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JPMorgan Pays for Shorting Madoff Without Telling Anyone

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Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#61

Post by ig1 »

luckyno13 wrote: post #10

Interesting read but my knowledge of what I am going to call "advanced banking" kind of leaves me wanting to do some sidebar research. Can anyone suggest any accessible literature for learning the more complex areas of banking/finance?

The Complete Guide to Capital Markets for Quantitative Professionals by Alex Kuznetsov is what I generally recommend developers entering investment banking to read.

(despite "Quantitative Professionals" being in the title it's not math heavy, although you need to be able to think technically - should be fine if your developer)

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#62

Post by jgalt212 »

It's pretty clear, and has been pretty clear for years now, that JPM is not only too big to fail, but too big to manage.

In short, JPM needs to be broken up. Most everyone will benefit--JPM managers, line workers, JPM customers, and shareholders, and the worldwide financial system. The only who does not benefit from a break-up is Jamie Dimon whose primary goal is to manage the largest bank around.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#63

Post by camelite »

mcintyre1994 wrote: post #43
twoodfin wrote: post #15

Earlier quoted context omitted.

If you believe, say, that Apple has been faking its revenue and profit numbers for the last 10 years, you can go ahead and short them on the expectation that they'll get caught, Tim Cook will go to jail and the stock will tank. In the meantime, the presence of your short will in some small way drive down the price of AAPL, or at least signal to the rest of the market that somebody believes things are not as rosy for…

I've never really looked into shorting, so sorry that this inevitably sounds really dumb, but if a short is public and works as that kind of signal, can it be abused? Say, if a big investment bank shorts a stock, and then advise all their clients to do so, and in some way convince a significant number of others to short that stock. Does it eventually become a sort of self-fulfilling prophecy where the number of short…

There's some very entertaining stuff at http://www.deepcapture.com/.

A good place to start is http://www.deepcapture.com/the-story-of-deep-capture-by-mark... or http://www.deepcapture.com/category/1-the-players/

edit: changed starting suggestions because the website is confusingly laid out and some links don't seem to work.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#64

Post by ddebernardy »

spinlock wrote: post #36
joosters wrote: post #26

Earlier quoted context omitted.

It's not a very good example, and hardly comparable to the JPM situation, since it was in JPM's power to raise the alarm (and keep raising it when no-one first paid attention). Your crimes aren't magically washed away because the SEC wasn't doing their job well.

No, the Apple example is excellent. I forget what the name of the blog is but there's an investor who investigates firms for fraud, shorts their stock, then publishes his finding. It's not illegal in the slightest and is a public service. Now, you seem to think that there should be communication between a trading desk and Madoff's custodian. Any compliance officer would disagree. There is simply too much risk of fron…

> No, the Apple example is excellent. I forget what the name of the blog is but there's an investor who investigates firms for fraud, shorts their stock, then publishes his finding. It's not illegal in the slightest and is a public service.

Err... If you're thinking about the handful of self-proclaimed "activist investors" who frequently end up massively short after "investigating" the stocks they abandon, please spend some time reading http://www.deepcapture.com. You'll find their names in rather dubious company -- including Madoff, incidentally -- and associated with mountains of illegal activity.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#65

Post by spinlock »

bronson wrote: post #46
spinlock wrote: post #38

Earlier quoted context omitted.

> When assessing risks of this size, I am glad that JPM seemed to be asking all the right questions about Madoff (which no one else, not even the SEC, was asking), it is funny JPM is being penalized for this. It's amazing what JPM is being held liable for. I think it sets a terrible precedent that they were basically fined $13B for acquiring WaMu and Bear Sterns in the financial crisis. I can't imagine another bank c…

You can't imagine BofA buying Countrywide?

That happened in 2008.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#66

Post by spinlock »

bonemachine wrote: post #47
spinlock wrote: post #38

Earlier quoted context omitted.

> When assessing risks of this size, I am glad that JPM seemed to be asking all the right questions about Madoff (which no one else, not even the SEC, was asking), it is funny JPM is being penalized for this. It's amazing what JPM is being held liable for. I think it sets a terrible precedent that they were basically fined $13B for acquiring WaMu and Bear Sterns in the financial crisis. I can't imagine another bank c…

they were basically fined $13B for acquiring WaMu and Bear Sterns in the financial crisis. Ugh. They were fined for selling bad mortgage bonds. Not for acquiring Bear and WaMu. It also ends up being closer to $5B due to tax breaks and other incentives, BTW.

The crimes happened at Bear and WaMu. It did not happen on Jamie Diamon's watch.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#67

Post by spinlock »

ddebernardy wrote: post #64
spinlock wrote: post #36

Earlier quoted context omitted.

No, the Apple example is excellent. I forget what the name of the blog is but there's an investor who investigates firms for fraud, shorts their stock, then publishes his finding. It's not illegal in the slightest and is a public service. Now, you seem to think that there should be communication between a trading desk and Madoff's custodian. Any compliance officer would disagree. There is simply too much risk of fron…

> No, the Apple example is excellent. I forget what the name of the blog is but there's an investor who investigates firms for fraud, shorts their stock, then publishes his finding. It's not illegal in the slightest and is a public service. Err... If you're thinking about the handful of self-proclaimed "activist investors" who frequently end up massively short after "investigating" the stocks they abandon, please spe…

I'm thinking of Guys like Chanos.

http://en.m.wikipedia.org/wiki/James_Chanos

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#68

Post by spinlock »

mcintyre1994 wrote: post #43
twoodfin wrote: post #15

Earlier quoted context omitted.

If you believe, say, that Apple has been faking its revenue and profit numbers for the last 10 years, you can go ahead and short them on the expectation that they'll get caught, Tim Cook will go to jail and the stock will tank. In the meantime, the presence of your short will in some small way drive down the price of AAPL, or at least signal to the rest of the market that somebody believes things are not as rosy for…

I've never really looked into shorting, so sorry that this inevitably sounds really dumb, but if a short is public and works as that kind of signal, can it be abused? Say, if a big investment bank shorts a stock, and then advise all their clients to do so, and in some way convince a significant number of others to short that stock. Does it eventually become a sort of self-fulfilling prophecy where the number of short…

Shorting is absolutely open to abuse, especially naked shorting (i.e. you sell the stock without buying it first). Google the CEO of Overstock.com. He had a lot to say about naked shorts being abused. Regular shorts aren't abused as much because the company's dividends have to be paid to the owner by the borrower (i.e. the short) this makes the varying cost of holding a short on a good company high. I also never understood why people lend their stock to shorts. You're just helping them put downward preassure on a position that you're long.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#69

Post by spinlock »

guimarin wrote: post #42

That dimon is still being targeted astounds me. This is an example of why even those in power should not be the nail that sticks out. In case you're wondering why dimon, why JP Morgan it all traces back to this [1] event. 1. in 2008/2009, can't find it on Google bc why have a date search anymore. Jamie Dimon was called before the finance committee to explain the financial meltdown. He allegedly stormed out after repr…

Congress shouldn't have that much influence over the SEC. I always assumed it was because Dimon is the only CEO able to admit he's not infallable. I also think JPM is ahead of the curve on action against them. Again, they'll admit mistakes and take the fines. The rest of the street is denying everything but I believe they'll eventually be targetted as well.
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