Thursday, 2 October 2014
Last updated 15 hours ago
Jan 14 2013 | 2:05am ET
In his latest missive from prison, Bernard Madoff takes aim at one of the most popular strategies in the hedge fund industry.
"Merger arbitrage could only be executed successfully by having the inside information as to whether there was going to be board of director approval of the pending merger," the infamous Ponzi schemer wrote to CNBC's Scott Cohn. "As well as having access to the anti-trust rulings."
Madoff, who pleaded guilty to fraud and who is serving a 150-year sentence, said he never engaged in merger arbitrage because of the need for insider information.
As with his previous letters to journalists, Madoff's latest is a wide-ranging affair, touching on signing bonuses, high-frequency trading, his allegedly legitimate market-making business, insider-trading and the Securities and Exchange Commission. He's no fan of the former two, for one.
"The real problem with signing bonuses is that pressure that the new firms put on their bonus babies to generate large commissions by promoting special products of the new firm to pay off those bonus costs," he wrote. He added, in his typically humble way, that he "tried to stop this practice" when he served on the Securities Industry Association, but "we never could."
He also said he found "fault" with Knight Trading CEO Tom Joyce's recent letter in The Wall Street Journal defending high-frequency trading. He compared—unfavorably—the "strict obligations as registered market makers" both he and Knight formerly offered to the "FLICKERING quotes that are provided by the high frequency trading firms."
Reiterating his Christmas Eve message to Cohn, Madoff reminded that "insider trading is nothing new." The only thing that has changed since his arrest, he said, is "the decision of the SEC to prosecute Wall Street's worst kept secrets."
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...