Goldman Sachs MDs Could Have Just Stayed And Had A Career At A Great Firm, But Will Take Ken Griffin’s Money InsteadBy Jon Shazar
It seems that as prosecutors and the Securities and Exchange Commission were circling, someone drawn to the “veritable magnet for market cheaters” was hot for some edge, black or otherwise, about Apple iPhone sales. Read more »
Even When He Wasn’t Engaging In Securities Fraud, Admitted Insider Trader Richard Lee Found Ways To Get His Jollies OnBy Bess Levin
Richard Lee, the ex-SAC Capital trader who pleaded guilty to insider trading last week, was fired from a rival hedge fund over a bonus-boosting scheme that was uncovered his first day in a new job, The Post has learned. Lee was ousted from Ken Griffin’s $15 billion Citadel Investment Group in 2008 for fiddling with the trading books in a ploy to pump up his payout, sources said. What’s more, it happened during Lee’s first few hours as head of Citadel’s value special situation team, which focused on mergers, according to sources. Lee never made it to a second day. Citadel accused him of pulling profits from other trading groups to boost his own performance numbers, a source said. The 34-year-old Lee, a graduate of Brown University who lives on Chicago’s tony Gold Coast, had been promoted to head of the trading group after the former chief left in March 2008. Citadel has programs to track such changes and Lee was caught within “three hours,” sources said. In a statement, Citadel hinted at the reason for Lee’s firing, saying he “transferred positions” in such a way that it “would have impacted only his potential future compensation.” [NYP]
The Dow Jones Industrial Average is a very stupid measure of the stock market for at least two reasons, which are (1) it is an average of only 30 big stocks and (2) it is weighted by share price, an entirely arbitrary number, rather than market cap or equal weighting or anything at all sensible. Was Mr. Dow an idiot? Probably not? He was just a guy inventing indices in 1896, when computers couldn’t fit in your pocket and were pulled by horses.1 Back then, to get a stock market average, some schmuck had to actually go look at a ticker tape for each stock price and then do the averaging on a … I’m gonna say an abacus? (Slide rule? HP 12C?) So “add up 30 stock prices and divide by 30″ seemed like a good plan; “take the float-adjusted market-cap-weighted average of 500 stock prices” did not. You can’t really fault Mr. Dow for the choices he made at the time he made them.
It is now 117 years later and nobody really uses the Dow anymore except, like, everybody, but people do use the S&P 500 index, which has the advantage that it’s a reasonable enough index of the thing it is an index of. But as with the Dow, a certain sense of “ooh the clerk is working so hard to calculate all these averages” still clings to the S&P, even though that’s obviously false. The clerk is a computer and it’s so bored calculating stock indices that it’s mining bitcoins on the side just to feel something.
I think that has something to do with this CBOE vs. International Securities Exchange dispute over S&P 500 (and DJIA!) index options. The CBOE lists such options; the ISE doesn’t but wants to. So the CME and McGraw-Hill, which together own the S&P 500 index, and the CBOE, which licenses it for options trading, sued in Illinois courts and got an injunction saying nobody else could use the index to list options. And today the CBOE finally totally won its case when the Supreme Court refused to hear it, leaving the Illinois court’s injunction in place, and thus leaving CBOE with a monopoly over derivatives on the S&P 500.2 Here’s CBOE’s gloating.
There’s no opinion from the Supreme Court and there’s a lot of goofball copyright preemption law involved; the Illinois court decided the case not on (federal) copyright law, but on … I dunno, this: Read more »