Kraven

Another thing to consider, for what it's worth, is that in the event of an emergency, my understanding is that 911 cannot tell where you are from a mobile phone or computer based phone. With a landline, on the other hand, in the event of an emergency all you would need to do is call 911 and let the phone drop (if you couldn't speak for example). They are supposed to immediately dispatch help even if no one is on the other end.

The populist outrage at bankers and traders always amuses me. Not every banker and trader "tanked" the market. Some actually help companies raise capital and contribute to risk management in a positive way. The thing about it is is that people think these aren't useful occupations and in many cases I won't argue the point, but how many jobs actually are useful? My guess is that most on this board aren't teachers, fire fighters, police officers or researching cures for cancer. Is working for Apple and developing the Iphone58s really so much better for society? Is working on the Xbox beneficial? I'm not saying they don't perform useful functions, but so do some bankers and traders.

Yes, a typo. Fixed. Life simply isn't so straightforward all the time. He could be dealing not just with loss of money (i.e. a fine), but loss of liberty (i.e. prison). At the end of the day, my position is that it seems grey to me. Again, that doesn't mean he should have done it and as others have said and I have said, best to stay away when it's grey.

Agreed. He entered a grey area where a reasonable case can be made either way. His big mistake was failure to exercise an abundance of caution, or use the Buffett standard of WSJ page A1. He should have known better and as his public profile increases he will get less of the benefit of the doubt. As a matter of habit, I try to conclude each conversation with an insider by confirming that material non-public information was not disclosed. Had Einhorn asked that simple question on the recorded call, he would not be in the trouble he finds himself in today. That's no free pass. It's the reasonable man test that applies. It's better to avoid any questions about market sensitive topics. Then, if something material to trading should be revealed anyway, don't trade on it. If something material reinforces a trading strategy in progress, cancel future trades until the news becomes public. I don't disagree with what you've said (although it's now the "prudent person" view as reasonable man was not pc enough), but think you are taking a complicated situation and attempting to put simple parameters around it. Sometimes you can't avoid market sensitive topics? You could call a CEO and say hello, how are you doing and he says great, if it wasn't for this capital raise I need to do tomorrow. You've also assumed that what is "material" is obvious. It isn't always. Also, what is "non-public" isn't always obvious. You said "if something material reinforces a trading strategy in progress . . . " That assumes that one knows what is material. My points are simply that these are treacherous waters and it isn't as straightforward as it seems. As I mentioned in the other post, some people believe nothing short of nuclear war is material and others think what the CEO ate for lunch is material. It is the "prudent person" rule, but that is of course as grey as it comes and it is, if taken to the extreme, as determined by a jury of your "peers". Of course peers being relative since the jury will be people who aren't in the business and when told a trade is for over $1000 will immediately think you must be a crook and how can you be so rich.

I call it as I see it. I am not trying to justify or explain anything. I also don't agree Einhorn has zero excuses. The fact that he tears others apart for their actions doesn't mean that his actions are automatically suspect. We are all human and make mistakes. Sometimes these types of things are obvious and sometimes they aren't. This one doesn't seem obvious to me. I have known plenty of traders who liked to live on the line and likewise plenty who were scared of their own shadow and everytime they took a dump they wanted to make sure that legal was ok with them going forward on their next trade. I maintain that mistakes happen and this didn't seem to be deliberate. Should he have not done it? Absolutely. Should he be sharing a cell with Raj Rajaratnam? Not based on the current facts. This wasn't a scheme to create an insider trade in my view.

Agreed. He entered a grey area where a reasonable case can be made either way. His big mistake was failure to exercise an abundance of caution, or use the Buffett standard of WSJ page A1. He should have known better and as his public profile increases he will get less of the benefit of the doubt. As a matter of habit, I try to conclude each conversation with an insider by confirming that material non-public information was not disclosed. Had Einhorn asked that simple question on the recorded call, he would not be in the trouble he finds himself in today. I disagree if he had asked that question he wouldn't be in trouble today. The insider himself does not determine whether the information is material and non-public. It could perhaps give one some guidance, but isn't legal protection in my view. But I could be wrong. Its likely not protection, but by bringing the issue to the open all of the "he-said-she-said" claims are minimized, and disipline is imposed on both sides of the conversation. It keeps one from acting alone and pointing fingers later. In this case if Punch said yes, Einhorn would not have traded. If Punch said no, but was later found to have passed material information, then Einhorn would not appear as culpable as he is today (or even better use the answer as a reminder to use his moral compass and stay away from a potentially bad situation). You may be right, but I don't think so. If it was me I would seek legal advice on a matter of such importance. Get some guidance from your lawyers on what is appropriate.

