In the end, these guys are all the same. Their edge is market manipulation. Pimco allegedly bought a âlong positionâ of June 2005 10- year Treasury note futures contracts, while owning notes that were underlying the contract, according to the 2005 lawsuit filed by investors Josef Kohen and Richard Hershey and Breakwater Trading LLC. Rather than liquidating the futures contracts or selling the notes, Pimco held both to the brink of maturity in order to create an artificial scarcity, causing losses for investors who had to buy June 2005 contracts at inflated prices to cover their âshortâ positions, according to the original complaint.
1) That position was very "real", not alleged nor imagined. 2) "Texas Hedging" is not illegal. 3) Size does matter. 4) Let me guess......If you earn money, it's because of your own "skill and smarts". If you lose money, it's because of the somebody else's "manipulation".
Pimco cornered the market (>66%) and failed to report. "the Chicago Board of Trade placed a maximum limit on positions of 50,000 contracts and the U.S. Treasury required position reports from persons holding in excess of $2,000,000,000 in any note issue." Do you really think Pimco would have settled for $92 million if they thought they had done nothing wrong?
1) That's a "subjective" statement. 2) I had thought that position limits were done away with in treasury futures, not that I ever needed to be concerned. 3) I don't know about reporting requirements for cash market positions. 4) What's your interpretation of that? $92,000,000 is "chump change" for Pimco to pay on a trade that may have earned 10-times that?...Crime does pay?...Pimco is evil?...Today's funds are gigantic compared to the exchange venue?...Did you lose money in the 5-year note at that time?....Bill Gross looks "scary"?...Markets aren't completely "fair and competitive"?
average joe or the public doesn't care about market manipulation in the comic book market but average joe does have a problem with market manipulation in the bond and oil markets...consumers pay more..... i think these 'professionals' know what market manipulation is....
Salomon Brothers corned a note issue in the 90's. This is not so different except it brought Salomon to the brink of failure. Buffet came in as the White Knight.
If Bill Gross took positions in his total return funds based on undisclosed positions of his bond trading desk, that would be grounds for insider trading charges. Thank you. The year was 1991. http://www.time.com/time/magazine/article/0,9171,973726,00.html "Buffett, who owns 16% of Salomon's preferred stock and a legendary reputation for his investing, if not his investment-banking, savvy, assumed Solly's chairmanship after the board forced chairman John Gutfreund and two other top executives to step down. Buffett immediately brought in Deryck C. Maughan, 43, who until recently ran Salomon's Asian operations from Tokyo, and jettisoned two bond traders. Executives admitted that the firm had violated the rules that prohibit any one bidder from buying more than 35% of a single issue at a Treasury auction, and that they had skirted regulations barring a firm from submitting bids in its customers' names without their authorization in order to conceal such illegal efforts to influence the market."
One of the execs forced out was John Meriwether, a vice chairman, who later brought us the Long Term Capital Management debacle. The crew at Salomon at the time was the best and the brightest in the debt markets of the 80's and early 90's. No amount was enough for them.