What Stealing 65 million From the Capital Fund that backs Boston's Muni Bond Holders of will result in when Investigated by the SEC.
Good afternoon,
I may have had a bit too much whiskey today during today’s trading session to accurately ascertain the effect, the hack on multiple large corporations had on the market today. Especially including the long list of suspects who have an interest in doing some detective work or making some money. Additionally, uncontrollable mistakes can occasionally cause spurious correlations large enough to sob at.
Thinking too much about them can drive you crazy and distract you from identifying any solvable, actionable solutions. From a trading perspective if you are not sure, its best not to act unless reasonably sure and you have considered every option, or you know the people behind decisions that affect the large market moves ascertained from publicly available information and can guess what their likely course of action is based on how you would expect them to be positioned based on a mosaic of non-material information.
I don’t know anyone at Bank of America who arbitrages Treasuries and Mortgage-Backs, but I would guess they are making this trade and are legally suppressing the Ten-Year yield with volume, acting in the best interest of their shareholders, but their actions should be noted by all those valuing the dollar. In my opinion, the risk-free rate should compensate investors at a higher return considering the market and economic factors associate with pricing and rate decisions for this instrument.
The risk-free rate is a great indicator of future interest rate differentials that result in the value of the dollar, the strength of the U.S. financial system, the future ability of large pension funds, fixed income funds, and insurance floats to legally cover their liabilities. The Risk-Free rate is a vital benchmark in an extraordinary number of valuation types.
I have raced Sail Boats Competitively against several of their executives and had the pleasure of getting to know some of them. They all seemed like good people, who are associated with good people, and are straightforward and honest.
Strengthening my hypothesis that it is Bank of America's volume suppressing the mentioned yield, is that their platform outages today correlated with an increase in the mentioned yield, indicated a decrease selling volume of the instrument, marching us diligently towards our great society.
If it is not Bank of America volume suppressing this trade, I apologize. I am not suggesting they are breaking the law, I am just noting it, because it is interesting and an important factor that should be considered while day trading.
As incidents such as what happened today can cost a lot of people a lot of money, I would like to stress the importance of regulators being accurate in any accusations they act on, I have seen the detrimental effects malicious prosecution can have good faith relationships with regulators and the destruction they can result in people’s personal lives.
I was once charged with a crime myself based on a false police report shortly after filing a lawsuit against the Boston Police Department. It took a considerable amount of time to clear my name, and it was completely unnecessary. That petty action however pales in comparison to what was perpetrated against a childhood friend’s father who worked at the same Bank that I eventually joined.
I started playing hockey with Ryan Flannery around the age of six and was on several of his teams prior to us both going to a private high school in the area. We also played against each other in lacrosse and raced sailboats against each other. He was one of the only classmates I knew prior to attending B.C. High. My Junior year, I was at wrestling practice early one Saturday Morning when his best friend and my teammate, who passed a few years later, came in distraught and broke the news. Ryan had crashed on Old Oak and Bucket Road the night before and did not survive.
His family was devastated. Most of us used to drink and drive, I had never heard of him doing so. The trick to not getting caught was doing the speed limit. He was sober at the time and always had phenomenal hand eye coordination, a standout athlete in every sport he participated in, and always an honorable competitor. His family was devasted, seemingly catatonic at the wake. They are good people, and the apple typically does not fall far from the tree.
A few years later his father was charged with a crime he did not commit by the SEC, and his father was jailed.
As small-town gossip will have it, it was rumored his son’s death could have been related to the case he was prosecuted for. I don’t think his son’s “accident” was perpetrated by a bank, another bank or any of his clients or business partners, or a pending bank merger.
Around the time Ryan passed there was a high frequency of automobile accidents in his town and others in surrounding towns but who who hurt children?
http://archive.boston.com/news/local/articles/2005/02/27/in_scituate_a_tragic_list_of_loss/
Around the same time, State Street brought in an executive with ties to the car industry so their employees could trust the spurious correlations affecting automobiles in the area were uncorrelated with their employee’s who believed in car conspiracy theories, despite the risk they could easily be framed for the murder if the continuing frequency distribution anomaly became not spurious. I understand the concern as I myself, have had my axel separate from my car a few miles after visiting a Boston Police Station.
Shortly after John Flannery’s case was overturned. State Street settled a case with a department I worked with. I agreed to a Non-Disclosure Agreement that would prohibits me from disclosing anything negative about State Street, however there is no conflict to my legally binding agreement here, and I think it shows the importance of regulators acting in a non political manner.
I worked with the head of this department on a couple of projects. She is meticulous in everything she does and brilliant. She kept her job and was well respected and trusted by all. I don’t know definitively what happened, as I was not involved, but my best guess would be when you are moving tens of billions of dollars in any asset class daily, you must be cognizant of client prioritization, volume, and accuracy. The service is a staple of Custody Operations, I doubt they would have done anything to jeopardize that relationship.
My best guess is interest rates are too low for these large pension plans to get a low risk return to cover their unfunded liabilities, so they hired lawyers to try and make some additional alpha. With interest rates still too low, almost a decade later. It my best guess we may see this type of action again, when the issue is, the country is broke, and interest rates are too low to guarantee sustainable pensions for government workers. Let’s hope that changes.
Warmest Regards,
Comments