A few weeks ago we indicated that the S&P Large contracts surged in the week ended March 23by the biggest amount since the March 2009 lows (which incidentally was followed up by the latest phase of the most ridiculous market melt up since 1932), observing the capitulation phase of the melt up. So it is interesting to point out that non-commercial speculative positions in the just as relevant E-Mini contracts hit the greatest short exposure since the collapse of Lehman, declining to -51,180 in the week ended April 20th. The last time we were negative by such an amount was in November 2008, when the market was plunging daily, however then the bias was positive with E-Minis surging all the way to the March inflection point at which point they collapsed once the market started its seemingly endless creep higher. Have we reached another inflection point, with the E-Mini specs, at least, betting there is a market correction upcoming?
Another Goldman Lawsuit Imminent? From The Mail Bag: Lehman To Sue One Or More Big Banks Over Derivatives "Fraudulent Transfer"Submitted by Tyler Durden on 04/22/2010 23:26 -0400
A week ago we disclosed the unredacted Volume 5 of the Valukas report, in which the full details of the Lehman derivative portfolio were presented, as well as the names of "white knights" who stepped in in the last moment to onboard Lehman's holdings at a firesale valuation. Furthermore, it was Valukas' conclusion that Lehman may have a claim to sue the counterparties for fraudulent transfer. It appears this is precisely what is about to happen. We just received the following tip:
Lehman Holdings will be filing a lawsuit against one or more major banks in regards to the valuation of derivatives. This will occur tomorrow or Monday. It is the first such lawsuit (valuation dispute) of its kind by Lehman. Some of the counterparts to Lehman's existing trades weren't willing to play nice, so the "estate" felt it necessary to rack up another few thousand billable hours and take this battle to court.
The biggest bankruptcy in American history has also become the biggest fee bonanza free for all for the dozens of legal and financial advisors who are assisting with the orderly liquidation of Dick Fuld's former firm. Total fees paid out to all related partied now adds up to $741.6 million. Note - this is not for a reorganization: this is a pure liquidation. Of this, chief liquidator firm Alvarez & Marsal has pocketed an unprecedented $262 million. Bloomberg quotes George Fisher of Capital Guardian: "What a travesty. They’ve taken nearly three- quarters of a billion dollars out of a company that’s bankrupt, and nobody cares." Too bad the US government will never allow any other firm to file for either Chapter 11 or 7 as this may put a dent in the administration's plan to confuse everyone that the greatest Ponzi market/economy of all time is based on anything but a constant low-volume meltup in the markets. So obviously restructuring specialists will milk all they can from the one remnant of the biggest market collapse until its emergence into... fully liquidated status. Talk about value added.
There is at least one person left who isn't afraid to speak the truth. We only wish the camera would have panned to Dick Fuld's face as Mr. Black was delivering his testimony.
Gasparino And Chanos Discuss Lehman, Touch On Every Goldman Client's Lack Of Willingness To Short The SquidSubmitted by Tyler Durden on 04/20/2010 16:36 -0400
Charlie Gasparino led an informative discussion with Jim Chanos earlier, in which in addition to the trademark topic of China, the two had a rather poignant tete-a-tete on Lehman, Goldman, pervasive financial fraud, state and local finances, i.e., the muni implosion (the stuff that keeps Chanos most up at night), on shorting US debt, on the Volcker rule and, lastly, on China. While for the most part the interview is boilerplate, what caught our attention is Chanos' reluctance to express his feelings toward Goldman in a monetary fashion: he refuses to short anyone he does business with. Indeed, this is the mentality shared by many. However, while Chanos may or may not be sincere in his reasons, most others would refuse to short Goldman primarily as a result of such activity showing up immediately on Goldman's very own Redi. And the last thing a prime broker account, and client of a monopolist wishes, is to be perceived as a rogue. It also explains why Goldman has been calling up alumni and tell them to be good. This is also one more reason to immediately commence Goldman monopoly proceedings with the ultimate intent of breaking up the organization which is certainly big enough to benefit its employees and shareholders, but far too big to either fail, or to survive in the long run.
Today at 11am Barney Frank's Financial Services Committee will begin what will be arguably the most exhilarating live grilling in 2010, with a truly star-studded line up. We expect nothing actionable to come out of this, but with flagrantly conflicting statements between the complicit parties of the SEC and the FRBNY on one hand, and the suspiciously honest Lehman examiner on the other, the show should be a memorable one. Throw in the original whistleblower Matthew Lee, who will be testifying in the same panel as Dick Fuld and William Black, and this could be one of the best hearings in a while. At the very least, it will provide some entertainment for the morts who will once again get the false impression that corrupt Congress cares about their interests. You can watch the hearing live and commercial free here or on C-Span.
The Beginning Of The End For Ernst & Young? Auditor Back In Spotlight As Lehman Creditors Seek ProbeSubmitted by Tyler Durden on 04/20/2010 09:22 -0400
With the spate of corruption news out of Wall Street and seismic updates out of Iceland dominating headlines in the past month, everybody forgot about the culprit in the Lehman Repo 105 fraud. Well, almost everybody - the Lehman unsecured creditor committee, or basically the post reorganized equity estate, has decided to seek a probe of Ernst & Young to see "if the estate may have causes of action against the auditor arising out of Lehman's use of a the controversial accounting technique, Repo 105" reports Reuters.
