Search and ye shall be found out

Guambat gets so precious few hits on his hit-o-meter that he often takes time to view them. The hit usually looks like it is simply the result of being one of multitudes of results that pop up from someone's search query. And oftentimes those other results are quite interesting.

For instance, the google search "amaranth jp morgan hogan" turned up a pdf copy of the complaint in the lawsuit Amaranth filed against JP Morgan. Whether the complaint is truth or fiction, treated even as fiction, it is fascinatingly written, and far from the formal pleading Guambat was accustomed to from his legal writing class over 30 years ago.

For instance, is this straight out of a paperback quick-read from a airport book stall or what? (you may want to click on this extract to enlarge it, if your eyes are anything like Guambat's):


Guambat was also interested to have a curiosity satisfied. When he posted on the Amaranth fall out, noting that Citadel and Morgan reportedly started with the deal jointly but Morgan left hurriedly and very profitably, leaving Citadel with the left-overs, Guambat wondered "if JPMorgan had some kind of bridging put arrangement all along."

Paragraphs 21 and 22 of the complaint says, "you betcha".

Another search result mentioned that Morgan denied the lawsuit as "an effort to rewrite history".

Would that other rewrites were so well written.

Yet another fascinating piece of history that popped up as a result of that seach was the minutes of meeting of Members of the CSFI Advisory Council on October 23, 2006, of the London based Centre for the Study of Financial Innovation.

One of the items discussed had to do with the replacement of banks by hedge funds as intermediaries of risk. And how prescient was this?:

We need to look at what a recession might do to the new structure of the financial services industry. McKee agreed; one casualty, he suggested, are the so-called “London rules” for orderly debt restructuring. For the first time, lots of banks may well have a financial interest in a firm going bust.

One particular area of concern was the mortgage market – especially in the US (though that always seems a good predictor of problems in the UK). It was pointed out that 40% of US mortgages have zero equity, and that 40% are not for primary residences. Both the US and UK banking systems are very heavily dependent on mortgage business; what happens if it goes wrong?

Continuing with their penchant for asking the right questions, but not disclosing if they came up with any right answers, was this item:

4. International capital markets – particularly the sense that the US is losing business as a result of SarbOx. Is London really winning? How realistic is it to expect a rollback of SarbOx?

Plender noted that the PCAOB is now saying that the drift away from US markets started in 1996, ie that it predated SarbOx. On the other hand, Joe Coffey insisted that SarbOx is a major reason for the success of AIM – at least, he added, “that is
what US companies say”. They say it is just too difficult to raise money in New York.
That prompted Plender to ask whether it is too easy to raise money in London. Are here too many Russian mining companies in London? Are our standards now too low? “Is London the new Vancouver?” And will there be a blow-up?

You may want to give the group a bit of a sticky-beak. The topics of their meetings, which you get by clicking the "Minutes" link on their left side-bar, look quite engaging.