Friday, December 12, 2008

Invincible Wall Street, Part II


  • Citibank will pay $7 billion to settle the massive auction-rate securities debacle.

  • Fidelitys' crew will settle Wall Street's version of pay-to-play (or plug-'n-play or whatever).

  • Last, a fraud scheme so vast that the SEC called it "epic" and Ponzi himself would have either blushed or have had his proudest moment to date. Made possible by complete faith in a little audit group in the middle of nowhere and belied by returns so statistically improbable that Mendel would have grinned.

Madoff’s auditor, Friehling & Horowitz, operated from a 13-by-18-foot office in Rockland County, New York. Vos had an investigator stake out the office [!!! I missed that in due-diligence class]. A call to the New City, New York, office of Friehling & Horowitz after business hours wasn’t returned. (Bloomberg)

Update: CNBC is asking about fraudulent conveyance. I doubt there is such a thing for a fraud itself, right? That's like asking, "Was the fraud conducted fairly?" Who knows, though. It's just crazy enough to be possible...

Update2: split-strike is a fancy, modified buy-write strategy. They promise "daily liquidity".

Update3: Oh, what a list of investors. Every no-name auditor in the industry can expect the phone to be ringing off the hook in the next week.

Update4: Askia says that OEX options market couldn't handle $13 billion ... is that true? It does appear to be. Today's open interest of 188188 appears to suggest a size of just under $8 billion, far in excess of whatever the daily volume would be...

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