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Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage.

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 9/20/2006 4:48 AM

It's in all the NY papers. Amaranth, a large CT hedge fund, is going down for the count due to a disastrous bet on natural gas prices rising.

Motherrock, a smaller fund, vaporised earlier this month for similar reasons.

I note that the murmuring is starting among the Wall Street banks, not over how disappointed they are at having invested their clients' money in these stinkers, but rather at the level of exposure they face due to the likely 4X leverage Amaranth employs.

Which brings up two observations. First, you can bet that if Amaranth had taken a bad bet on a single stock, the fund and their bankers would be kicking that stock in the throat to keep the price depressed, and avoid this sort of conflagration. You can do that with a company like OSTK or NFI, but you can't with a market as big as natural gas. The exposure of the Wall Street banks is only now being hinted at, and as with Refco, we probably won't hear the full story for years.

The second is that hedge funds, by definition, employ leverage. Lots of leverage. Which means someone has to lend them the money to make their outsized, and sometimes foolhardy and risky bets. When they implode, those someones are left holding massive liabilities - which the young turks who approved all the lending, and who got and spent their wildly inflated bonuses, don't much care about. It's all about getting the money, today. Tomorrow is another day, with different problems.

Note that the SEC is scrambling to re-instate some of its safeguards that were contained in its registration rule for hedge funds - which was shot down. Which safeguards do you think those are? The safe harbor provisions that protect the hedge funds and their management? Isn't it funny that everyone scrambles when hedge funds lose a few billion, but when tens of billions are drained out of your and my pockets, they're too busy to answer the phone - we are just malcontents pissy over our stocks not going up.

The NCANS Reg SHO comment letter is now up at the SEC site. As are letters from other "baloney" scammers like Congressman Jim Ryun, the AG of Utah, the UT State Securities regulator (great read), and an anonymous investor who nicely summarizes the SEC's litany of failure and shoddy behavior. 

As the comments pile up, NFI has been getting kicked in the teeth even as its peers are soaring, and nobody bats an eye. Greenberg is back to bashing the company, the bashers are working a full shift on Yahoo, the company is generating record profits, and the SEC doesn't have the time to ask why it's been on the Reg SHO list for coming up on two full years, with a 13 day break over a year ago. Just too busy. So everyone that bought it at $60, and $50, and $40, and $30, and is wondering why the bad guys seem to be able to do whatever they feel like in spite of stellar company performance - guess what? The SEC isn't going to enforce any of the laws designed to keep this from happening. Just won't. But they will do 24-hour crisis sessions when one of Cohen's boys screws the pooch on a massive wrong way wager in NG.

Nice system, huh?

Where's the special prosecutor? What ever happened with Aguirre? Why can the SEC and DTCC lie about Reg SHO's efficacy, to us and to Congress, and nobody does anything?

I warned about the dangerous use of leverage to make stupid, out-sized bets a few years ago in this blog. I further warned about hedge fund opacity being a ticking time bomb. I also argued that there was no way that SHO was doing anything but helping the bad guys rape and pillage. I stated categorically that the SEC was in bed with the crooks running interference for them, and was an active participant in the looting of America, as well as in setting up a scenario where Wall Street was so beholden to the larger aggressive hedge funds that their failure could cause a bomb blast should they take one to the jaw.

That's why the stocks they target stay depressed, no matter what the company's fundamentals. The bankers own those bad bets just as the hedge funds do - likely at 10X or greater leverage. Goldman can't keep natural gas artificially supported, but it sure has the juice to keep OSTK down via creating artificial shares in perpetuity. Why wouldn't they? Who's going to do anything about it?

And that is the lay of the ugly land on Wed, September 20. Business as usual on Wall Street.

---------

Speaking of which, HedgeWorld had the expected article on the SHO comment letters today, wherein they cited Shapiro's, and net nut James Brownfield, whose incoherent Chewbaca rant was cited for many paragraphs, replete with non sequitors, incorrect statements, misleading torturing of the data...you name it.

The final paragraph of the article was my own personal favorite.

"A spokesman at the New York Stock Exchange, Brendan Intindola, said Wednesday [Sept. 20] that from that exchange's point of view, SHO is working, "in the relevant metric, which is reducing the number of fails." As for the test of the uptick rule, it is "still a pilot, so there has been no definitive conclusion reached."

Now, given that we just posted the FOIA data for the NYSE, and it shows, conclusively, that there is no drop in the number of fails as of the last date we got info for.

