bear stearns / transactions d'initiés fort suspectes

source www.lemetropolecafe.com




A National Disaster

Rob Kirby
I was made aware of the existence of this article this evening. The author’s name is John Olagues. Here is his bio:
John Olagues is the owner and principal consultant for Truth IN Options and a recognized authority on listed and employee stock options.
After graduating from Tulane University (where he captained the baseball team and set many of Tulane's pitching records), John applied his B.A. in mathematics and his competitive spirit to the real world of stock options.
In 1976, John became a member of the Pacific Stock Exchange in San Francisco trading and managing options positions in scores of different stocks. John joined with Blair Hull to create Options Research, the first service to provide theoretical options values to market-makers and to the general public. In 1980, he became a member of the CBOE, where he personally traded more options in more diverse situations than any other trader.
After reading the piece, I contacted Mr. Olagues and asked for permission to repost his article with his bio. Additionally, I was curious, so I asked whether or not anyone from the mainstream financial press had contacted him regarding an interview or giving his article greater exposure?
His reply to me:
You can do with it what you wish. I have not had any calls or emails from the main stream media as they will not criticize the FED or J.P. Morgan. I am saying the J.P. Morgan essentially stole $30 billion from the tax payers through the FED and did a big favor for the short sellers, who probably made a few billion. From Cox to Bernanke, to Dimon and Cramer, they all played their roles.
This article is about how Bear Stearns stock was artificially collapsed so that illegal insider traders would make billions and J.P. Morgan would be paid $55 billion of US tax payer money to shore themselves up - and buy Bear Stearns at bankruptcy prices.
Massive buying of puts and shorting stock in Bear Stearns
On March 10, 2008, the closing price of Bear Stearns was 70. The stock had traded at 70 eight weeks earlier. On or prior to March 10, 2008 requests were made to the options exchanges to open new April series of puts with exercise prices of 20, and 22.5, and a new March series with an exercise price of 25.
Their requests were accommodated and new series were opened for trading March 11, 2008. Since there was very little subsequent trading in the call with exercise prices of 20, 22.5 or 25, it is certain that the requests were made with the intentions of buying substantial amounts of the puts.
There was in fact massive volumes of puts purchased in those series which opened on March 11, 2008.
For example: between March 11-14 inclusive, there were 20,000 contracts traded in the April 20s, 3700 contracts traded in the April 22.5s, and 8000 contracts traded in the April 25s. In the March 25s, there were 79,000 contracts traded between March 11-14, 2008.
Question: Why did the options exchanges not open the far out of the money puts for trading the first time that Bear Stearns stock hit 70, when the April and March options had far more time to expiration?
Certainly if the requesters were legitimate hedgers or speculators, their buying the March and April puts with 2 and 3 months to expiration was more reasonable.
Answer: The insiders were not ready to collapse the stock and did not request the exchanges to open the new series when Bear Stearns first hit 70.
Second Request and Accommodation
On or prior to March 13, 2008, an additional request was made of the options exchanges to open more March and April put series with very low exercise prices.
These new March put options would have just five days of trading to expiration.
The exchanges accommodated their requests, knowing that the intentions of the requesters were to buy puts. They indeed bought massive amounts of puts. For example the March 20 puts traded nearly 50,000 contracts (i.e. contracts to sell 5 million shares at 20). The March 15s traded 9600, the March 10s traded 13,000 and the March 5s traded 6300 all on March 14 (the first day of trading of the new March series).
The introduction of those far-out-of-the-money put series in the April and March months immediately before the crash provided a vehicle whereby extreme leverage was available
to the insiders. In other words if an insider had $100,000 and he knew that Morgan would buy Bear Stearns at 2, he could make 5-10 times more on the $100,000 by buying the newly introduced March puts. This is so because the soon to expire far out-of-the-money puts were far cheaper than the July or October out-of-the-money puts. And that is why the illegal inside traders requested the exchanges to introduce the far out-of-the-moneys just days before the crash.
