Thursday, April 07, 2005
Last night I was writing on my web site about Morgan Stanley and the difficulty the small trader has staying alive.The big houses move the markets around, killing your tiny positions in a few minutes of stop running. I was referring to the S&P 500 and specifically now all of the electronic index markets. I've avoided trading them for three years.
Then this morning over my paper and coffee, I found a very interesting story. If this law suit finishes up in favor of the plaintiff, it could be pretty embarrassing for the FIRM. I can't even begin to think of how expensive the settlement could be if the jury finds against Morgan Stanley. Mind you they have pretty deep pockets.
It seems billionaire Ron Perelman is suing Morgan for conspiring with Sunbeam to cook their books and misrepresent Sunbeam's value. Perelman swapped his controlling interest in Coleman for a mixing bowl full of Sunbeam shares. Those shares then became worthless after Sunbeam, the biggest U.S. maker of small appliances, filed for bankruptcy protection. Perelmen claims he lost about $680 mil in the deal because Morgan Stanley covered up Sunbeams true financial picture.
Perelman's lawyer told jurors "Ronald Perelman and his advisors are not the kind of people who are frequently fooled." Next is the part of the quote I enjoyed. "Even very successful people like Mr. Perelman can become the victim of a carefully crafted and cleverly concealed fraud."
These huge banking firms, in this case the second largest U.S. Securities firm have enormous power and very deep pockets. They also underwrote a $750 million Sunbeam Bond issue used to help fund the 1998 buyout. But how do you like these numbers. When a judge last month sanctioned the Investment Bank for mishandling evidence relating to the case, they set aside a total of $360 million for the case even after adding $100 million to the fund on April 4th.
Perelman is no dummy. I can prove it. Not only did he own Coleman but he's also Chairman of Revlon Inc. What I didn't know until this morning was to whom he's married. There was a great shot of Ron and his gorgeous wife. I sat there looking at this woman...taller than Ron himself and just stunning. The cut line under the picture confirmed what I thought I was seeing. Ellen Barkin. Oh my God!
Note to self...head to the video store and rent Switch. Then I'll have to remember the other great movie she co-starred in with Al Pacino, where he was a New York cop and she played...wait for it...the hottest shoe sales girl you've ever seen. The first movie I can ever remember her in was Diner. That 'cutting edge' cult film started more careers that I can name but hers is the prettiest. I don't envy your fight with Morgan Stanley's $460 million available legal fund Ron, but what's Ellen doing for fun while you're tied up in court?
No wonder the small trader is fodder for the floor when you look at those kind of numbers. Tread carefully lest they bait and switch YOU!
I've also decided my email address sould be on this blog.
Sunday, April 03, 2005
April 1st with a close of 322 ½ after another stop running 11 ½ point range on the 31st. They cleaned out all the new shorts before tanking it again. If you’ve got the stomach for it, check out the beans on the day the planting intentions were released.