Friday, October 05, 2007
DealBreaker Remains Optimistic...
by Ken Houghton
We would prefer actual regulation, thank you.* But since there's no inclination that way, I'll just quote that busiest of blog commenters, Anonymous, at 7:47 tonight:
It sounds worth investigating, so it's no surprise that DealBreaker would be worried. But they're still only looking at a few of the pieces, not the whole jigsaw puzzle.
The investigators may know better; time will tell.
*Rudy G.'s reputation—but not reality—was built, of course, on his alleged "regulating finance through criminal prosecutions." To point out that his actual record was abysmal—and that it probably got him where he is today—would be rude of me, and Rudy is a man with faith in work, God, and himself.
and off-course, with this piece about The Old Firm:
While the Bear funds certainly made colossal mistakes, nothing we’ve heard so far has indicated criminality....
Some will no doubt be happy that the guys who lost all that money may face criminal charges someday. But the less vengeful of us might want to think twice about enjoying the another instance of regulating finance through criminal prosecutions. How well has that been working out?
We would prefer actual regulation, thank you.* But since there's no inclination that way, I'll just quote that busiest of blog commenters, Anonymous, at 7:47 tonight:
One of the funds that blew up was marketed as a low risk investment that had positive returns every month since inception. Of course that turned out to be the result of marking prices to their own models, which they didn’t bother to mention in investor meetings. Misrepresentation of risks including telling investors about the use of hedges that did not actually exist was common practice at another fund. They also claimed that all the Bear hedge funds used their internal risk management software called “Bear Measurerisk” to stress test portfolios, among other things. However, this was complete BS as the program was considered internally as basically useless. [MeasureRisk won several industry awards last year - kh] They had people in the back office that did not know how to settle trades, so they didn’t. They misrepresented the amount of assets that PM’s had invested in their funds…..I could go on
It sounds worth investigating, so it's no surprise that DealBreaker would be worried. But they're still only looking at a few of the pieces, not the whole jigsaw puzzle.
The investigators may know better; time will tell.
*Rudy G.'s reputation—but not reality—was built, of course, on his alleged "regulating finance through criminal prosecutions." To point out that his actual record was abysmal—and that it probably got him where he is today—would be rude of me, and Rudy is a man with faith in work, God, and himself.
Labels: Regulation, The Old Firm
