Posts filed under “Really, really bad calls”

Rule 10b-5: Manipulative and Deceptive Practices

When ever I write something up, I try to show how I reach my conclusion. What are the data, facts, underlying elements used to reach an ultimate decision. In math, algebra, it was called”showing your work.”

Sometimes, I don’t bother show the tiny details. I assume everyone knows 2+2=4, understand the basic aspects of the US Constitution, and is hip to Freud, Aristotle and McLuhan. Occasionally, this leads me to omit items that I erroneously assume everyone knows. The SEC vs Goldman was just such a case.

For those of you without the benefits of a legal education, or who do not remember their Series 7 tests, this is a refresher: Pay attention eejits, this is important:

Rule 10b-5: Employment of Manipulative and Deceptive Practices

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.”

This is why Goldman Sachs is going to have a hard time defending this case — the vilation of 10b-5 is blatant.

It is also why the 2 SEC commissioners who voted against bringing the case — Republican commissioners, Kathleen Casey and Troy Paredes — should be ashamed of themselves. If you have even a passing familiarity with Rule 10b-5 — say for example, you actually read it once — it is obvious that Tourre and Goldman violated this rule.

If you won’t vote for this enforcement action, than what would you vote for? Apparently nothing — and therefore you do not belong on the SEC.

Its time to demand these two Goldman Sachs suck ups resign their commission. They are unqualified and incompetent, and have no business being part of any field where understanding law or having judgment is involved.

Category: Derivatives, Legal, Really, really bad calls

WSJ OpEd: “Material Misrepresentations? What’s That?”

I have no idea what goes on in the WSJ OpEd offices. I cannot tell you for sure that their Water Cooler is laced with LSD; I have no idea if they are drunk by the opening bell every morning. I’ve never done the research to see if key persons there played college football sans…Read More

Category: Derivatives, Legal, Really, really bad calls

Books in the Queue

Not too long ago, I finished Justin Fox’s Myth of the Rational Market. I’m about halfway through Scott Patterson’s The Quants. I have the following lined up in my queue: • Roger Lowenstein’s The End of Wall Street • Steven D. Levitt and Stephen J. Dubner’s Super Freakonomics • Michael Lewis’ The Big Short •…Read More

Category: Bailouts, Markets, Quantitative, Really, really bad calls

Are Defaults Really Driving Retail Spending?

Every now and again, I see an economic commentary that is so ass backwards, I am compelled to call it out. Today is one of those occasions. The commentary in question comes from the usually astute Housing Wire. Paul Jackson makes the case that voluntary mortgage delinquencies are driving retail sales. I disagree. ~~~ Our…Read More

Category: Analysts, Credit, Real Estate, Really, really bad calls

The Only Tea Party Stat You Need to Know

There is a huge CBS/NYT poll and article (Poll Finds Tea Party Backers Wealthier and More Educated) about the tea party members. I was not surprised to read they skew older, white, Republican, better educated and higher income than the average American. I was surprised to read they favor Social Security and Medicare. Towards the…Read More

Category: Politics, Really, really bad calls

Michael Specter: The danger of science denial

Vaccine-autism claims, “Frankenfood” bans, the herbal cure craze: All point to the public’s growing fear (and, often, outright denial) of science and reason, says Michael Specter. He warns the trend spells disaster for human progress. hat tip boingboing

Category: Really, really bad calls, Science, Weekend

Amazon Rocks; Electronics Expo Sucks!

You may recall back in February, I noted the ole Sony tube TV in the bedroom, after 17 years, finally bought the farm. I stumbled across a Sony Bravia V-Series KDL-40V5100 40-Inch 1080p LCD Flat Panel HDTV & Sony BDP-N460 Blu-ray Disc Player Bundle on Amazon for sale by Electronics Expo for $853. The delivery…Read More

Category: Consumer Spending, Really, really bad calls

Hudson Castle: Lehman’s Secret Risk-Shielding Tricks

The NYT digs up a secret Lehman Brothers memo about Hudson Castle — part of a financial system that enabled banks to exchange investments for cash to finance their operations — and mislead investors to make their finances appear stronger than they actually were. NYT: Critics say that such deals helped Lehman and other banks…Read More

Category: Bailouts, Really, really bad calls

Plummeting Death Reform

Very funny, from new Pulitzer prize winner Mark Fiore: click for video Hat tip Barry2

Category: Bailouts, Humor, Really, really bad calls, Weekend

Dow = 11,000. Discuss.

Go figure – Over the past 13 months, the Dow has regained nearly 4500 of the 5000 points it shed in the six month following the collapse of Fannie Mae, Lehman and AIG. You can debate amongst yourselves whether this is proof that a) Capitalism works; b) Government intervention is more successful then popularly realized;…Read More

Category: Markets, Really, really bad calls, Trading