It seems in the USA, if you sell patent rights, the new owner can sue. If you sell a subsidiary, they can still sue. It seems that as long as it is not a personal claim ... it can be sold and assigned along with the property that was damaged. ... in this case, TP is majority shareholder of both entities between which the assignment occurs ... makes it even easier.
The one more problem is that IB does not have any power to change the rules of the game. Even if he will be able to recover this loss this time there is no guarantee that same situation will be "prearranged" again, and their trading system will not be able to hedge it properly because they have to provide liquidity for options traders. I'm not even sure how they would be able to hedge it... Was there really way to hedge unlimited (kind of) risk while being short?
actually Bennett did, I am unfortunately a holder of the refco stock, its seems the underwritters couldn't read a balance sheet. The 500 million that was suppose to be hidden was indeed on the books for years and obviously had no real value as the company ran for years profitable with this 500 Million on their books. When the situation surfaced Bennett paid the 500 Million almost immediately ..to no avail as the stock was halted had a 10 day hold but started trading 2 days later to be halted during the rally. The whole deal is/was bs. Some one bigger wanted to cause the collaspe of refco as each of the profitable subs were divided up. We will never really know what is going on and I can guarantee you because there are lawyers and liars this is not the end of IB's trouble. I am not saying they are going to go bust but now that lawyers are involved and the weak will jump ship the stock current price will drop. refco was trading 27-30 dollar when the news hit to drop to 18 area to drop to 9-10 before being halted and delisted. Perhaps the real story is IB stepping on someone's toes similiar to the Hunts and the silver market. w
Your comparison makes no sense. The $400M loss, about a quarter of Refco's market cap, which triggered Refco's collapse, was caused by Refco's lack of risk control, and then fraudulently concealed by years of Refco's accounting manipulations and bogus transactions. Refco's CEO Bennett never covered the loss until after he was caught concealing it. Bennett obtained the funds, used in order to cover Refco's loss, by engaging in yet another questionable transaction of selling his personally owned Refco shares to an Austrian bank at which Refco had had relationships with insiders, days before those shares became worthless upon public disclosure of Refco's loss. This subsequently triggered an investigation by Austrian banking authorities, who were not happy to see the Austrian banking system left holding the bag. IB has the strongest possible risk controls, the opposite of Refco. IB's loss was caused by wrongdoing outside of IB, not inside as with Refco. IB, unlike Refco, never concealed the loss. IB's loss was a few percent of its market cap, unlike Refco's loss, which was about a quarter of its market cap. IB's chairman covered IB's loss from his own personal fortune, earned through his legitimate achievements in creating and running IB as a legitimate company, instead of by looting a bank to cover the losses of a crooked company. It just doesn't make any sense to compare the two companies. Bottom line: Refco's corruption doomed it to collapse, while IB is an honest, legitimate, successful company. Disclosure: I have never held any IB stock. I am an IB customer, who is concerned that false attacks on IB's reputation might interfere with the opportunities which IB provides to its customers.
My answer does in deed make sense. You need to relax and read what I said / wrote versus what you are thinking I am saying. You have information of refco but not the discernment of the information as you are not totally correct. My answer was in response to old trader stating no ceo or officer from refco every put in funds. Refco was profitable and had been making money for years and the 500 million had been on the books for years while refco's day to day business carried on. I would summize that part of the blame has to go to the underwriters and their dd. regardless, when Bennett went to the bank it was done in good faith to rectify the situation. Obviously no one knew refco was going to collapse otherwise the bank would of not given Bennett funds for the stock that at the time was part of his personal wealth portfolio. So it was done in good faith? I am not saying nor did I say that IB was refco. I even stated that but did say that IB imo would have additional issues now that there is the possibility of litigation and there was a similarity versus price when the issues occurred which is factual. I am an IB customer and also hold no stock. I do not want and hope IB can settle the dust as quickly as possible. In closing, you state IB has the strongest possible risk controls etc. You and I only know what we are told and that is one's perception of the information. IB's loss being caused by wrong doing outside of its control and manipulation? again is perception of IB's, the SEC, etc compliance and protocol but we will in time get the answers to those as we don't have enough information at this time to state that statement accurately. Even based upon your own statement that refco's debt was 25percent of its cap doesn't explain why refco is worth 12 cents as we speak as we have seen many corporations retrace and not go bust as refco. Refco's directors,staff, accountants may or may not have committed frauds but you tell me what stock listed on the nasdaq or nyse exchange has and does not? That includes banks and brokers? We as traders get interventions and frauds committed on us daily, par for the course. again, I do not hold IB stock and hope this issue dies quickly. w w
Comparing IB to Refco is silly. However, how does anyone know there were pre-arranged trades? Couldn't it just as easily have been that a whole lot of investors placed market-on-close sell orders to get out before the dividend and its tax implications? Altana closed at 51.82 on May 2 and 46.56 on May 3 (the date of the alleged pre-arranged trades). A 10% one-day decline is certainly not unheard of when a lot of people want out.
Bennett was operating a kiting scheme involving a hedge fund he controlled. He would enter into a fraudulent loan every quarter. It started with Bawag in 2000 and ended with Liberty Corner. Bennett would instruct a Refco sub to lend to Liberty Corner, who would then lend to Refco Group Holdings which covered the debt, and which Bennett controlled. He was kiting the bad debts with funds sourced from the Refco subsidiary. A receivable from Refco Group Holdings would replace the clearing loss. He unwound the loans after the quarter-ended, which put the debts back with the listed-company, and started the scheme anew at the end of each quarter.
I re-read your earlier post, and I am sorry to say that I am still appalled by the unfair way you have spewed your ignorance, apparently without regard to how your actions might harm others. It is silly to draw comparisons between IB and Refco, or to suggest that the recent incident jeopardizes IB's survival. Your assertion that both companies acted in good faith, and therefore can be compared, shows appalling ignorance. Refco's loss resulted from its bad faith. Refco acted in bad faith by concealing that loss from its customers, investors, and creditors, and also from BAWAG, the Austrian bank left holding the bag after it purchased Bennet's $430M in shares days before they collapsed to zero. Refco acted in bad faith at all times, which is only one of the things making it totally different from IB.
I thought the same thing, but they do say that if TB gets back more than 37mm he has to pay back the excess. Also I have to say it but this is exactly what Taleb has been talking about this is a Black Swan!
TP's decision to eat the losses is as transparent as they come... I just don't understand why?? Basically, if he owns 85% of the company, he's going to eat the losses one way or another. I assume by paying IB, he still wins if he's able to deduct it from taxes. I also assume his intention was to prop up confidence in his company. Also, I assume this will mask losses the next time they report earnings. As for him going after the insider traders personally?? ...I don't know about that one. Isnt the SEC handling the case?? They certainly have more resources and expertise (I would hope).