Scam Science: Old School Wall Street

mod (Andy) note: "Blast from the past - Best of Eddie" - This one is originally from September 2010 . If there's an old post from Eddie you'd like to see up again shoot me a message.

I have a feeling this week-long series is going to be both fun and difficult to write. It's going to be fun because the subject of financial scams has always been an area of fascination for me. It's going to be difficult because it's going to require you, the reader, to go back to a point in time that will be difficult to imagine - and it's my job to take you there.

The scams I'm going to cover this week are based on practices I personally witnessed from 1992-1995. They were widespread, and just about every firm on the Street (every firm I knew of, anyway) took part in them. Some were merely shady, others outright fraud. I neither admit nor deny my personal participation in any of them. This series will cover the mechanics behind each of them.

Bonus Bananas March 21, 2014

1) Ex-IMF Chief Strauss-Kahn To Launch Hedge Fund (FIN Alternatives) - Anyone who gives this clown money is not only an idiot, they're also a terrible human being. He was recently charged with "aggravated pimping" here in France, which I suppose is what he's up to in China as we speak.

2) SEC Announces Charges Against Brokers, Adviser, and Others Involved in Variable Annuities Scheme to Profit From Terminally Ill ( - God, this scam is just gross on so many levels. Just goes to show you that some guys will do anything to turn a buck.

3) Tech billionaire buys record-setting $201 million insurance policy (CNBC) - You know what I find amazing? Not that some Silicon Valley tech shmoe bought a $200 million life insurance policy, but the fact that we have no way of knowing which one. It's good to be king, I guess.

4) Brazilian Billionaire Creates Plan to Beat Death (Bloomberg) - I think you have to be a billionaire to even want to beat death. I mean, life is great and all, but if you're not a baller death gives you something to look forward to.

Fred Phelps Dead

It's times like these I wish Hell weren't just a fantasy.

Of course his flock of fucktards is doubling down on his crazy:

Get The Best of Braverman for Just $6.95

So my book is about to be listed on Amazon, which is cool because I've been told a lot of people have been waiting to buy it there. It's also cool because it'll be exposed to a much wider audience, and I hope it brings in readers from all walks of life. That said, my royalties are going to take a pretty significant hit, and before it goes up on Amazon I wanted to give you guys a chance to save the money I'm going to have to give up to Amazon when it does. Basically it works like this: the book sells for $9.95 and Amazon takes $3 of that. I'd rather pass that money on to you guys (Jeff Bezos won't miss any meals because of it), so click the link below and enter the coupon code 3off at checkout to get the book for just $6.95:

Click here to get The Best of Braverman for just $6.95!

If you haven't already bought the book and you need a reason to do it today, let me offer this one. My old buddy Arthur is about to go to prison for a long time (he's facing up to 40 years for fraud at his sentencing next month). As early feedback came in from readers of the book, I was surprised to find that Shooting Fish in a Barrel was one of the more popular chapters. It details what it was like to work at a somewhat shady commodities firm in the late '90s. What I didn't go into in the book was the crew in charge of this shop. Arthur was the CEO.

What Happened to Flight 370?

I realize this doesn't have much to do with Wall Street, but rarely do we experience a mystery that has electrified the global community in the way missing Malaysian Airlines flight 370 has so I thought it would be worth a blog post to see what you guys think happened. I'm of two minds on this one: Occam's razor makes a crash the overwhelming statistical probability, but the possibility that the plane was stolen can't yet be ruled out. Thing the hell do you evade radar, land a plane that size, and then hide a plane that size? And for what purpose? Here are a couple of videos debating both sides of the issue, but I'm really interested in what you guys think happened. Hell, even Courtney Love thinks she found this damn thing. Maybe we should get a poll going...

Monday @Mentions March 17, 2014

Thread of the Week:

Thread of the Week this week goes to @"BOTT1702" with his thread What I Look For When Hiring Junior Traders. This informative post gave great insight into the skills you should sharpen if you want to land a trading gig, and for the effort it earned 9 Silver Bananas, 7 Facebook Likes, and 5 Tweets. Like a boss.

Comment of the Week:

@TNA brought down the house this week with his pull-no-punches thoughts on real estate and other wealth traps in his comment on the thread The Fallacy of Homeownership as a Vehicle for Wealth Creation by @"jankynoname". I couldn't agree more with his sentiments, and his comment earned him 10 Silver Bananas. Check it out.

Caption Contest Winner:

This week's Caption Contest Winner was @"B4SH" with his caption Investment Bacon Division. The caption earned him 5 Silver Bananas and a WSO T-shirt.

Did Fuld Commit Perjury?

mod (Andy) note: "Blast from the past - Best of Eddie" - This one is originally from April 2010 . If there's an old post from Eddie you'd like to see up again shoot me a message.

Bonus Bananas March 14, 2014

1) The Future of Venture Capital, Tech Valuations and the Fate of Tech Incumbents - Conversation with Bill Janeway (Forbes) - Very interesting conversation on the shrinking state of venture capital with one of the guys who pioneered it. If you're at all interested in VC, this one's for you.

2) Mark Cuban's 12 Rules for Startups (Entrepreneur) - These are really, really good rules. I don't think I've ever started a company without an exit strategy in mind. Maybe that's why I've never sold an app for $1 billion.

3) THE INTERNET IS FUCKED (but we can fix it) (The Verge) - Absolute MUST READ of the week. Then head over to the Electronic Frontier Foundation and become a donor. Then watch the Video of the Week and get on the right side of this fight.

4) Nearly one in three American households have no choice when it comes to their internet (Quartz) - In case you thought #3 was hyperbole, here's the data to back it up.

Shocker: People Who Were Deadbeats in 2008 Are Still Deadbeats

In the years immediately following the financial crisis, no small amount of space on WSO was dedicated to the debate over what should be done about those Regular Joes who were caught in the crossfire of the mortgage mess and were losing their homes right and left. The subject of strategic foreclosure came up repeatedly, and in my opinion was one of the more interesting debates in the history of the site. For better or worse, a lot of folks in the general public got a government bailout, which seemed fair at the time at least on a prima facie basis because of all the handouts the banks were getting.

So now that we've put a few years distance between then and now, how did all that charity work out?

About like most of us expected, frankly. In a study released earlier this week, it was revealed that 30% of those homeowners who received a bailout have already defaulted again. What's worse is that the remaining 70% are about to go through a mortgage reset, which will no doubt shake a few more out of the deadbeat tree.

"The program was a temporary Band-Aid," said Greg McBride, a senior financial analyst at "Five years later, that Band-Aid is going to be ripped off."

An Interesting Spin on Ratings Agencies

I don't think too many people would argue that the current system of ratings agencies is anything other than deeply flawed. The out-and-out fuckery (for want of a better word) that took place leading up to the financial crisis would have been enough to drive any other industry to extinction, yet the ratings system persists largely untouched today. The following video describes a new model for sovereign ratings, a model that is transparent, doesn't involve conflicts of interest, and most of all is free for anyone to use. In an industry begging for disruption, do you guys think a model like this could work? Think about it: if you removed all the conflicts of interest (most notably clients paying for their own ratings) and published for free the ratings of all countries, wouldn't the sovereign debt market run more efficiently?


WallStreet Prep Master Financial Modeling