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Och Ziff Refuses To Cooperate With Investigation Into Whether It Sunk Lehman
Apparently what is good enough for Greenlight, SAC, Citadel and Goldman, is not quite up to snuff for Och-Ziff. The 7 West 57th-based, $25.6 billion AUM, hedge fund believes that it should be exempt from responding in an ongoing investigation by the bankrupt Lehman estate, which is probing the abovementioned hedge funds whether they engaged in rumormongering that may have brought down Lehman Brothers. And Lehman is unhappy: in a filing from the Lehman bankruptcy docket, the state claims that "Och-Ziff, one of the world's largest hedge funds, was involved with, or has information that pertains to, the "short-and distort" efforts." If this is indeed true, it is not very surprising that "Och-Ziff has already begun stonewalling to attempt to prevent this information from seeing the light of day by interposing frivolous and dilatory objections to the Debtors' Rule 2004 Subpoena." As the Lehman examination has already proven to be a gold mine for illegal practices conducted by Wall Street, we would not be surprised if the most recent 2004 investigation uncovers some new and even more shocking results. To be sure, Zero Hedge has never been a fan of the "short selling raid" theory - fair value can and always will find a way to creep up to the surface, unless of course it doesn't exist in the first place, like in Lehman's case. Additionally, funds would have to be extra stupid to keep written evidence of this kind of complicit and illegal activity. Which is why Och-Ziff's response is perplexing. And if the estate had credible reason to pursue Och-Ziff, we can only imagine the same must be true about Greenlight, SAC, Citadel and Goldman. Suddenly the Lehman bankruptcy case became interesting all over again.
Specifically, on page 3 of the complaint we read the basis for Lehman's investigation:
1) Och-Ziff was either a possible source of, or a conduit for, a tleast on specific rumor circulated in 2008 concerning Lehman Brothers and
2) it was a prime broker for Lehman Brothers during the relevant period and thus may have been the target of efforts by competitors or short sellers urging Och-Ziff to withdraw business from Lehman Brothers at its most vulnerable point.
Och-Ziff has substantiated its unwillingness to respond claiming it would have to spend $3.3 million to produce 3.9 million electronic
documents. It also said that it had nothing to gain by Lehman's
bankruptcy, which it said caused significant losses for Och-Ziff. If this is the case, it is odd to read in the estate's complaint that "Och-Ziff has served offensive discovery upon Lehman - without the benefit of a Rule 2004 order or another procedural basis - attempting to learn what Lehman has thus far discovered about Och-Ziff's possible wrongdoing."
It gets weirder:
One rumor involved Lehman's effort to strengthen its financial condition during the financial turmoil of 2008 by reducing its gross and net leverage. In June of that year, false rumors circulated concerning the legitimacy of Lehman's de-leveraging effort, inaccurately claiming that Lehman has improperly spin the debt off its balance sheet into two hedge funds created and controlled by Lehman. Through the privileged investigation, Lehman determined that Och-Ziff likely disseminated and/or was the recipient of this rumor. [Through a second] privileged investigation uncovered additional information and evidence corroborating what Lehman previously had learned. As a result of this second investigation, KBT&F identified a short list of 2004 targets [here is where Goldman falls]. The false rumors circulating about Lehman carried potentially devastating consequences. Beyond artificially driving down the price of Lehman stock, such rumors could have the effect of increasing the perceived risk to counterparties in transacting business with Lehman, discouraging counterparties from dealing with Lehman and increasing its costs of doing business.
The nature of the subpoena demands all documents created seven and a half months prior to the filing of Lehman's bankruptcy petition and documents created in the three-and-a-half months after the filing. The time period "is intended to capture the realization of profits from any wrongful conduct towards Lehman and any regulatory or internal investigations or punishment of wrongdoing involving Lehman immediately following the filing of the bankruptcy petition."