So, is that an improvement? Is that working?

Is it against the law for the representative of a publicly traded company to make provably false and misleading statements?
Copyright ©2006 Bob O'Brien
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Comments (31)
Dude made 75 mil last year! no ones knows 1 tril 1.5 2 tril??? By newspaper on 9/20/2006 8:41 AM
Other insiders point to what they see as a lack of talent running some of the 7,000 hedge funds in the United States. "There's $1 trillion, and possibly $1.5 trillion, in capital in hedge funds, and there's certainly not enough talent to shepherd that capital adequately, and certainly not talent to justify the fees," says Antoine Bernheim, president of Dome Capital Management, which advises European institutional and private investors on their hedge fund portfolios. Bernheim also publishes Hedge Fund News, a quarterly newsletter that tracks the industry.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By gregcable2002 on 9/20/2006 8:42 AM
Mark L Shurtleff AG for the Great State of Utah says to the SEC; either you correct the NAKED SHORT SHARE problem or we,as defenders of our citizens will.Everyone needs to read his comment letter to the sec.GOD BLESS UTAH!
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By seduce me on 9/20/2006 7:22 PM
A rival said: “They were seduced into thinking he was God because he was making a lot of money for them.”

http://business.timesonline.co.uk/article/0,,13129-2367816,00.html
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By InTheKnow on 9/20/2006 7:58 PM
If they don't come up with a special prosecutor then we know that the scumbags and gangsters are in charge.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By Jeremiah 9:24 on 9/21/2006 10:27 AM
I wonder what this means, from one of CSHD's recent releases. "Note to Waatle Holdings Corp Convertible Note Holders; shareholders, Conversion Solutions, Inc Convertible Note Holders; shareholders and all Subsidiary shareholders; we will be providing documentation for your conversion to Conversion Solutions Holdings Corp on our Web site www,cvsu,us within the next week."

Does this mean there are people shorting ahead of a PIPE conversion? My view is this is still illegal... but it could explain some of what these settlement failures came from.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By mhatmccane on 9/21/2006 12:00 PM
From LATimes:

Implosion of Fund Is Felt in San Diego
From the Associated Press

September 21, 2006

San Diego County's government is accustomed to accolades for earning outsized returns on its employees' retirement money, while the city of San Diego has been ridiculed for bungling management of its pension fund.

Now, after betting on a hedge fund that subsequently suffered a big loss, the county is under fire for what some say was a surprisingly risky investment strategy.

The county invested $175 million last year with Amaranth Advisors, a Greenwich, Conn., fund that told investors this week that it had lost 35% of its assets and was liquidating energy holdings after the recent drop in natural gas prices.

The loss to the county retirement fund — and the 33,000 workers it represents — is still unclear, but the sour bet is raising questions about the county's unusually heavy exposure to hedge funds, which are high-risk, secretive and largely unregulated. The county says it has put $1.5 billion in about 10 hedge funds, about one-fifth of its total assets of $7.5 billion.

County Treasurer-Tax Collector Dan McAllister said Wednesday that hedge funds might be "too esoteric" and that he would urge reconsideration of the strategy.

"These hedge funds have to answer to no one," said McAllister, who serves on the nine-member pension board. "We are a public fund. We should be about full disclosure."


Seems like "Mom and Pop" didn't quite dodge the bullet.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By ikarus47 on 9/23/2006 9:35 PM
The hedge blow-up was likely opportunisticlly "enhanced" by the counterparties involved- look to who is now picking up the peices to close their own position; what's a little manipulation (Citibank, JP Morgan) if a few billions can be nabbed...

Re: systemic risk: did you all see the piece on the expanding size of the nominal values of derivatives: 200 trillion +, Amaranth x 5-10 fold could trigger a nasty chain reaction in those derivatives...

Anyone buying gold yet, I mean the stuff you can hold and hide...?
IK
It's up By davidn on 9/20/2006 8:49 AM
http://www.sec.gov/comments/s7-12-06/mhelburn5381.pdf
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By Niel Storts on 9/20/2006 8:54 AM
"The dog ate your comment submission, re: sho. So sorry" s.e.c.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By hhawes on 9/20/2006 9:09 AM
They are posted now. All very good, but the Anonymous American Investor letter was outstanding. Sounded sort of familiar, actually.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By old duffer on 9/20/2006 10:58 AM
Speaking of a blow up in the works....with the SEC apparently happy to see the risk put off on ma and pa once again...Read this though to find out how the dumb money is once agaqin being set up to take the big fall.