Prepared Remarks By Bernanke, Fuld And Schapiro Contradict Those Of Anton Valukas In Tomorrow's Lehman HearingSubmitted by Tyler Durden on 04/19/2010 14:44 -0400
In a nutshell, Bernanke says he was not supervising Lehman, Fuld was not aware of Repo 105, and the SEC had never heard of such a concept.The only person who is not lying, Anton Valukas says that he "found Lehman was significantly and persistently in excess of its own risk limits" and confirms that the SEC is nothing but a pathetic liar lead by incompetent idiots: "we found that the SEC was aware of these excesses and simply acquiesced" and "we believe it is clear that the SEC wasLehman's primary regulator." And just in case the FRBNY thinks it can avoid claims of potentially criminal negligence "
Valukas concludes: "there were "serious lapses" in SEC, federal reserve bank of New York working together to avert Lehman's failure." In other the CEO, the Regulators and the deranged money printer all wash their hands of the fraud that very well may have led to the biggest and most dramatic bankruptcy in history, despite that the independent third party arbiter finds them all guilty of gross incompetence and possibly collusion.
April 19 (Bloomberg) -- Lehman Brothers Holdings Inc., which has been investigating whether any companies may have contributed to its bankruptcy, issued at least five subpoenas to investment firms and hedge funds including Goldman Sachs Group Inc., SAC Capital Advisors LP, Greenlight Capital Inc. and Citadel Investment Group LLC, according to court filings. Bankrupt Lehman is conducting its own probes separately from the 2,200-page report by examiner Anton Valukas that was published on March 11.
The Great Lehman Derivative Robbery: From A Tipster; Lehman May Have Grounds To Sue Goldman And Barclays For Fraudulent TransfersSubmitted by Tyler Durden on 04/14/2010 18:27 -0400
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. At least in the meantime, Anton Valukas scores one for honesty and transparency, and "concludes that an argument can be made that the transfers at issue were fraudulent." Which means Goldman can likely be sued for ripping off Lehman.
Unredacted Volume 5 Of Lehman Examiner Report Released, Goldman Acquired Lehman's Nat Gas Positions And Equity DerivativesSubmitted by Tyler Durden on 04/14/2010 12:23 -0400
And the winners of the liquidation of the Lehman options and futures book are Goldman Sachs, Barclays, DRW Trading, JPMorgan, and Citadel L.P.
Fox Business reports that the investigation around Lehman is intensifying. Surely the SEC, now generically equated with objects that float around in sewers in formal conversation, has realized it has to do something, anything, to find at least one scapegoat for the financial collapse. Which is why we read with little surprise Gasparino's report that "thee SEC has ramped up its inquiry into Lehman’s fall, particularly after court-appointed bankruptcy examiner Anton Valukas issued a lengthy report stating that Lehman’s top executives were “grossly negligent” in possibly hiding the risky nature of the firm’s finances during its final day." What we find much more interesting is that "yet another investigative agency, the Public Accounting Oversight Board
-- created under the 1992 Sarbanes-Oxley law to investigate and
discipline public accounting firms -- has launched an inquiry into the
role of Lehman’s auditor, Ernst & Young, following the examiner’s
report, which accused the big accounting firm of “professional
malpractice,” for its work in approving accountings techniques Lehman
used during its dying days in the summer of 2008." In the absence of any Wall Street villains, which it is now all too clear have endless diplomatic immunity from prosecution by the corrupt regulators, will the auditor, together with Dick Fuld, be made into the sacrificial lambs? Or will we continue the farce that anything even remotely related to capital markets integrity and reporting is real and valid? Judging by the nearly 60 days of no S&P downticks, the market has answered that question for us.
Banks are busted, all of the big guys were doing the Lehman thing, and it gets worse. I take a look under the hood of the big boys to see what they were hiding. On a side note, as I type this the story is breaking all over the place. Is this the return of true, investigative reporting? I hope so!
More on Lehman Dies While Committing Murder - my rant on regulatory capture has been picked up by independent media. Uh Ohhh! It's Ponzi Videohhhh!
Commerzbank Pulling Greek Repos, Lehman Deja Vu As Greece Shifts To Full Blown Liquidity Crisis ModeSubmitted by Tyler Durden on 04/07/2010 11:04 -0400
And so the Greek funding crisis shifts to a liquidity crisis yet again. Bankingnews.gr reports that Commerzbank, among many others, is now pulling its repos with Greek banks, essentially killing liquidity in the entire financial system. Cue Lehman Brothers and Sunday CDS trading. At least it's not Friday so OTC traders don't have to worry they will be pulled from their Hamptons retreat. The Greek website is reporting that according to sources, Commerzbank which is one of the biggest repo counterparties to Greek institutions, was dumping bonds in yesterday's sell off. Not only that, but it is now pulling repos, in essence starting a cascade of asset liquidation, in which banks, already experiencing a depositor run, will be forced to sell assets at any prices they can get just to fund their operations for one extra day.