Yes, absolutely and I meant to say that (I was thinking it). Always if someone is unclear they shouldn't tread there, just as you said. If you don't know, don't do it. Get advice. And yes, for all the hedgies out there, that may mean that you can't do something in 2 seconds, but instead might need to wait a few minutes (or more).

Agreed. He entered a grey area where a reasonable case can be made either way. His big mistake was failure to exercise an abundance of caution, or use the Buffett standard of WSJ page A1. He should have known better and as his public profile increases he will get less of the benefit of the doubt. As a matter of habit, I try to conclude each conversation with an insider by confirming that material non-public information was not disclosed. Had Einhorn asked that simple question on the recorded call, he would not be in the trouble he finds himself in today. I disagree if he had asked that question he wouldn't be in trouble today. The insider himself does not determine whether the information is material and non-public. It could perhaps give one some guidance, but isn't legal protection in my view. But I could be wrong.

Based on a quick read of the articles, it seems to be more of a grey situation than people make it out to be. He was on a call with the CEO, CFO, etc. It is described as an "open" call. Does that mean open in the sense that there was no agenda, or open in the sense that there were others on the call? He hears some information that clearly is important. A company with issues may engage in a capital raise, etc. It would seem to be material and people need to remember that at least in the US (I don't know the standard in the UK, but assume it's similar) what is material is essentially what a reasonable investor would believe impacts their investment decision. But was it actually non-public? That is, was it a secret that they needed this capital infusion? I would venture to say that for many people on this board, a struggling company with balance sheet issues may need to raise capital. And if there were others on the call, were they other hedge funds, etc? Was it actually non public? The timing is clearly suspect as he apparently sold immediately after the call. At the end of the day, it seems to me that this is probably something more along the lines of the Martha Stewart situation. More bad judgment than a deliberate attempt to break the law. Of course scienter (knowledge that what one is doing is wrong) isn't needed. All that is necessary is that one is in possession of the info and acts on it. Again, the UK might be different. It wouldn't surprise me though that a busy guy like Einhorn who is jumping on one call after another hears something and it jives with what he was thinking anyway and just like on auto pilot he implements it. I'm not saying this wasn't wrong if he did it, but this strikes me (perhaps incorrectly) as more Martha Stewart than Galleon.

I wondered if this happened to anyone else. It happens to me fairly frequently. Often I can't just type it in, but have to reboot the network before it will accept the password again. Drives me crazy.

I just worked out and find myself very short of bandwith. I am also parched and am looking for the pitcher of bandwith I normally have around, but can't seem to find it.

You need to bone up on your history. This has been done before. Read about the go-go years and the conglomerates of the 1960s. That worked out pretty well . . . at least for those involved in the M&A/LBO business which really got going in the 1970s as a result of tearing apart all of those conglomerates.

Not the timeliest of ideas. That was probably true until the 1950s or early 1960s. At the absolute latest, once the go-go era started in the 1960s the "smart" people decided they would like to make money too instead of being just "mad to live, mad to talk, mad to be saved".

Hester, you make some very good points. When are people going to realize that the animal kingdom needs streaming devices as well? Where is my dog's streaming device, I ask you? I think that if we can get even 10% of the dogs in the US and Canada (not to mention a small percentage of cats) with some kind of internet connected device, even if it's just a blackberry, this could be huge. I think even LVLT could make a shekel or 2 at that point.

Probably some combination of money and begging, not necessarily in that order.

Biaggio, sorry, my point was a bit different. To the extent there is concern that Sears has somehow transferred these "valuable" assets to another entity, they (Sears) would have had to receive something in return. Otherwise, they didn't "sell" them and would still own them. There can certainly be a securitization where debt is issued and paid for by the payments from Sears to utilize the brand names. Such debt would almost certainly be backed by ownership of those brand names, but it isn't necessary that they be. I was only speaking to the fact that either Sears still owns those names (Craftsman, etc) or they got something back of theoretically equal value in return.