This guy is pretty much up on the silver market, but someone needs to educate him in the real ways of the Criminnal SEC!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

You Make The Call

By: Theodore Butler



-- Posted 18 September, 2006



This article answers the CFTC’s response to the articles and letters sent to them alleging manipulation in the silver market. My allegations were based upon evidence provided by the CFTC itself in its weekly Commitments of Traders Report (COT). It showed a small number of traders were short more silver than existed in world deliverable inventories and represented a concentration greater than had ever existed in any prior manipulation. This extremely large concentrated short position held on the COMEX is the necessary requirement for manipulation.

The New York Mercantile Exchange (COMEX) was jointly notified with the same letters and allegations as the CFTC. There has been no reply from them, to my knowledge. I consider this strange because the NYMEX is a Self Regulatory Organization * (SRO), and provides the primary defense against violations of commodity law. In other words, it should have been the NYMEX responding first to the allegations of manipulation, with the CFTC deferring to them. That’s the purpose of the SRO structure. The Exchange is the primary regulator, and the government is the backstop. In this case, the CFTC has become the spokesman and defender of the NYMEX, even though this is contrary to the SRO structure.

(*A non-governmental organization that has the power to create and enforce industry regulations and standards. The priority is to protect investors through the establishment of rules that promote ethics and equality.)

My only conclusion is that the NYMEX/COMEX won’t offer a defense against the allegations of manipulation, because they are afraid that any discussion might jeopardize their proposed initial public offering. They don’t want to go there. I suggest they intend to dump the whole silver manipulation problem onto the investing public. If you are as fed up as I am about this exchange ignoring their regulatory responsibilities, I’ll suggest something you can try to do about it at the end of this article.

Now to the CFTC’s responses. The first one was sent on August 23, to only one person that I am aware of. Click Here

The second response was sent on September 6 to many people. Click Here

The early response contained two paragraphs trying to show how having a short position greater than deliverable supplies is very normal in commodities. But the recent LME nickel default proved that to be false, and the CFTC did an about face and removed those paragraphs from subsequent responses. Both the original inclusion and the subsequent removal of these paragraphs make the CFTC look foolish.

The CFTC took three months to answer with their September 6 reply. Three months is an outrageous and intentional delay, especially for such a non-responsive reply. The simple fact is that the CFTC delayed for as long as they did so that time alone might cause people to forget what the real issue was. The CFTC has been reduced to time delay tricks precisely because they can’t answer the simple allegations and questions posed to them straight up.

The CFTC did not refute a single statement of fact in any of my letters or articles. They didn’t deny that silver has a higher concentrated short position than ever existed in any prior manipulation. They didn’t deny that the short concentrated silver position is greater than the concentrated long position to an extent greater than in any other commodity. They didn’t deny that 8 or less traders are net short the entire commercial short position and what thousands of traders (the entire net long position) held net long. They didn’t deny that the concentrated short position was greater than total world deliverable supplies and that this constituted a grave danger for delivery default. They didn’t say that the short position was backed by real silver or legitimate hedging obligations; which they couldn’t possible document. They couldn’t deny that the very reason they maintained concentration data was because concentration goes hand and hand with manipulation, and if the silver concentration were on the long side, and not the short side, they would have cracked down on it, as they have in the past.

So what did the CFTC say in their response? They made three points, all bogus and deceptive. The first point was to try and show that the concentration on the short side wasn’t large compared to other markets, the majority of which are not physical delivery commodities. They wanted to compare apples and bananas. You can’t have a delivery default in a cash-settled market or a market on financial futures. You can have a delivery default in a physical commodity market, particularly with a large concentrated short position, like nickel or silver.

More importantly, the CFTC was intentionally deceptive in how they calculated concentration. They slyly added option open interest strictly for the purpose of inflating the total open interest. They know full-well that options are a derivative on derivatives and that silver option open interest is 75% spreading (establishing a long and short position simultaneously). The intent of this was to make the open interest artificially high, which makes the concentration appear less than it really is.

What the CFTC has attempted to do is to steer the allegations into some sort of debate on percentages of concentration in various markets. They want to turn it into a meaningless numbers debate, ignoring an obvious crime in progress. This was never a debate on percentages, it is a question of a handful of traders holding a net short position more concentrated, compared to real world supplies, than any concentrated position in history. It is a question of the CFTC not enforcing the law applying to the current COMEX concentrated short position even though they have always moved against long concentrations that were less concentrated than this one.

