Of Bush, Hedge Funds, And Naked Short Selling
Yesterday, we were treated to a number of fun events – the DTCC issued forth a publication that contained a number of prevarications, or to put it kindly, examples of where the truth was stretched to the breaking point – specifically when they claimed they were never invited to the NASAA conference, and when they invented statements for the NASD representative declaring that he had not seen any evidence of rampant naked short selling – he never said that.
We were also treated to Gary Weiss’ fifteen minutes of fame, wherein he claimed that naked short selling was good, and further claimed to know that it wasn’t a problem. He was oddly unable to articulate how he knew this, other than to rely upon the DTCC’s invented quote, and ignore or mock all the data that exists. He particularly avoided how advertising something for sale, taking a buyer’s money, and then not delivering the product (fraud being the layman’s term) was good.
You can view both events and their unfolding in the three preceding Sanity Check blogs.
Enough about those, for the moment.
Today, my mailbox was crammed with information about a close Bush family friend being a hedge fund manager who had been fined for naked short selling.
Huh.
And pages and pages about connections between the Bush family and a host of hedge funds. Not surprising, as big money uses hedge funds – nothing wrong with that on the surface. It does speak a bit to a conflict of interest in the transparency argument, though, if a favorite vehicle of the ruling class is completely opaque to scrutiny. But that is actually the least of our worries at present.
Apparently this Bush family friend, a guy named John Mangan, was revealed by the NY Post today as having not only gotten an endorsement by Marvin Bush, but had misled his investors by omitting the information that he had been fined by the NASD for naked short selling and barred for life from working with any legitimate participant. From the Post, who at times I have expressed a less than stellar opinion of (specifically my like/dislike of Roddy Boyd's material), but who knocked one out of the park on this one:
“An exclusive corner of the New York financial community is buzzing about why a politically-connected and high-profile hedge fund didn't tell investors that regulators slammed one of its founders with a six-figure fine for shady trading.
Investors in Mangan and McColl Partners' flagship hedge fund were never told John Mangan was nailed by the NASD for sleazy trading in a separate business, in a puny Nasdaq stock called Compudyne. Mangan, an arbitrage trader managing $1 billion as recently as 2004, and his partner Hugh McColl Jr., son of Bank of America architect Hugh McColl, declined to volunteer the information in the fund's December letter to investors. …..Mangan was fined $125,000 and barred from NASD member firms for life. He was accused of making naked short sales, in which you sell stocks you don't own and fail to properly borrow the stock before trading…..”
The article continues, and discusses the relationship with the Bush family:
“The fund also has a close relationship with Marvin Bush, the brother of President George W. Bush and a founder of private-equity and fund-of-funds Winston Partners. Bush told The Post he happily served as a reference for Mangan when he was raising capital for the fund.
"John [Mangan] was a neighbor and a friend from Alexandria going back nearly 15 years. We started out playing tennis — he's an incredible player —and the relationship grew," Bush said.
"He needed a reference and he was one of the hardest working and smartest guys I knew, so I was happy to tell anyone about that," he added.
Bush declined to comment on whether he had an investment with Mangan and McColl. “
Now, I am not a political animal – but is it just me, or did we find out in the last week that Abramoff was bribing Congressmen and buying legislation, not to mention buying the press, and this week we find out that some longtime friend of the Bush family (who received the Bush seal of approval in an endorsement) not only misled investors about his past, but was a prime mover in a naked short selling scandal?
Given that we in the Market Reform Movement has been saying for over a year that naked short selling is a very real problem that defrauds Main Street America on a regular basis, and given that we have been puzzled as to why the government is unusually reluctant to look into the problem, much less acknowledge it and fix it, it is very, very uncomfortable for us to find out that a close friend of at least one Bush has been fined for the practice and barred from his profession because of his involvement in it - the week after we are treated to pictures of our leader with Abramoff – literally moments after claiming he had never met the man.
Anyone else getting a sinking feeling as more of this comes together?
Comments?