But this scenario has serious implications.
This means that the deal was already arranged on March 10 or before. That contradicts the scenario that is promoted by SEC Chairman Cox, Fed Boss Bernanke, Bear CEO Schwartz, Jamie Dimon of J.P. Morgan (who sits on the board of directors for the New York Federal Reserve Bank) and others that false rumors undermined the confidence in Bear Stearns making the company crash, notwithstanding their adequate liquidity days before.
<BLOCKQUOTE>
“I would say that the deal was arranged months before but the final terms and times were not determined until maybe March 7-8, 2008.”</BLOCKQUOTE>
On March 14, 2008, the April 17.5s, the 15s, the 12.5s and the 10s traded 15,000 contracts combined. Each put gives the right to sell 100 shares. So for example, these 15,000 April puts gave the purchaser(s) the right to sell 1.5 million shares at prices between 10 and 17.5. Those purchasers expected to make profits on 1.5 million shares because they knew the deal was coming at $2.00. That is the only plausible explanation for anyone to buy puts with five days of life remaining with strike prices far below the market price.
So there were requests, during the period of March 10-13, to the exchanges to open the March and April series for buying massive amounts of extremely out-of-the-money puts, which were accommodated by the options exchanges. Did the Exchanges aid and abet the insider trading scheme?
We do not able to have a strong opinion on that idea.
Media statements of adequate liquidity
However, Reuters, on March 10, 2008 was citing Bear Stearns sources that there was no liquidity crisis and that there was no truth to the speculation of liquidity problems. And none other than the Chairman of the Securities and Exchange Commission on March 11, 2008 was stating that "we have a good deal of comfort with the capital cushion that these firms have".
We even had the "mad" Jim Cramer proclaiming on March 11, 2008 that all is well with Bear Stearns and that the viewers should hold on to their Bear Stearns.
On March 12, 2008, Alan Schwartz CEO of Bear Stearns was telling David Faber of CNBC that there was no problem with liquidity and that "We don't see any pressure on our liquidity, let alone a liquidity crisis".
The fact that the requests were made on March 10 or earlier that those new series be opened and those requests were accommodated together with the subsequent massive open positions in those newly opened series is conclusive proof that there were some who knew about the collapse in advance, while Reuters, Cox, Schwartz and Cramer were telling the public that there was no liquidity problem.
<BLOCKQUOTE>
“This was no case of a sudden development on the 13 or 14th, where things changed dramatically making it such that they needed a bail-out immediately.” </BLOCKQUOTE>
The collapse was anticipated and prepared for, even while the CEO of Bear Stearns and the SEC Chairman were making claims of stability.
What was the reason why Cramer, Cox and Schwartz were all promoting Bear Stearns immediately before its collapse? That will be speculated upon for years to come.
Cramer has admitted that "truth" was not his friend and that he manipulated stocks to influence investors behavior. Was this one of his acts? But no apologies from Cramer as he claims now that he was referring to keeping money in Bear Stearns Bank - not in Bear Stearns stock.
Proof of Insider Trading:
To prove the case of illegal insider trading, all the Feds have to do is ask a few questions of the persons who bought puts on Bear Stearns or shorted stock during the week before March 17, 2008 and before.
All the records are easily available. If they bought puts or shorted stock, just ask them why? What information did they have access to which the CEO and the SEC did not have? Where did they get the info? Why aren't Cramer and Cox, Dimon, Bernanke, Geithner, Paulson, Faber and Schwartz subject to a bit of prosecutorial pressure to get to the bottom of this? Maybe the buyers of puts and short sellers of stock just didn't believe Reuters, Cox, Schwartz, Cramer and Faber and went massively short anyway, buying puts that required a 70% drop in a week? Maybe they had better information than Schwartz or Cox? If they did, then that's a felony, with the profits made subject to forfeiture. April 4, 2008 Congressional Hearings on the Bear Stearns Bail-out: I watched both sessions and drew the following conclusions: In the first session there were the following witnesses; Bernanke of the Federal Reserve Board, Cox from the SEC, Geithner representing the New York Reserve Bank and an incidental player Mr. Steel from the Treasury. The only Senators that seem to be willing to attack these