What the CFTC should be doing to study real concentration (and they know this) is to strip away all "phony" open interest, not add more. They should also be removing phony futures spreading to determine true concentration. It has been suggested to me by those knowledgeable about these matters that the big spreading in COMEX silver futures is uneconomic and designed solely to make the concentrated short position look much less than it really is. Shame on the CFTC for resorting to such shallow number games.

If one looks at percentages alone, which is what the CFTC wants you to do, you lose the evidence of the allegation. This is their intent. No market has a higher overall concentration than silver, especially when you strip away phony open interest. It is when you compare the concentrated short positions to real world supplies that silver really is off the charts. If you compare the concentrated gold short position, for instance, to real world gold supplies, and do the same for silver, you’ll see silver’s concentrated short position is 100 times larger. Similar comparisons yield the same result (as Loeb pointed out in his letters to the Commission). The CFTC ignored this completely.

Next, the CFTC tries to portray the concentrated short position as not changing much in big price run-ups and declines. While I agree there is a "perma short" quality to the concentrated short position that only confirms the long-term nature of the silver manipulation that I have alleged. It is the inclusion, once again, of extraneous option open interest that allows the CFTC to reach such a bizarre conclusion.

The final point that the CFTC makes is the cruelest to the victims of the silver manipulation. They claim that the concentrated shorts sell on the way up and buy on the way down, something that is common knowledge and proof of the manipulation. What they don’t say is how the shorts do this, which is clearly by collusion and withdrawing bids and offers at critical times, like recently on the downside. The CFTC tries to portray the concentrated shorts as providing support to the market on the way down, ignoring their collusive methodology. It is akin to proclaiming a burglar as a crime fighter because after cleaning out a house, he’s made it theft-proof.

In its entirety, the CFTC’s response was weak, non-responsive and downright deceptive. It was designed to cloud the issue, not clarify. I can’t help but reach the conclusion that the CFTC had to know the real story in order for them to issue such a misleading document. They could not be this ignorant. They had to know the truth, in order to lie like this. They only question is why they are failing to enforce the law. Are they too embarrassed to admit they blew it for 20 years, or are they beholding to the big shorts for some unstated reason?

What to do now? As I have previously written, the response from the CFTC would not mark the end of the campaign to end the silver manipulation. Rather, it might serve as a springboard to further action. Today, I need your help to put pressure on the NYMEX/COMEX, the wellhead from which the silver manipulation flows.

If you have reviewed the unfolding saga of the silver manipulation, including the recent response from the CFTC and the vicious engineered sell-off and feel that they have done nothing to dispel the existence of the manipulation, I have a suggestion for something you can do now.

Since the real problem lies with the NYMEX/COMEX and their failure to not only eliminate the manipulation, but also even to respond to credible allegations of that manipulation, that is where the pressure should be applied. Specifically, I am asking you to contact the Securities and Exchange Commission (SEC) and ask them to delay the NYMEX’s plans to go public, until they address the issue of silver manipulation in an open manner. A legitimate SRO would not hide from or ignore allegations of manipulation, which is the most serious market crime possible.

There exists the strong possibility that Exchange insiders know of and/or are involved in the silver manipulation, and are anxious to transfer the great liability that a silver manipulation/default would bring, from seat holders to public shareholders. There couldn’t be anything more wrong than this. It would be a shame of the greatest magnitude for the SEC to permit this. The SEC should force the NYMEX to address these concerns before allowing them to go public.

I believe the SEC will listen to you. I know it can’t possibly hurt for you to contact them, and may, in fact, help tremendously. You are not asking the SEC to investigate the silver manipulation, you are asking them to force the NYMEX/COMEX to go on the record and openly address the allegations of manipulation, that would be expected of any legitimate Self Regulatory Organization. Even if the NYMEX responds that there is no manipulation, it will force them to go on the record and leave them more liable if and when a default occurs.

The contact info for the SEC is as follows. Feel free to send or reference this, or any article of mine.

