former. As we discussed it may not be a meltdown for the general economy but in our world it will be."
CIOFFI and TANNIN told, and caused others to tell, investors throughout March 2007 that the market presented a buying opportunity. ... CIOFFI believed the market was such that, "we have an awesome opportunity."
33. In contrast with CIOFFI and TANNIN'S representations to investors that the Funds had tremendous opportunities to buy undervalued assets, CIOFFI told TANNIN and another team member on March 15 that the Funds "have to be very light on the investment side and continue to raise cash in [the High Grade Fund] and maintain cash in [the Enhanced Fund.]," primarily to meet margin calls.
34. Despite his repeated representations to investors that he was going to add to his own investment in the Funds, TANNIN never did so.
In an email message, TANNIN advised CIOFFI..."the subprime market looks pretty damn ugly … If we believe the [CDOs report is] ANYWHERE CLOSE to accurate I think we should close the funds now. The reason for this is that if [the CDO report] is correct then the entire subprime market is toast. . . . If AAA bonds are systematically downgraded then there is simply no way for us to make money - ever. (emphasis in original)
TANNIN concluded that, "caution would lead us to conclude the [CDO Report] is right - and we're in bad bad shape."
TANNIN then asked, "Who do we talk to about this? [BSAM's president]? [Bear Stearns' co-president]? Outside counsel? (And here we have to be careful because our outside counsel is BSAM’s counsel NOT our counsel - This is another very big issue we at least need to think about." TANNIN circumvented Bear Stearns' email system by sending this email from his personal account to the personal email accounts of CIOFFI’s wife and the other Funds manager.
TANNIN, in stark contrast to the grim views expressed in his email to CIOFFI of just three days before, told investors: "So, from a structural point of view, from an asset point of view, from a surveillance point of view, we're very comfortable with exactly where we are. … The structure of the Fund has performed exactly the way it was designed to perform," and "it is really a matter of whether one believes that careful credit analysis makes a difference, or whether you think that this is just one big disaster. And there's no basis for thinking this is one big disaster.”
[Asked about redemptions ]CIOFFI answered that question by falsely claiming that, "[tlhe next big redemption date would be June 30th, and as of now, I believe we only have a couple million of redemptions for the June 30 date. . . . I believe we have about 45 million in subscription, and 25 of that is from Bear Stearns and those will be for, I believe those are all for May 1st."
47. Despite the acknowledged importance of this issue to investors, CIOFFI failed to disclose the approximately $57 million redemption submitted by Major Investor #I, with whom CIOFFI had met on April 18, 2007.
48. While noting the May 1 subscriptions, CIOFFI also omitted any reference to $67 million in redemptions scheduled for April 30 and May 31, 2007. As for the "June 30" redemptions, while CIOFFI stated that there were only "a couple million," in fact, there were a total of approximately $47 million, which included a portion of Major Investor #l’s $57 million redemption.
While gathering the documents and materials, Bear Stearns learned that TANNIN'S tablet computer, which he had used to take notes during 2007, and one of CIOFFI’s notebooks, in which he had taken handwritten notes for the period January 1, 2007 to June 17, 2007, were both missing.
Entry: When Will The Treasury Announce Plans For Fannie and Freddie?
posted by gdm
Aug 22, 2008 2:58PM
I don't think Bush has the stones at this point to pull the trigger. He's going to close his eyes and hope they can kick the can down the line to the next guy.
Entry: Dealbreaker Contest: No Rest For The Wicked
posted by gdm
Oct 28, 2008 10:41AM
874.62 at noon
868.20 at close
Entry: The Municipal Bond Ratings Debate Hits The New York Times
posted by gdm
Mar 03, 2008 3:33PM
For those who think muni insurance is a total rip off, read this:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9wVRJ4yf_7c
The county, in a notice to investors on Feb. 28, said it could ``provide no assurance'' that revenue from the sewer system would be sufficient to pay its increasing debt costs. The disclosure prompted S&P to lower the county's sewer debt by six levels to B, five steps below investment grade, and keep the bonds under review for possible further downgrade.
So without the "monolines" Alabama would still be using outhouses...