bankers were Bunning, Tester, Menedez and Reed. All the rest were useless and very respectful. Absurdities: All witnesses did their best to keep their stories consistent but they did slip up a bit. They all agree that the bail-out was necessary without any proof that it was. They all agreed that what caused the cash liquidity to dry up within one day was ‘rumor mongers’. Apparently it is claimed that some people have the ability to start false rumors about Bear Stearns's and other banks liquidity, which then starts a "run on the bank". These rumor mongers allegedly were able to influence companies like Goldman Sachs to terminate doing business with Bear Stearns, notwithstanding that Goldman et al. believed that Bear Stearns balance sheet was in good shape. (Goldman, between March 11-14 warned their average customers that Bear Stearns stock was "hard to borrow" for shorting due to the fact that other customers had used up all of the stock available for borrowing for short sales). That idea that rumors caused a "run on the bank" at Bear Stearns is 100% ridiculous. Perhaps that's the reason why every witness was so guarded and hesitant and looked so strained in answering questions. Loans to J.P. Morgan total $55 billion from FED The Private New York FED lent $25 billion to Bear Stearns (described as the primary facility by James Dimon) and another $30 billion to J.P. Morgan (described as the secondary facility by James Dimon).
So the bail-out cost was $55 billion not the $30 billion that is promoted. This was revealed at the second session of the Senate hearings in a James Dimon response to a question from Senator Reed. Who gets the $55 billion?
J.P. Morgan received the money on a loan pledging Bear Stearns assets valued at $55 billion. $29 billion is non-recourse to Morgan. Effectively the FED received collateral appraised by Bear Stearns at $55 billion for a loan to J.P. Morgan of $55 billion.
“That's a loan to value of 100%.” If the value of the secondary facility of $30 billion ($29 billion of which is non recourse) is worth only $15 billion when all is said and done, then J.P. Morgan has to pay back only $1 billion of the $30 billion received and keeps the $14 billion the Fed loses. If the $25 billion primary facility is worth only $15 billion when all is said and done, J.P. Morgan has to pay $10 billion of the $25 billion received. If J.P Morgan can not pay, then the Fed loses the $10 billion. If after all is said and done, the $25 billion primary assets or the $30 billion secondary assets are sold for more that $25 billion or the $30 billion respectively, the difference goes to J.P. No matter how you cut it, J.P. Morgan wins. If the $55 billion assets turn out to be worth only $20 billion when all is said and done, J.P. Morgan owes $1 billion on the $30 billion and the difference between $25 billion and the value received on the primary facility.
<BLOCKQUOTE>
“The best the FED can do: get their money back with interest. The worst they can do is lose $25 -$40 billion.” </BLOCKQUOTE>
The FED would have been far better to just buy the assets at Bear's and J.P. Morgan's valuation. The question arises:
Why didn't the FED just make the $55 billion loan to Bear Stearns directly?
The FED received Bear Stearns assets valued by Bear Stearns as its only collateral for the 100% loan. I am sure that Bear Stearns would have guaranteed the full $55 billion and would have advanced more collateral and accepted a 90% loan to value. Everything would have been just fine for Bear Stearns and the FED would have had a better deal. But the Bear Stearns stock would have gone up and all short stock sellers and all put buyers would have massive losses instead of massive gains.
<BLOCKQUOTE>
“The bail-out is a great deal for J.P. Morgan, the illegal insider short sellers got a great deal. Bear Stearns stock holders and employees got a very bad deal and the sellers of puts sustained large losses.”</BLOCKQUOTE>
This shows, in my view, that J.P. Morgan and the FED were in collusion with the short sellers and put buyers.
~John Olagues~
Conclusion:
While I’m saddened to learn what John has reported here, I’m not surprised. Personally, I now believe that the “take down” of Bear Stearns served as a façade to recapitalize none other than J.P. Morgan.
You see, J.P. Morgan’s derivatives book is 2 – 3 times bigger than Citibank’s – and it was derivatives that caused losses of more than 30 billion at Citibank [14.1 billion Q1/08 and 18.1 billion Q4/07]. So, it only made common sense that J.P. Morgan had to be a little more than “knee deep” in the same stuff that Citibank was – but how do tell the market that a bank – ANY BANK – needs to be recapitalized to the tune of 50 – 80 billion?
Now, it appears, we know the answer to that question.