Biaggio, is there any disclosure on this? Have searched 10k, 10q in past-but have never had anything close to what is described in the following article in a old business week. http://www.businessweek.com/magazine/content/07_16/b4030071.htm "BusinessWeek has learned that Sears has created $1.8 billion worth of securities based on the brand names Kenmore, Craftsman, and DieHard. In essence, it has transferred ownership of the brands to another entity, which it then pays for the right to use the brands. The deal, carried off last May, was the biggest "securitization" of intellectual property in history, according to Eric Hedman, an analyst at Standard & Poor's (MHP ), which, like BusinessWeek, is a unit of The McGraw-Hill Companies. (MHP ) The story hasn't gotten out until now because the bonds haven't actually changed hands—Sears is holding them in its Bermuda-based insurance subsidiary—and because Sears has never disclosed them, nor has it had to do so. But that could change if Sears were to decide to sell them to outside investors and collect the cash." I am not sure this makes sense to me. A company can't simply put it's assets in a bankruptcy remote entity. They would have had to have been sold to the entity and value received in return (otherwise it wouldn't be a sale and simply a secured financing). If they were securitized, getting the securities back could theoretically provide that return, but they can't simply be placed somewhere else in the corporate structure without the original selling entity having received something in return. So somewhere there is a chain that can be followed.

No one ever learns and everyone thinks they are smarter than everyone else. People never get it through their thick skulls. So these guys made a few bucks (well, more than a few) and now their lives are over. Nice trade off.

These are good points, especially about there being a fundamental change in shopping habits. Speaking for myself, it has taken some time to fully recognize and appreciate that. Perhaps I didn't want to as I grew up at the bookstore, the record store, etc. Who remembers Tower Records? Great store that you could spend hours in. It's hard to give these things up. But for those of us of a certain age, is it really so different then when ATMs became widespread? Who remembers older people being afraid to use them? My dad didn't trust an ATM until probably 10 years ago. But of course we just used it and couldn't imagine having to go into the bank to get cash. Who also remembers having something like Sprint or MCI and having to dial what seemed like a 50 digit number before you could make your long distance call (try that on a rotary phone). The point being that things change. If you can't recognize the future is coming, it will pass you before you know it.

Hah! I'm just waiting for some poster who shall remain unnamed to jump all over you for that one! I am not sure I understand why. I thought LVLT was a guaranteed 10 bagger.

Up 3.9%. I attribute it primarily to having the ordinary intelligence that Buffett refers to and not having to worry about whether having a 160 IQ can in fact beat a130 IQ.

Thought this was an interesting story. Several Florida theme parks had to freeze entries due to record number of visitors. I have never heard of that happening before. http://www.google.com/hostednews/afp/article/ALeqM5gCgWuGUlrRp5EXOevScEciKZFMNA?docId=CNG.be6baae328c9eb609027cab51eb6bf35.3a1

I saw a short piece on the anonymous donors paying off layaway accounts at K-Mart and Wal-Mart last night on the evening news. It was really nice. They also showed a short piece on some young kids with Santa and when he asked what they wanted they said their daddy to be home (he's in the military in Iraq or Afghanistan). They had arranged for the father to be there and after the kids said that he walks in to the room. The 2 older girls (maybe in the 5 or 6 range) were shrieking with joy and the little boy (maybe 3 or 4) looked stunned and started crying. They all ran over to him and couldn't stop saying "Daddy! Daddy!" It was very heartwarming. All of these things help put things in perspective and show what the holidays are all about and what is important in life.

I thought this was a great post. Regulators and legislators are very good at making sure the last crisis doesn't occur again. Not so good on known unknowns or unknown unknowns, but that isn't really what people are worried about. Everyone is worried that we will have another 2008 financial crisis. It's living and investing by looking in the rear view mirror. Anything can happen of course, but doubtful it will be the same thing that just occurred or what is staring us in the face (i.e. Europe). My experience is similar to Vinod's in terms of how the banks are operating today. I know from several wealthy friends who have sought mortgages or refis recently that it is an insane process these days. And these are people who don't need the mortgage. They could use cash, but choose not to. They make millions and it is still a multi month process. It seems to me that once all the bad, pre-2007 mortgages fall off the books (and according to Berkowitz, etc, we are more than 60% of the way through it) banks will have some of the strongest loan books they have ever had.

I don't see how all of this isn't years of litigation. BAC has no incentive to settle unless it is on their terms or they feel they derive some benefit from not litigating. Litigation can be dragged on for a lot longer than people think. Just for point of reference in situations that have nothing to do with this case or even remotely related. There is still Exxon Valdez litigation that goes on over 20 years later. There is still asbestos litigation that goes on from the original cases filed decades ago. The Winklevoss twins still have litigation against Facebook after 7 or so years. There is still plenty of Bear Stearns litigation ongoing. It becomes a war of attrition. At some point both sides will either agree to settle because the fight isn't worth it any longer, or they won't. But look at the incentives. BAC keeps pushing and all they owe is more legal fees. The ones suing them have their returns diminishing every day it goes on and have their own legal fees to pay. Not even Klarman can or will want to go on forever.