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The Great Lehman Derivative Robbery: From A Tipster; Lehman May Have Grounds To Sue Goldman And Barclays For Fraudulent Transfers
Earlier today we posted the unredacted version of the 5th volume of the Lehman Examiner report, which unhid all the specifics of the unwind related to Lehman's options and futures positions. There was a reason why Goldman et al felt sufficiently motivated to make the data hidden in the first place. The reason: the banks participating in the liquidation made a killing on the unwind. Yet another involuntary gift from the Lehman creditor estate to the big banks who had the inside scoop on Lehman's books all along, and certainly in the days just before the bankruptcy was announced. The market continues to be one for the banks, and one for "everyone else." And "everyone else" still can not borrow at the Discount Window. Although we are confident that that may change soon.
From an anonymous tipster:
The amount given to these firms to take on these positions was huge. The LEH book was basically short spu’s, long fixed income, short oil and long all other commodities. That position was perfect at that time though obviously not enough in relation to their mortgage positions. All of these firms knew what the positions were and obviously knew the markets were going their way so it really wasn’t much of a gamble to take the positions down, especially when spotted such huge upfront cash payments and knowing how it may net against what you have on your own books. As long as they eliminate the risk in one day there will not be any more margin requirements and they keep the cash. The risk would be that the markets would move against them in one day by more than the spotted cash but even the exchange said the span margin was well under the payments so it wasn’t likely. Forget the large negative option value numbers because those are misleading and irrelevant because that is factored into the span and margin being used already. All of these firms just had to get the books delta neutral during the day and then manage strike risk after that. Almost all of the risk was delta risk which is easily managed in the futures markets. (for this we are talking -50k spu, +70k bond equivalent, -20k oil) Anybody could get that delta neutral quickly- Especially when it is going your way and you are spotted huge dollars. It has been rumored that DRW eliminated their fixed income delta risk before the floor session was even opened for 40 minutes. It probably took longer for them to load up the algorithm with the positions then to actually execute it. Look at the charts of some of the agriculture futures at that time and those did have some slippage. Cattle was down limit a couple days as well on this liquidation but it didn’t matter because that was a favor to get the valuable fixed income piece.
In light of this daylight robbery, Valukas noted in his comment that the Lehman estate may have grounds to sue Goldman and Barclays. From Bloomberg:
Goldman was the highest bidder for Lehman’s equity derivatives at CME, and took $445 million of those assets at a private auction in September 2008, according to previously censored details of Valukas’s March 11 report. Barclays was the highest bidder for Lehman’s energy derivatives and took $707 million in assets from CME.
DRW Trading was the highest bidder for Lehman’s foreign exchange, agricultural and interest-rate derivatives, Valukas said. As a result of the auction to the three successful bidders, Lehman lost $1.2 billion out of total deposits with the CME of $2 billion, Valukas said.
“The examiner concludes that an argument can be made that the transfers at issue were fraudulent,” Valukas said in the report. Under bankruptcy law, the auction may be able to be undone, he said. Lehman received “less than reasonably equivalent value”, Valukas said in his partly censored March 11 report on the 2008 bankruptcy.
Goldman and the others, which used the Fed approach of claiming they may be harmed if confidentiality was breached, ended up just protecting their asses, from what they knew would likely end up being a Fraudulent Transfer case.
Furthermore, as per Lousie Story's recent disclosures, Judge Peck was inquiring as to why Valukas did not focus on any fraud at Hudson Capital. The response: "Hudson Capital to our knowledge had become independent of Lehman as of 2004,” Valukas said. His 2,200-page report focused on 2006 forward, he said."
We are positive that should the Fed's actions finally see the light of day that thousands if not millions of fraudulent transfer cases will ultimately be brough up against it when the degree of depravity of the FRBNY's actions is finally realized by the taxpaying population.
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Why was no announcement required at the time it was done? This was a material event.
Exactly - this should have been disclosed
Lets face it the banks own the country...we're all at their mercy
No, you are not. Do not let them use your money. Do not have an account at any of these banks (TBTF). Put it in gold, silver, land, hard assets, etc... Do not leave it in dollars in an account they can then take and blow up with leverage by 30 times and then lose it so they need more of your money so they dont implode because if that happened it would be a tragedy and you'd lose even more (?) than you would by just giving them the money. Or should I say...
"You got a nice little country here, be a shame if anything were to happen to it... crash... looks like you need a little protection so 'accidents' like that dont happen anymore..."
If need be they will take your gold.
It wouldn't be the first time they took the gold from the people...no reason to believe that was the last time either.
.....and when they come knocking........
They can't take what they can't find, and there are always ways to hide things.
At their mercy? kick one in the balls and finish with a little roundhouse kick to the head while said banker is wondering where his nuts went. Ever heard the term "drawn and quartered"? I am not at the mercy of any banker, and either are you my friend. Let's party.
Until we take to the barricades. Not likely until American Idol's ratings decline.
