I would say yes, based on: 1. In the video from 2016 when the fraud was already clearly described in the complaint he kept defending her and he was crying about her treatment by other medias. He was clearly in denial mode, just like Bobby is now. Now he would have to acknowledge that he was wrong, and people are not very good at that. 2. Why would he invite her NOW to speak, when she is an acknowledged and proven fraud, and she can't even trade OPM even if just temporarily? Is he really going to ask her: So Karen, what's happened to you in the last few months??? Before September an interview would have made more sense, but now??? Watch the video, and the collective denial, Tony chimes in with the scheme trades comment, agreeing with everything what Tom says.
I have not followed either him or her and not defending either. However, if you are a true friend, you may do whatever it takes to help. Most of the time it is not black or white ... She might have overcome these kind of situations before and maybe got shut down at the worst possible time. Somehow I am suspecious of regulators who bail out big boys(banks, LTCM, etc) but go full force after little guys. They have hundreds of cases to investigate and oftentimes they choose based on politics and/or public opinion. So let's just keep an open mind.
1. There is a limit to true friendship. I had a college friend who was so good looking you would have never guessed what he does to get girls. Jeffrey Dahmer was his name. (this story might not be completely true, just making a point) What Tom as an option pro should do is trying to figure out what went wrong and tell it to his viewers so they can avoid the same mistake. Of course if the strategy was really just a pennies in front of the steamroller type, it is hard to acknowledge that finally the steamroller caught up with it... 2. This didn't happen. She wasn't shut down until last September, so she had 2+ years to overcome it, and who knows, maybe she did. But the way how the scheme trades worked, there was no fucking way to generate profits only fees based on closed results. So she actually has to thank the suing investor because he/she made her finally take the loss, so she could go back to generating profits instead of just arbitraging a position. Who knows? Maybe the reason for this interview is that she did manage to make the lost money back since mid-2016 and although this SEC settlement could be a momentary set back, she and her strategy are still alive and kicking. --------------------------- By the way the market only dropped 7% from the September close into mid October, and had a V recovery and rallied 13% from the lows in 6 weeks. None of them should have caused big losses for the strategy, so I theorized that she actually lost money on the calls, because the recovery was a bigger move than the drop. A 7% orderly drop was nothing compared to drops in 2010 and 2011, yet somehow at this time she lost money... That is what Tom should be concerned with, not what TheStreet writes about Karen...
I knew someone would go there This business has lots of luck in it. Many people survive or blow up based on market turning at the right/wrong time. You get sucked in quick sand trying to survive and do best for clients and your family. The ones who make it look like geniuses. The ones who fail are not necessarily evil people. There's huge difference from a violent criminal.
Sure. But her criticism is completely valid, so attacking the messengers is just bad form. And having a loss (wasn't even that big, 25-28%) is one thing but inventing the scheme trades, that is just outright malicious fraud. Not to mention while running the schemes she couldn't get back on her feet because the money was tied down in arbitrage. So the only thing she accomplished was fees for herself >>>> bad,bad,bad granny
I take your point completely. But only to a very limited extent. Like you, I was (and am) repulsed that only one or two little minnows were ever convicted in the mortgage fraud debacle. The fact that in 2008 Wall Street political contributions were at their high water mark is no coincidence. The corporate Democratic Party is just as culpable as the corporate Republican Party - both bought and paid for by Wall Street. Elizabeth Warren is dead nuts correct about that. Reasonable and clear thinking individuals should draw a valid conclusion from the NFA’s audit of Hope Advisers, LLC and Karen Bruton. It forms the basis for the SEC’s criminal complaint (they say so and reference the audit). My guess is that it was someone at her clearing firm or one of her employees who alerted regulators. Executing then continuously rolling calendar spreads - but only reporting the one leg which offsets losses in your statements and reports to clients is brazenly fraudulent. And I’m sure it was immediately obvious to the NFA when they took one glance at the Clearing Firm Statements and compared them to the Hope Advisers monthly Statements to clients. This wasn’t political. This wasn’t a “witch hunt”. You have a Certified Public Accountant in Karen Bruton who knew better cooking the books in order to cover up a $50M loss and to generate greatly inflated management fees for herself. It’s indefensible. If she had a case she would have gone to trial or through discovery the SEC would have dropped its case. She would have used that $2M in fines and disgorgement on legal fees instead IF she had a plausible defense.
"Little guy" whom defrauded people out of TENS OF MILLIONS OF DOLLARS. Madoff got LIFE for financial fraud.
I'm not defending her actions, but I can understand why Tom would not "turn" on her immediately. If your friend got into trouble with IRS, would you disown him/her? I don't think so. There are so many cases of people looking for unreasonable returns and loosing their shirts that I no longer feel too bad for them. It's not like she was cold calling old ladies to get their pensions.
Your ethics are why you'll never see OPM. Not stating that you're interested in managing outside money.