Division of Corporation Finance at 202-551-3500 or by e-mail at cfletters@sec.gov

And/or Chairman of the SEC chairmanoffice@sec.gov


-- Posted 18 September, 2006
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By bobo on 9/20/2006 11:26 AM
This is the closing paragraph from a summary of the SHO comments that appeared in Hedgeworld, which devoted a ton of space to noted net kook and short apologist James Brownsfield's letter excusing naked short selling as a necessary offsetting of pump and dump scams. Of course, he studiously ignores all those scams like Delta and United, Tasr, NFI, OSTK, NFLX, etc. etc. Which is why he is a kook - his reasoning is specious, as any cursory study of the data shows. That this publication decided to single that one out of the dozens of coherent, factual letters detailing the actual lay of the land underscored the dishonesty in the market, and in those playing to that market.

Here's the offending closing paragraph:

"A spokesman at the New York Stock Exchange, Brendan Intindola, said
Wednesday [Sept. 20] that from that exchange's point of view, SHO is
working, "in the relevant metric, which is reducing the number of fails." As
for the test of the uptick rule, it is "still a pilot, so there has been no
definitive conclusion reached.""

Isn't that interesting. So the FOIA data we posted a few days ago and which is cited in the NCANS letter, that shows on the NYSE that there IS NO REDUCTION IN THE NUMBER OF FAILS, is consistent with this statement how?

The NYSE is lying. Isn't it against the law for the representative of a publicly traded company to lie about something like this?
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By Jumbo on 9/20/2006 12:03 PM
Bob, when are you sending you SEC comment letter in?
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By davidn on 9/20/2006 12:17 PM
This is important. Depending on what the words mean, it could mean the NSCC is admitting there are way more IOU's in the system than we believe.

"According to the National Securities Clearing Corporation (NSCC), on an average day, approximately 1% (by dollar value) of all trades, including equity, debt, and municipal securities, fail to settle. In other words, 99% (by dollar value) of all trades settle on time. The vast majority of these fails are closed out within five days after T+3."

From the DTCC annual report, they disclose that they clear:

$130.7 trillion equities and muni bonds
$874.3 trillion government securities transactions
$75.6 trillion mortgage backed securities.

Total: 1.0806 quadrillion dollars

If you take the common sense reading of the SEC quote, then 1% of $1.0806 quadrillion is $10.808 trillion

The question is does that quote mean 1% of all equities and debt or 1% of only muni debt and equities. They don't go out of their way to clarify what their data means.

Now, it also isn't clear what a transaction is. Is that before netting or after netting? We need an FOIAA request to clear this up.

Cede & Co. owns $31 trillion in securities. I can't find the dollar volume of securities traded anywhere in the DTCC report as they combine it with the municipal bond numbers.

My best guess is about $7- $15 trillion a year, based on extrapolating disclosed volumes from the exchanges. Does anyone have access to accurate numbers? Assuming 25-50% of the DTC float trades in a year seems like it could be right on an order of magnitude.

That means the real fail numbers could be:

$10.8 trillion out of $7- 15 trillion
or
$1.3 trillion out of $7 - 15 trillion.

IE. the possible numbers are so far out of whack that the SEC disclosure is near meaningless without further information.

Also, is this number audited? The DTCC lies about everything else - how do we know these numbers are accurate?
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By davidn on 9/20/2006 12:19 PM
Huh, naked short bonds?

What does it mean when someone delivers an IOU for a US government security?

From the DTCC annual report:

Although the industry’s volume of “aging fails” has
declined since hitting a peak in 2003, failed positions continue to
generate record-keeping problems and risk exposure for firms trading
U.S. government securities. In 2005 FICC enhanced its systems to
facilitate the netting of participant fails with the clearing corporation.
This new service, targeted for mid-2006, will help to alleviate related
issues by reducing the number of fails a participant has with FICC in
government securities. Each evening a participant’s outstanding fails will be re-incorporated into the net with the activity due to settle the next
business day. The process will eliminate situations where participants
find themselves carrying offsetting financial obligations on both the
long and short sides of the market.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By Goofy on 9/20/2006 12:30 PM
Citigroup, J.P. Morgan may buy Amaranth parts: sources

http://today.reuters.com/news/articlebusiness.aspx?type=ousiv&storyID=2006-09-20T193208Z_01_N20221294_RTRIDST_0_BUSINESSPRO-FUNDS-CITIGROUP-AMARANTH-DC.XML&from=business
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By Amarantha on 9/20/2006 12:45 PM
Citigroup and JP Morgan are not buying Amaranth because it has suddenly become a good investiment. They are taking ownership because they loaned them money the are in essence defaulting on.