It's not illegal if your doin' God's work...
Of course in November the Gods may change..
...God's work...? Then all bets contracts are off thanks to Force Majeure. Shell, Exxon, Chevron, Total, etc use it whenever GoldSax God'sWork and protesty natives impinge on their business.
Force Majeure arguably has application wherever fraud exists to direct an outcome. Force Majeure trumps the GreatRedHerring called InvisibleHand.
And so to bed.
Surely by the time the lawyers get done with this mess in 2 years or so, the Lehman bondholders will still end up with SQUAT !!
"The banks are the most powerful lobby on Capitol Hill, and they, frankly, own the place." - Senator Dick Durbin
http://www.youtube.com/watch?v=CZbC_IqWEJY
You think you have a vote? You don't. We are serfs, servants, slaves to "the system". It's a modern day corporate company store from shore to shining shore. Wake up and smell the damn coffee.
Abolish the Fed, and the corrupt two party political machine. Swift tribunal justice for the criminals in DC, and on Wall St.
It's time to take back the reins of power.
Take delivery of your cash, assets, and commodities. Do not do business with TBTF. Do not do business in the manipulated stock, bond, and commodity markets. Stop paying your mortgage, unless the creditors come to terms. Vote incumbents out, regardless of party, or better yet vote for a third party.
Do these things.
If justice still is not done, then it's time for civil disobedience. Tagging banks and bankers with red paint would be a relatively peaceful start, but I can think of other things I will not mention.... I will just do them.
I and people like me own this country. I will defend it, and so help me GOD I will defend it with force if necessary.
You people in DC and Wall St should heed this warning because I don't have much left to lose. I'm not some crazy that will throw my life away in some one off attempt. You, your companies, your possessions, your careers, and your families will pay dearly for making an enemy of me and my people. I hope someone reads this and understands. I will make peaceful attempts first such as those above, and then I will seek alternatives.
The people who think they own this country, do not. We the People do. Heaven help those who stand in our way, for we may not be able to.
Exodus 21:23-2523But if any damage follows, then you shall give life for life,
24Eye for eye, tooth for tooth, hand for hand, foot for foot,
25Burn for burn, wound for wound, and lash for lash.
Fraudulent Conveyance is an important fiscal tool now.
Watch AIG closely.
Jeeez-uz Kee-rist!
A basis for litigation?
A basis for litigation?
That's what laws and the courts are for during insolvency and dissolution, to ensure the equitable transfer of assets and liabilities.
Nice to see that the (captured) regulatory was on top of the dissolution, endeavoring to treat all fairly and equitably.
With the Blessings of the Captured Politicians and Regulators, The Power Elite get to Pick the Carcass, the Final Costs being Borne by the Taxpayer...the little guy...the Youse and Me's.
I don't get it. Why is this supposedly fraudulent? Is the allegation that the bidders in the auction colluded or something like that?
Exposé du jour. Wake me up when somebody actually goes to jail.
That You AND the sheriff are sleeping is one part of the problem. Maybe you should bang a gong or something? WTFU
I believe that the correct terminology is "fraudulent conveyance". Important in our world today to call something by its proper name for a change.
I see huge budget cut possibilities in the government. Massive. Plus some revenue generators to help balance the budget, or at least free up more funds for the bankers when they need it.
For example, we don't use the justice system to actually prosecute wrongdoing, so we might as well just shut it down. No more courts, no Supreme Court...heck, just the savings from no longer dry cleaning those gowns is worth a ton.
We can cut out the middleman known as Congress, save all those salaries, staff salaries, close down C-Span, turn the Capitol Building into a roller rink or a giant Apple Store, and just let the real lawmakers---Wall Street---do whatever they think is best.
Don't really need the Executive Branch, either, as Oreobama just fields calls from Jamie and Lloyd and does what they need doing. We can transfer ownership of the White House to some up-and-coming REIT like Simon Property Group. Turn the old house into a trendy shopping mall, with A&F, LuLu, Nordstrom as a anchor store in the West Wing, a Food Court on the back portico, another Apple Store (cannot possible have enough of those), a couple of Starbucks...the usual mix of American retail necessities.
The Marriner S. Eccles Building can be turned over to Goldman as their Washington Office. Oh wait, that was done a long time ago. Never mind.
All the art and artifacts inside the National Gallery and the Smithsonian can be put on auction. With all the cash sloshing around in the pockets of our betters on Wall Street, no doubt there'd be some great bids for stuff like the Wright Brother's plane, the Hope Diamond, all of our Wyeths and Homers and whatever we might have liberated from Euroland back in the days of Morgan and Carnegie. Some banker can pick up the Constitution at the National Archives and literally, rather than figuratively, trample on it.
As for the Declaration of Independence, anyone is welcome to that. We the People (I know, wrong document) could not possibly understand the sentiments, determination and courage that went in to writing that work. That we have lain down at our own time of moral crisis is proof that we do not deserve to be custodians of such a document.