Jay Midnyte

Matt Taibbi, the writer who exposed Goldman Sachs market manipulation for Rolling Stone Magazine, is coming out with a new piece saying somebody bet on the collapse of the Bear Stearns Boyz and the Lehman Brothers Gang and won big.

“On Tuesday, March 11th, 2008, somebody – nobody knows who – made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half of their value in nine days or less. It was madness – “like buying 1.7 million lottery tickets,” according to one financial analyst.”

“...the very next day, March 12, Bear went into a free fall…Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a bitch ever or…Or what?”

Sounds interesting. But if he is claiming that naked short selling led to the collapse of Sterns and Lehman, I think he is wrong. They collapsed due to their own stupid leveraged bets. But that doesn't mean someone or some investment bank didn't profit from insider knowledge.

If you like this post, consider subscribing to my full feed RSS.