It is as if I defaulted on my home mortgage and so I told you Countrywide just bought my home.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By InTheKnow on 9/20/2006 1:08 PM
Betcha a bunch of homes will be for sale soon on North Avenue in Greenwhich, CT.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By davidn on 9/20/2006 1:22 PM
The DTCC annual report talked about moving Refco's liabilties to new homes. It never mentioned the concept of paying off / honoring Refco's liabilities.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By mhelburn on 9/20/2006 2:06 PM
Bobo... this is absolutely true...

"that from that exchange's point of view, SHO is working,"

It is working just the way they want it to work. It doesn't work....and to the folks profitting from naked shorting.... that is awesome. continued fails with lots of commissions..
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By KABOOM! on 9/20/2006 2:15 PM
Sounds like Amaranth imploded with rich people money for a few billion. Listen to all of the screaming. Just a drop in the bucket compared to the 100's of billions that have been stolen from Mom and Pop. Dead silence about that. Mum is the word.

How do you spell BAILOUT. Looks like it has already happened for Amaranth. Smells like Longterm Capital and Refco. Bet we are never told what really happened at Amaranth much like REFCO.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By newspaper on 9/20/2006 3:27 PM
I only saw 1 negative comment letter on the sec site. Every single other letter wanted the SEC to change its abusive and illegal practices.
Is this a good thing? Is the SEC actually even reading those letters? Has public opinion changed enough to enact meaningful change?
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By newspaper on 9/20/2006 3:36 PM
Personally I think the changes we get will make everything worse.
I think they will increase T+13 to T+35
They will not make it mandatory for anyone to buyin or impose any fines if people refuse to do so.

But really who cares if they get rid of grandfathering or they make it T+1 OR T+55? If they don’t force people to buyin it is a useless gesture.
If there is no real forced buyin or large meaningful fines for violators stocks can stay on SHO for eternity.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By clearthinker on 9/20/2006 4:22 PM
Agree with newspaper...until we see buy-ins on these battered shares, it's all conversaton....
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By lynetta32233 on 9/20/2006 4:58 PM
And the problem--as Research Capital Corporation (a Canadian brokerage firm) pointed out in its comment letter--is that buy-ins are simply met with more fails. They tried buying in failed deliveries of Overstock.com on 39 separate occasions. On each of these occasions, the buy-in simply resulted in another FTD.

What to do, what to do...
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By Miss Quackfaster on 9/20/2006 5:08 PM
MILAN/NEW YORK, Sept 20 (Reuters) - Italian police arrested 20 people on Wednesday in an investigation into suspected illegal wiretapping at Telecom Italia as an acrimonious battle raged over the future of the country's biggest telecoms group.

http://yahoo.reuters.com/news/articlebusiness.aspx?type=technology&storyid=nL20417607&WTmodLoc=HybArt-R2-IndustryNews-3&from=business
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By Little Bo peep on 9/20/2006 5:22 PM
All eyes that need to be open now are. WIDE AWAKE!

The people that need the information now have it.
I think we should take a step back and let them do their job.

The orders for "tin foil hats" have been OOOOOOOO...............................................Overwhelming.
I think that is a good sign.

Put your horns back in for now.
We can grow them in .5 seconds.
If we need to. I don't think we will.

This is BIGGER than anyone imagined.

Not only has the ice cream melted it is now curdling.

The playground is done. Put a fork in it.

I like GREEN lime sherbet tOOOOOOOOOOOOOOOOOOO
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By KABOOM! on 9/20/2006 5:50 PM
Amaranth problems blamed on overregulation of hedge funds, prime brokers and financial crooks in general. Expecting settlement at some point is absurd. If they could have kept their positions open they could have avoided this problem. Just further proof that Reg SHO is working and now should be extended to commodities. Oh that's right. They have their own problems with all those phantom silver contracts. HAHAHAHAHAHAHAHAHA!
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By bobo on 9/20/2006 5:59 PM
The more articles I see about pension funds losing a ton on this one hedge fund, the more this stacks up like the S&L crisis.

Mark my words. When this finally comes crashing in, the huge bailout will be predicated on not allowing our hard government workers' retirements to be lost due to the bad hedge funds imploding.

