About a rogue trader, a rogue nation and a rogue husband
In National Post April 24
Stories about a rogue trader, rogue nation-state and rogue husband captured headlines this week and raised more questions than they answered.
American prosecutors this week would have the world believe that a day trader, operating out of his parents’ modest semi-detached under Heathrow Airport’s flight path, singlehandedly sparked the trillion-dollar May 6, 2010 Flash Crash. The accused was no button-downed Nick Leeson of Barings Bank or Jerome Kerviel of Societe Generale.
He was Navinder Singh Sarao, 36, who showed up in court wearing a yellow sweatshirt and white track pants. Despite his dress code, he was asked to put up L5 million for bail and to pledge to stay off the Internet. He did both.
Sarao played the stock market like a video game, scoring big by using dodgy and illegal manipulations, say accusers. He hid $40 million away in Nav Sarao Milking Markets Ltd., his company in dirty money haven Nevis.
But something is dodgy here and convicted fraudster Leeson told a British newspaper this week that he thinks Sarao’s a fall guy: “We are talking about a young trader that was operating out of his mum and dad’s house and he’s being charged with effectively forcing around the biggest stock market in the world and going up some of the biggest investment banks. That just doesn’t ring true. I hate to jump to conclusions but he seems like a scapegoat. Is there something much more sinister that we don’t know?”
Strangely, Sarao was contacted by market officials on the day of the Flash Crash and told to desist “spoofing” (entering huge bids to rattle markets then cancelling them). He reportedly told them to “kiss my ass”. Then he continued for five more years, manipulating the market 366 days out of the 1,000.
So if they had their “man” five years ago why the delay? If he persisted for years then why weren’t there 366 Flash Crashes or at least one more? And is it possible that no Americans were doing the same? In 2010, a report blamed a Kansas-City money management firm for the calamity but charges weren’t laid.
“I don’t think you could say one individual singularly caused the crash. But we do believe that Mr. Sarao’s spoofing was a contributing factor,” responded the prosecutor this week.
My guess is that if Sarao had apologized, and just tempered his trading, he may still be spoofing away in his parents’ house today.
Another disturbing story concerns the death of Bay Street denizen Jim Doak in a Mongolian hotel room, causes unknown. He was relatively young and was in Ulan Bator (one of the world’s great hell holes – I’ve been there) to resolve bullying by Mongolia, one of the world’s great black holes and rogue nations.
In 1990, Mongolia, a former client-state of Russia’s not China’s, lured the world’s mining companies by adopting a generous Mining Act. Then the Russians returned and games involving the rule of law began, harming all investors including Robert Friedland of Ivanhoe Mines fame.
Doak’s company, Khan Resources, was embroiled in a dispute with the Mongolian government and in 2009 had its licenses canceled on a big uranium project. The assets were unceremoniously handed over to Russia’s ARMZ. More recently, Doak won in arbitration and was there to sort out details. However, Mongolia’s track record is checkered to say the last, and duplicity and expense undoubtedly took its toll on Doak…and now this.
Finally, the tale of the rogue husband, Bill Clinton, also involves uranium and Russians. This week, a 2005 story was recycled to embarrass Hillary about how her husband had helped his Canadian mining pal Frank Giustra obtain uranium assets in Kazakhstan and sell them along with U.S. assets, to Russians. Shortly afterward, Clinton’s Foundation got $30 million in contributions from Giustra.
Mitt Romney said it “looks like bribery” and the news cycle lit up immediately, even bouncing off the top news story that Gold medalist Bruce Jenner was coming out as a “tranny” or transgender female.
But the story will have little permanent traction, except within the Republican echo chamber, because it’s simply another example of America’s questionable political funding practices. Unless it’s proven that Hillary, as Secretary of State, used her office to gain monetarily, this is just another example of old-fashioned backscratching and cronyism. Not pleasant, but not bribery. Romney should, and does, know better.
Likewise, the fact that Bill Clinton has personally made US$89 million from paid speeches since leaving the White House in January 2001 is a non-starter. Other former Presidents and officials make millions doing the same, but his total is disclosed, as required, because his wife was a Senator then Secretary of State. On top of that the Clinton Foundation may be rightly accused of sloppy bookkeeping but it publishes audited financial statements that show where its funds are dispensed.
However, these stories will have resonance, within the Democratic echo chamber, because Hillary has chosen to brand herself as Every Woman who wants to “topple the 1 percent” to help the middle and working classes.
Before picking her tagline, she should have known better than that and does.