What's funny is that you have these characters who know all about manipulative shorting blaming them and then you have the self-styled "crusading cyber sleupps" claiming it's all the CEO's largesse, while the CEO's claim it's the manipulating shorts.
How about the truth, that they are both to blame and they both steal from us retail investors, 401K ers, mutual fund holders, variable insurance policy holders, etc., they all want to throw a party of plenty like Baroness Pontalba, one laden with hypocrisy.
Dick Fuld’s Vendetta Against Short-Sellers—and Goldman Sachs
Posted by Heidi N. Moore
October 7, 2008, 4:05 pm
Was Lehman Brothers Holdings CEO Dick Fuld driven to distraction by short-sellers as the company’s stock price plunged this year?
Well consider Fuld’s congressional testimony Monday and internal Lehman documents released by lawmakers, which paint a picture of an executive so intent on bringing down short-sellers that, in the words of one skeptical Congressman, Fuld’s judgment may have been “clouded” as to the financial standing of his securities firm.
Fuld didn’t let up on his hatred for short-sellers–primarily David Einhorn–even after his company filed for bankruptcy last month, and he believed the shorts were part of a cabal driven by Goldman Sachs Group.
In April, Fuld reported back to general counsel Thomas Russo about a dinner with Treasury Secretary Hank Paulson that Lehman had a “huge brand with treasury,” which “loved our capital raise” and, in perhaps an oblique reference to short-sellers, that Treasury “want to kill the bad HFnds + heavily regulate the rest.”
Still, it seems Lehman was as worried about short-sellers as about a need for more capital. And as The Wall Street Journal reported today, when Lehman was in talks to take $5 billion of capital from Korea Development Bank in the spring, executive David Goldfarb suggested Lehman should spend about half the money to buy back Lehman stock, “hurting Einhorn bad!!!” “I agree with all of it,” Mr. Fuld responded.
Fuld’s obsession with the shorts prompted him to demote executives dealing with short-sellers such as finance chief Erin Callan, who had jousted with Einhorn for several months. Later, Callan told Fortune magazine she hadn’t wanted to confront Einhorn, but that the rest of the management team–including Fuld–forced her to.
In July, a former Lehman executive named Jarret Wait stopped by Lehman’s offices and said, according to an email by Lehman executive Thomas Humphrey, “that in just a few weeks on the ‘buy’ side,…it is very clear that GS is driving the bus with the hedge fund kabal& greatly influencing downside momentum,Leh & others!” Fuld responded to the executive who forwarded him the email, “Should we be too surprised. Remember this though–I will.”
In his prepared Congressional testimony, Fuld wrote, “The naked shorts and rumor mongers succeeded in bringing down Bear Stearns. And I believe that unsubstantiated rumors in the marketplace caused significant harm to Lehman Brothers.” When Fuld was questioned about the shorts’ connection to Goldman, he grumbled that he had no evidence but didn’t sound convinced.
It isn’t clear, though, how Fuld rationalized that with the appearance that the shorts were attacking Goldman, too. In his prepared Congressional testimony, Fuld said, “On September 15, when the market opened after the collapse of Lehman, naked shorts appeared to turn their attention to Morgan Stanley and Goldman Sachs. In the three days between the announcement of Lehman Brothers’ bankruptcy and the SEC instituting an emergency ban on short selling, Goldman Sachs’ and Morgan Stanley’s share prices fell 30% and 39% respectively. None of this was a coincidence.”
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