That's how the bailout will take place. It won't focus on the hundreds of billions that were stolen in full view of our elected officials, while guys like Patch and Faulk and Burrell and I were sounding the alarm, and Patrick was taking bullets for screaming fire. It will focus on how we are saving the old age of a generation from having to eat dog food. A few token scumbags will get trotted out and sent to jail. But the real crooks - mainstream wall street - will walk away, and probably make money by securitizing the newly created taxpayer obligation - just like with the S&Ls.

Post this one on the fridge. Guaranteed.
MUST READ MUST READ MUST READ By Amaranth on 9/20/2006 6:46 PM
LOOKS LIKE FTD'S IN EQUITY DERIVATIVES CAUGHT THE ATTENTION OF THE FED.

..........................................

NEW YORK, Sept 20 (Reuters) - The Federal Reserve Bank of New York will meet with 14 major equity derivative dealers next Wednesday to discuss possible backlogs in the settlement of trades in the market.

"The industry is preparing to address equity derivatives confirmations and we understand that that may be the regulators' focus at the Sept. 27 meeting," said Louise Marshall, spokeswoman for the International Swaps and Derivatives Association, or ISDA, a trade association in New York.

New York Fed spokeswoman Linda Ricci did not immediately return calls seeking comment.

The discussions come after similar meetings led to a reduction in a backlog in processing credit derivatives trades, which the New York Fed and other regulators said added risks to the market.

ISDA said in July that credit derivative dealers had reduced the backlog in trades by 80 percent. For details, see [ID:nN19234244]

Delays in confirming trades in the equity derivative market are thought to be less significant than was the case in credit derivatives, however, as growth in equity derivatives volumes has not been as rapid as in credit derivatives.

The credit derivatives market grew 52 percent in the first six months of the year to $26 trillion, ISDA said on Tuesday. The notional amount of equity derivatives outstanding grew 15 percent in the same period to $6.4 trillion. [ID:nL19925454]

Credit derivatives dealers must remain vigilant that trade confirmation backlogs do not rise again after efforts to cut them have largely succeeded, an official from the UK Financial Services Authority said on Tuesday.
Re: Hedge Fund Blowups Highlight Systemic Risk From Risky Bets, Leverage. By Sean on 9/20/2006 7:19 PM
We have another winner!!

CSHD -- Conversion Solutions Holdings Corp.
Com ($0.001)

COMPANY NEWS AND PRESS RELEASES FROM OTHER SOURCES:

CSHD Non-Objecting Beneficial Owner (NOBO) List Identifies 75,487,085 in Market Shorts

KENNESAW, Ga., Sept 20, 2006 /PRNewswire-FirstCall via COMTEX/ -- Conversion Solutions Holdings Corp (OTC Bulletin Board: CSHD), a Delaware Corporation announces the following current events have taken place.
The corporation has received the Non-Objecting Beneficial Owner (NOBO) list from ADP Automatic Data Processing Inc. located at 51 Mercedes Way Edgewood, NY 11717.

"The NOBO list has disclosed 75,487,085 (Seventy Five Million Four Hundred Eighty Seven Thousand and Eighty Five) shares above the total free trading shares of 30,918,339 of CSHD. The shares are held by 15,184 (Fifteen Thousand One Hundred and Eighty Four) shareholders to include institutions. For anyone carrying shorts and those CVSU shareholders with questions please contact Ben Stanley at our corporate office number, 770-420-8270," stated CEO Rufus Paul Harris.

Ben Stanley, COO, stated, "Our actions have always been to insure the well being of our shareholders. For this reason we are going to work closely with the SEC and all institutional holders to quickly and fairly resolve this issue by September 29, 2006, the last day of certificate exchange."

Sabra Dabbs, EVP of Global Operations, states, "Now all of our attention can be focused on our Humanitarian and Global Business Development efforts."

About Conversion Solutions Holdings Corp

CSHD is a diversified holdings corporation, which was formed to originate, fund and source funding for asset-based transactions in the private market. CSHD's main service will be to acquire, fund and provide insurance to target companies in the currently underserved $15,000,000 to $100,000,000 asset finance market. Our funding will enable our businesses to compete more effectively, improve operations and increase value. CSHD is headquartered in Kennesaw, Georgia, a suburb of Atlanta. For more information, please visit us at www.cvsu.us.

SOURCE Conversion Solutions Holdings Corp



CONTACT: Ben Stanley, COO of Conversion Solutions Holdings Corp, +1-770-420-8270, Cell,
+1-317-213-7700, or benstanley@aol.com

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