How Citigroup Hedged Bets Against Enron

New York Times ^ | Friday, February 8, 2002 | By DANIEL ALTMAN

[OldFriend]

He has acknowledged calling O'Neill about the problem so he had insider information and was able to save his neck.

[aristeides]

Morning bump.

[OldFriend]

Same to you......just got through about 550 Olympic posts and gave up!!! LOL

[aristeides]

Worth another bump.

[TwoStep]

Great research! IMHO--this post, deserves it's own thread!

[Native American Female Vet]

I agree!!! Most of Black Jades posts should be threads. I learn a great deal from them. Thanks Jade for all your work

[mafree]

bump

[Fish out of Water]

BTTT

[MUDDOG]

"It's very strange, and the question I have is who was dealing with them

Yep, who was buying the securities. They would be bought by institutional investors, and it's very strange for that kind of sophisticated investor to be so stupid as to take lower AAA interest rates on BBB-backed notes.

Could be some kind of insider dealing with pension funds, similar to Alliance Capital buying Enron stock for the Florida teachers fund in October, with an Enron board member a big shot in Alliance.

[alrea]

What did Citigroup know in August 2000, and when they they know it?

As a bank, you have a duty to protect yourself by HIRING political insiders that can use their inside information not only to protect you, but to make sure competition gets the worst deals. Not only that, if the political insider is a Liberal Democrat you even get a FREE PASS from much of the key media outlets, regardless of your self interest.

[OldFriend]

Or regardless of any laws you may break.

[Tenega]

It is interesting to note that Citibank and Travelers were partners in the LJM2 deal, one of the minimally-disclosed "bankrptcy remote vehicles" to which Enron was secretly obligated to make-whole with bottomless-pit issuances of common stock. Thus, Citi's sale of these credit-linked notes smack of insider trading abuse, profiting on material non-public information.