Tag Archives: New York

Fabrice Tourre: The Last (Gold)Man Standing

While most Goldman Sachs employes are busy starting new hedge funds or preparing for new jobs, like central bank president or chief economist for a major European bank, Fabrice Tourre stands as the only Goldman banker to face a trail.  However, something strange happened recently, something that may spin the case in an unexpected direction.

“It’s impossible that only one person was involved with fraudulent activities in connection to the sales of these mortgage securities.”

G. Oliver Koppell

Yeah, yeah…we know that… The “Fabulous Fab” is just a trader who carried out the order of his superiors. An order that was very simple and impossible to misunderstand: “Make money!” It is, however, harder to figure out how a newspaper accidentally gets hold of a laptop, accidentally found in the trash, accidentally containing crucial evidence.

I won’t waste any time speculation about something I’m sure I’ll never find out.

But that seems to be the case at moment – the mysterious laptop, that is.

The New York Times published recently a long article about Fabrice Tourre, who as of now stands as the only Goldman Sachs employee charged individually in the firm’s CDO follies.

Tourre appears to be keen on fighting the civil charges in court, something that, according to US financial media, has caused a little bit nervousness amongst the top Goldman Sachs executives.

Many have suggested that Tourre in fact has little choice but to engage in a  scorched earth defense in an attempt to make it clear that many people are to blame for the scandal, besides himself.

Fingers have been pointing at his boss, Jonathon Egol, and questions raised on why he was not charged.

But the article in NYT is built new information that arrived in a reporters hands in a rather odd way.

The article explain that a New York filmmaker was  given a laptop by a friend who claimed it had been found in the trash.

Amazingly, it had many email to Fabrice Tourre on it. Including several emails from Egol that suggest he had a dire view of the market, one that Tourre didn’t necessarily share.

And even more amazing – the emails continues to stream in.

Based on those emails, the NYT concludes that Tourre’s legal team will focus on the fact that he was in fact a small player, and cannot alone be held accountable for the entire ABACUS fiasco.

According to Fierce Finance, it is likely that others will be drawn into the center stage.

Indeed, it would be remarkable  if Tourre alone is found guilty. That would mean that one single trader is capable of taking down the whole global economy!

The NYT  indicates that Tourre has been made a scapegoat, and that other Goldman executives should be charged.

One interview suggests that Tourre was targeted because he was prone to logorrhea, unlike his colleagues.

Anyway, he has hired a legal team that (also amazing) do not have ties to Goldman Sachs.

Everything is set for a very interesting case. But a case built on email is not necessarily a strong one.

“Perhaps, the SEC should make one final push to settle,” Fierce Finance writes.

!?….

Of course! Now, I get it….

Related articles:
Why Goldman should be hoping that SEC drops Fab case
Fabrice Tourre, a minor player in larger CDO drama

 

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Filed under Laws and Regulations, National Economic Politics, Philosophy

Bad Omen? Black Swan And Doom

Is this some kind of an Omen? The Black Swan guy, Nassim Taleb and Nouriel “Dr. DoomRoubini, together in a photo, with a smile stretching from ear to ear. Well, I can certainly understand the smile – they’ve both made a fortune by telling other people that there was going to be a serious financial crisis. Looking at this picture that Mr. Roubini himself uploaded on Twitter recently, make me wonder what those two geniuses are up to this time?

Nassim N. Taleb - Nouriel Roubini

Nassim Taleb, who recently published a second edition of his former bestseller The Black Swan, hasn’t made much money lately following his by betting against almost everyone and everything with his bearish hedge fund – Universa Investments LP.

But Mr. Taleb doubled his fortune in 2008 when the markets took a haircut of more than 50% (October 2007 – March 2009). In 2009 – when the stock market bounced back about 60%, Taleb and his clients lost 4%, according to the wall Street Journal.

The profit of 2010 wasn’t much better, sources says.

However the strategy is still the same, and the goal is to make at threefold profit of every percent the market drop.

And while waiting for that to happen, the professor/trader/author/philosopher is growing olives in Lebanon.

Mr. Roubini have been busy lately, buying real estate at bargain prices in New York, while calling for another round of quantitative easing by the US Federal Reserve.

There’s a good chance that he’ll get what he’s asking for…

Meanwhile – let’s just see what happens, okay?

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Here's The Best Place For High Frequency Trading

If any of you oil company executives get a phone call from a financial trading firm who want to rent an oil rig, don’t be surprised. A recent analysis concludes that the best place for high frequency trading in the near future probably is in the middle of the Atlantic Ocean.

“Simply owning or having sovereignty over a certain position on the Earth might turn out to be financially interesting.”

Alexander Wissner-Gross

To exploit the 50-odd milliseconds it takes for information to cross the Atlantic, it turns out that the sweet spot isn’t always at the stock exchange’s door. The best places for extreme high-frequency trading might be an empty lot in Uzbekistan, a barge anchored miles off Chile’s southern coast or on a floating device in the middle of the Atlantic Ocean, according to the analysis.

The analysis,  to be discussed at High-Frequency Trading Experts Workshop 2010 organized by Golden Networking in November and December, tries to pin point the precise locations between the world’s major securities exchanges for gaming at the speed of light.

In today’s markets, computers search for and act on relevant information in a flash, sending orders through fiber optic cables at nearly the speed of light. By buying or selling shares split seconds ahead of the rest of the market, holding stock for mere moments and then doing it all again, high-frequency traders are turning fractions of pennies into piles of dollars, UltraHighFrecuencyTrading.com writes.

To trim the time lapse in this extreme markets, firms will even buy space for their computers as close as possible to an exchange’s computers, a practice called “co-locating” that cuts data travel time, giving some traders an edge.

But to exploit the 50-odd milliseconds it takes for information to cross the Atlantic, it turns out that the sweet spot isn’t always at the exchange’s door. For some assets sold on more than one market, such as the New York and London stock exchanges, the money-making spot is in the middle of the Atlantic Ocean, researchers report in a paper to appear in Physical Review E.

The team figured out primo locations for performing particular trades on the world’s 52 major securities exchanges.

The analysis considers the speed-of-light delay between exchanges, and characteristics of the exchanges themselves, such as volume and frequency of trades.

“‘One surprising feature is that a lot of these optimal positions are in the ocean or other poorly connected areas,” says study coauthor Alexander Wissner-Gross of the MIT Media Laboratory.

“Simply owning or having sovereignty over a certain position on the Earth might turn out to be financially interesting.”

But some choice of spots, such as Los Angeles, are already well-connected, says coauthor and mathematician Cameron Freer of the University of Hawaii at Manoa. For trading some stocks sold on both the New York and Tokyo exchanges, the ideal location is probably already wired.

However, even for hot spots with preexisting infrastructure, it’s unlikely anyone will take advantage of this money-making map anytime soon, according to computational finance expert Michael Kearns of the University of Pennsylvania in Philadelphia.

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