Du GROS le coup d'acheter des puts necessitant 70% de baisse en 1 semaine...

Le carnet d'ordres du PUT doit être instructif+++
"Kikapéchossa ?" devraient se demander les autorités de marché...

Pas compliqué à détailler, ça ne devait pas se bousculer au portillon, il est évident que les chtis malins qui ont acheté massivement un truc aussi improbable ne peuvent pas être passés inaperçus... il suffit donc d'aller vérifier, pas même besoin d'y aller physiquement...

trop balaise la brigade financière amerlocaine...car à moins qu'elle ait reçu des ordres clairs et stricts lui enjoignant de tourner la tête, il est impossible que la survenue d'un tel évênement ne suscite pas un minimum d'enquête... et même la plus minimaliste des investigations permettrait à un élève de CE2 ou CM1 de mettre en face les transactions "atypiques" et le nom (les noms) par le(s)quel(s) les bénefs ont été réalisés...

à moins, bien entendu, que, dans l'intermède, la tour où se trouve le disque dur reçoive un ovni qui la fasse imploser pile poil comme une vulgaire barre de la Courneuve...

Kulés...!!! fire

Ouaip, à propos de tours c'est comme chercher ceux qui ont massivement acheté des PUT sur American Airlines une semaine avant que quelques uns de ses avions ne respectent pas la priorité des tours-jumelles.

Il était clair que l'opération consistait à sauver JPM et non pas BSC.

Citation :

c'est comme chercher ceux qui ont massivement acheté des PUT sur American Airlines une semaine avant que quelques uns de ses avions ne respectent pas la priorité des tours-jumelles.

Bah oui, Dup, c'est bien pour ça que je faisais le parallèle...

THE SECRET BAILOUT OF JPMORGAN:
HOW INSIDER TRADING LOOTED BEAR STEARNS AND THE AMERICAN TAXPAYER


http://www.webofdebt.com/articles/banking-bailout.php

Limpide! De la très grosse mafia...

GdB

tiens tiens, le wall street journal fait d'interessantes révélations .. au sujet de .. Golman Sachs

lire cet article



Goldman Sachs Group Inc. is the envy of Wall Street, navigating the credit crisis relatively deftly as many of its peers have been battered.

Now, the big securities firm has come under suspicion, at least from the chiefs of two rivals who have questioned in recent months whether Goldman, even indirectly, might have put pressure on their firms' stocks.


Alan Schwartz, who headed Bear Stearns Cos. when it collapsed in March, has pointedly asked Goldman Chief Executive Officer Lloyd Blankfein whether there was any truth to talk that in the days preceding Bear Stearns's fall, traders in Goldman's London office manipulated the struggling firm's stock, according to a person with knowledge of the conversation.

Lehman Brothers Holdings Inc. CEO Richard Fuld Jr., whose firm's shares also have been battered, also has contacted Mr. Blankfein. "You're not going to like this conversation," Mr. Fuld told Mr. Blankfein, according to people familiar with their talk, but he was hearing "a lot of noise" about Goldman traders who allegedly spread negative rumors about Lehman. In recent months, Mr. Fuld has contacted traders he felt may have been bad-mouthing his stock, according to someone familiar with the matter. Spreading rumors one knows to be false with the intention of manipulating a public company's price is illegal.

Mr. Blankfein was taken aback by the inquiry from Mr. Schwartz, according to a person with knowledge of the discussion, even though the former Bear Stearns CEO was quick to add that he didn't believe Mr. Blankfein would ever knowingly tolerate misconduct. Mr. Blankfein responded that he had no knowledge of any alleged manipulation, this person said, adding that he told Mr. Schwartz he would respond severely if he ever discovered such behavior by Goldman traders. Through a spokesman, the Goldman CEO says he doesn't recall the conversation with Mr. Schwartz.