This line of investigation closely merits close pursuit, especially since Och-Ziff, traditionally a distressed player, appears to have no Lehman sub note exposure (there is no conflict of interest mentioned in the filing) which would be quite odd for a firm with a clean conscience.
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Naked shorting party, bitchez!
+10^100
Wow and to think they almost bought the company I work for about 3 months back.
Sticks and stones may break my bones, but words will never hurt me.....wait a minute!
Not saying either way on this one but usually in the 'discovery' process, the plaintiffs (the estate) will go on fishing expeditions, asking for any and everything. To which the respondents, naturally, balk.
Hence,
is a standard tattle tale when the plaintiffs can't get the respondant to roll over for them.
The judge will come in and act like Dad and get the kids to play nice.
Expensive but that's the way things work.
The nature of the subpoena demands all documents created seven and a half months prior to the filing of Lehman's bankruptcy petition and documents created in the three-and-a-half months after the filing. The time period "is intended to capture the realization of profits from any wrongful conduct towards Lehman and any regulatory or internal investigations or punishment of wrongdoing involving Lehman immediately following the filing of the bankruptcy petition."
...sounds a lot like a fishing expedition to me. How exactly do the attorneys for the Lehman remnants get paid?
Unlike typical discovery in a non-bankruptcy context, fishing expeditions are actually allowed under Rule 2004 discovery.
Its 9 West 57th. I assumed ZeroHedge would know this since I assumed they occupied the top 3 floors, with the nice view of the Plaza residents in their birthday outfits.
Whats a few digits among friends right.
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Dan Och couldn't make an honest accounting gain if Mary Gabelli gave him a rigged POP license.
That has got to be one of the best names on ZeroHedge, period.
these guys ar OZM get sick and tired of dealing with the authorities that, despite their best intentions, often haven't a clue of what they're looking for; and now at the hands of the current president, their staff--- paid for by the US taxpayers and our creditors in beijing--- yes--- now they get double or triple the oversight from a brand new crew of G12's. like the JETBLUE steward who grabbed a beer and went for the exits, the hedge fund community is going to get less tolerant when they're getting a regulatory crushing from people who create needless expense and needless red-tape in order to justify their salaries; paid for (plus annual COLA adjustments) by uncle SAM.
shawn mesaros, pamria llc
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Having dealt with OZ, it would surprise me if these allegations were true. Those guys have more class than that. And I used to work for Lehman.
"We are the old, Carlton Navy Blues....."
Yep, going to see them beat the Tiges tomorrow at the 'G.
Start with David Faber on CNBC. He was the one propogating the rumors immediately after the collapse of Bear Sterns.
Chosen ones Daniel Saul Och and Ziff family, arent they? Should they testify? They won't.
I love ZH but have often wondered why they don't feature the work of deepcapture.com which is probably the single best source of information on wall st corrpution anywhere. I was particularly concerned to see ZH attack the German efforts to ban naked short selling.
Now I know.... ZH isn't a fan of the 'theory' of bear raids. For those with the time and inclination, I suggest they go to deepcapture.com and read 'the story'. The article is about 60 pages long but in my opinion it is brilliant. The major claims are all hyper-linked to source material so the reader doesn't have to take the author's word for it.
The corruption at the top of wikipedia, for example, is truly breathtaking -- and the source material is all viewable within wikipedia itself. I actually don't understand how anyone can dispute deepcapture's core claims. Everything is in black and white.
Perhaps the main problem is that not many people have the time nor inclination to read a 60 page article let alone cross check all the key references. It took me a whole week to do so, 5 days @ 8 hours each day. Much easier to read a snappy ZH headline and write "bitchez" at the end of a comment. It is very sad to see how the quality of comments on ZH has collapsed over the last 18 months or so. Previously the comments were as interesting as the articles.
It's funny, but 18 months ago is about when ZH began cross-marketing (cross-posting? not sure) with the Huffington Post, which in turn drew a fair amount of HP's traffic... Got to be a coincidence, no?!
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