What is crazy is that this bet paid off, leading to only one conclusion: insider trading (cue dramatic music). When Bear Stearns dropped from roughly $63 to $2 per share on March 17th (just six days later), the person purchasing the options made roughly $270 million. Senator Chris Dodd from the Senate Banking Committee thought that something wasn't on the up and up with this trade, and the Securities and Exchange Commission (SEC) promised it would look into the trade. Of course, nothing has happened since.
Rolling Stone found out that there was a meeting held at the Federal Reserve Bank of New York, led by Ben Bernanke and Timothy Geithner (then the New York Fed President). As the article says, "The luncheon included virtually everyone who was anyone on Wall Street - except for Bear Stearns." So, there is this meeting on the same day that our mystery millionaire made the bet that Bear Stearns would collapse. Interesting coincidence? I think not. There is definitely something amiss here. What I am concerned about is the fact that the SEC has decided to basically ignore what seems like a flat-out, cut-and-dry case of insider trading. Of course, perhaps it is just my simple mind that thinks this - I am sure that the SEC and the powers that be have every reason not to investigate this multi-million dollar theft.
I wonder if Martha Stewart thinks that this is fair. I am not saying that she should not have been punished, but I don't think her offense was as egregious as what happened here. In fact, the Bear Stearns theft may be worse because of the government agents that could be involved - maybe that is why there is a blind eye turned toward this questionable trade. Seriously, what would have happened if it had been you or me making this trade? We would have been made an example of, perhaps sharing a jail cell with Bernie Madoff. The fact that there was no punishment is first of all fishy, second of all unfair, and finally it is a freaking joke. If it had been anyone other than someone involved in that meeting, the punishment would have been swift, severe, and perhaps unreasonably harsh. Think about it folks, perhaps you can come to a different conclusion - if you do, make sure to put it in the comment section.