Goldman strongly denies wrongdoing. "We went out of our way to be supportive of Bear and were rigorous about conducting business as usual," spokesman Lucas van Praag said. He said Goldman never altered its terms for doing business with Bear, even as lenders pulled their financing and some trading partners retreated during the troubled securities firm's struggles in early March.

Questions still swirl nearly four months after Bear Stearns's collapse, which culminated with a fire-sale to J.P. Morgan Chase & Co. Goldman's role in the firm's demise is a focal point.

The Securities and Exchange Commission, which is investigating whether insider trading or market manipulation occurred in Bear Stearns's stock, options, or other securities, is examining trading documents showing that in the weeks prior to the firm's collapse, a number of parties curbed their exposures to the troubled firm, according to people familiar with the matter.

Cutting exposure to Bear Stearns and other financials was a compelling strategy at the time, and many parties may have done so legitimately. But making such moves in hopes of creating broader market anxieties is considered improper trading.

Meanwhile, the SEC is taking steps to root out manipulative trading. Tuesday, the agency set an emergency action aimed at reducing short-selling in the stocks of Wall Street securities firms and mortgage giants Fannie Mae and Freddie Mac, and it will immediately begin considering rules to extend new requirements to the rest of the market. The move follows an announcement Sunday that it will crack down on firms or individuals that illegally spread false rumors.

The SEC investigation into Bear's collapse partly involves trading documents, which have been reviewed by The Wall Street Journal. The documents indicate that in the weeks before March 16, when Bear Stearns reached its initial agreement to sell itself to J.P. Morgan, Goldman Sachs International, which encompasses the firm's European trading units, was one of the most-active parties in trading securities known as credit default swaps that it had bought from or sold to Bear Stearns -- more than most other Bear trading partners.

Goldman Sachs Asset Management, the money-management division, exited a number of swaps on behalf of clients, the documents show. Mr. van Praag said it would be unwise "to make assumptions about this information without understanding the underlying transactions." He said Goldman's international unit handles trades "around the world, on behalf of clients" as well as for Goldman itself.

Credit default swaps are private contracts that act like insurance against debt defaults. A seller of a swap agrees to pay the purchaser a sum of money if the entity that is being insured -- such as a large corporation or a mortgage-backed security -- defaults on its debt. Swaps often remain in place for years, making it important that both the seller and the purchaser remain intact through the life of the contract.

During the period in question, in late February and early March, Goldman Sachs International was on both sides of swap trading with Bear Stearns, both exiting contracts it had bought or sold from the firm and also taking on swaps that other parties were exiting.

An SEC spokesman declined to comment.

The documents show that a handful of other prominent firms cut their exposures to Bear Stearns, including Chicago hedge fund Citadel Investment Group and New York hedge fund Paulson & Co., which is run by a Bear Stearns alumnus.

Dozens of similar securities known as interest rate swaps, originally bought from or sold to Bear Stearns, were exited by Fairfax International Investments Ltd., a unit of Citadel, and transferred to another internal unit, Citadel Equity Fund Ltd., on March 3. An additional 40 or so credit default swaps were exited separately by Citadel Equity Fund; those contracts were taken on by a variety of other brokers. About 40 trades were exited by the hedge fund Paulson, primarily during the week of March 10, when Bear Stearns nearly ran out of cash.

In recent weeks, SEC investigators have questioned Citadel about its moves to unload complex securities contracts it had either bought or sold from Bear Stearns in early March, according to people familiar with the matter. Citadel executives have explained the moves as having been part of a long-planned restructuring in which certain holdings were transferred from Fairfax to another internal entity, these people say.

Senior people at Paulson & Co., run by former Bear Stearns executive John Paulson, have told associates that the swaps bought or sold from Bear during the March 10 week, most of which were transferred to Goldman, were part of the firm's overall effort to curb exposure to financial-services firms.