Naederhoffer SUES the CME

Discussion in 'Wall St. News' started by highlifejoker, Jun 25, 2008.

  1. Did he win this suit?

    market plummet of October 1997 seemed to be the logical cause for the former futures trader Victor Niederhoffer's ruin. But according to Niederhoffer, manipulation, not the market, was the true culprit. Niederhoffer is suing the CME and numerous exchange employees, officers, directors and

    committee members for $105 million, alleging they conspired to improperly set closing prices for options on the S&P 500 futures contract.

    Niederhoffer, author of the book The Education of a Speculator, was short S&P 500 put options on Oct. 27, 1997. He sold put options betting the stock market would rise. but the S&P 500 fell 64.65 points that day. The Dow Jones Industrial Average lost 554.26.

    The lawsuit, filed in U.S. District Court in Chicago, says that Niederhoffer's funds, worth more than $57 million just before the market plummet, had their positions liquidated the following day to meet a margin call. The lawsuit also claims CME employees and traders manipulated the closing prices on S&P 500 options to profit from the Niederhoffer fund's loss of $100 million or more.

    Similar actions took place on Aug. 13, 1998, the lawsuit claims, and caused additional losses of at least $5 million.

    Craig S. Donohue, CME general counsel, issued a letter to CME members and staff calling the lawsuit baseless.

    "We have been aware of Mr. Niederhoffer's claims for more than a year. His claims were thoroughly investigated. Mr. Niederhoffer was given documentation demonstrating that he had based his claim on incorrect information," Donohue wrote. "As recently as March 31 this year we made a written offer to permit him to interview our staff and review our records in order to demonstrate that the exchange was absolutely blameless. Mr. Niederhoffer rejected our offer."
  2. Daal


    not a bad strategy. sell low probability events for a premium, lose it all then try to get it back in a court with a good lawyer. that doesnt say much about his character though
  3. .......once a put-seller, always a put-seller.........:cool:
  4. hey... if you can't win, litigate!
  5. hughb


    If you lose in the markets, try again in court.

    Another well known, big time trader who is no different than joe schmoe who blew his Ameritrade account out. They both lost it all.

    Education of a Speculator was one of the worst financial books I have ever read. Niederhoffer was more intent on creating a brand for himself than making profits. Showing up to work bare foot, wearing loud suits, requiring employees to read the Enquirer, claiming that the length of cigarette butts found in the dumpsters by bums is a valuable economic indicator.

    Niederhoffer and I have one thing in common in that we both blew out an account. I went back to work to rebuild mine, Vic went to court.
  6. they have circuit breakers and FED is always there to lend money so you won't have a 20% drop in one day.

    unhedged 100 million position is asking for a crash. or wipeout overnight.

  7. ever think VN was right, and it was some kind of concerted effort to take him out?

    i really don't know, but he strongly believes it due to irregularities on that day. can anyone shed some light here? what was the result of the action? surf
  8. ssblack


    OMG, biggest PANZY ever to sue.

  9. next time you have 100 million cash in the option market, let me know. hopefully you get treated better.
  10. ssblack


    Get off his nuts. It's over TEN YEARS after the fact and he tries to pull this? Get real.
    #10     Jun 25, 2008