Posted on 21 March 2015. by Jones Bahamas
Amidst scathing public allegations made by Bahamian Attorney Keod Smith that Billionaire Hedge Fund Manager Louis Bacon had perpetrated untruths about having led the Bahamian grassroots campaign to save the ruins of Whylly Slave Plantation Ruins at Clifton here on Island of New Providence in The Bahamas, Bacon found his name embroiled in an international scandal associated with persons from his multi-billion dollar hedge fund company that involves a criminal investigation by U.S. Justice Department into improprieties in the currency markets back in March 2010.
In its Money and Investing section in its Wednesday November 14, 2014 issue, The Wall Street Journal reported that the “…alleged event, which HSBC self-reported to U.S. and British authorities and is being examined as part of a U.S. criminal investigation, happened when HSBC was advising a major client, British insurer Prudential PLC, on a huge acquisition and was working on a related multibillion-dollar currency transaction [whereby HSBC was]… helping Prudential sell billions of pounds and buy billions of dollars to finance the insurer’s planned $35 billion acquisition of the Asian life-insurance unit of American International Group Inc.”.
From what was reported by the Wall Street Journal, a “… senior HSBC trader allegedly alerted a trader at hedge fund Moore Capital Management LLC, a prominent New York hedge fund founded by investor Louis Bacon, about the impending transaction. The planned merger was public at the time, but in these situations, profiting from any related currencies deal requires a detailed understanding of the size and timing of related trades.”.
Bacon can find his company yet again at the end of high fines or other criminal penalties for activities that the Wall Street Journal last year reported as being regarded as “…attempting to boost currencies-trading profits…” as a result of what HSBC Holdings PLC regards as improper conduct.
That 2014 alarm rounded off a staggering set of similar criminal inquiries by regulatory agencies either in the USA or the UK that led to millions of dollars in fines and jail sentences for employees of Moore Capital Management.
In April 2010, Moore Capital Management was required by the U.S. Commodity Futures Trading Commission’s to pay $25 Million in order to settle allegations involving the trading on the New York Mercantile Exchange by one of its now former portfolio managers, Christopher Pia, who was found to have attempted to manipulate platinum and palladium futures prices from at least November 2007 through May 2008 through the practice known as “banging the close” where it was entering trades in the last 10 seconds of trading in a way to cause a false settlement price on those commodities. The CFTC also punished Bacon’s hedge fund by banning it from trading within 15 minutes of the close in the palladium and platinum futures and options markets.
On 21st August 2013, Reuters reported on its official website that “Louis Bacon’s Moore Capital Management has agreed to pay $48.4 million to settle a class-action lawsuit asserting that the hedge fund manipulated platinum and palladium prices…”. It was reported that the settlement was reached before Judge William Pauley III of the U.S. District Court for the Southern District of New York.
According to the Wall Street Journal website posting by Margot Patrick on March 9, 2015 under the headline “Ex-Moore Capital Trader Julian Rifat Jailed for Insider Trading”, the March 23, 2010, arrest of Rifat in relation to charges of insider trading in London while still in Moore Capital Management’s employ, has now ended in Rifat, being “…sentenced to 19 months in prison…after pleading guilty to sharing insider stock tips in exchange for cash, a family vacation and a luxury car.”.
“With the Pia 2010 conviction costing Bacon’s Moore Capital Management $73.4 Million Dollars in settlement money willingly paid between regulatory agencies and investors along with a suspended sentence deal to keep him out of jail, I had wondered whether the big net criminal investigation recently announced by the U.S. Justice Department at about the same time when Rifat pled guilty after four unbelievable years since his arrest, meant that he had made a deal to become a whistleblower against his former employer, Bacon’s hedge fund?”, recalls Smith..
“What has now been revealed at Riaft’s sentencing confirms my belief that he was in talks with law enforcement to make a deal as a whistleblower against Bacon’s interests,” said Mr. Smith.
In meting out the 19 month sentence against Riaft, the Wall Street Journal reports that the sentencing Judge of the Southwark Crown Court, London, Judge Alistair McCreath, said that “…he also took into account a late attempt by Mr. Rifat to assist authorities in the U.K. and the U.S. after deciding to plead guilty last fall. The court heard that Mr. Rifat in recent months had given information to U.S. authorities including the Justice Department that could lead to action against an unnamed individual, for an unspecified criminal offense. No one at the Justice Department was immediately available to comment.”
On the March 19, 2015 website of the Financial Times, it is reported that “Julian Rifat…after pleading guilty to a £285,000 insider-trading scam, co-operated with a Department of Justice probe last year and signed an agreement with the US authorities as part of the investigation…”.
In fact, in her March 19, 2015 website column for Bloomberg Business, under the headline “How an Ex-Moore Trader Got Caught in the Most Complicated Insider Trading Investigation in British History” Suzi Ring left the impression that Louis Bacon may have been ratted-out by Riaft when she wrote “Rifat had a front-row seat at one of the world’s most powerful hedge funds. Inside Moore’s offices on Curzon Street, he served as the eyes and ears of Bacon as a trader focused on financial stocks. He executed trades for the Moore Global Investors fund. The two often spoke or e-mailed, sometimes several times a day. At Thursday’s sentencing, the judge said Rifat played a “pivotal” role at Moore.”.
“In looking at all of these matters, I am left to conclude that Moore Capital Management is fertile ground for these acts, the conduct of which is regarded as improper although such acts have earned the Company and its principals, millions of dollars if not billions. It is no wonder that the Wall Street Journal reported last November that the U.S. Justice Department intends to broaden its criminal investigation into these matters that puts huge pressure on various financial related markets causing significant losses to unsuspecting investors and other persons doing normal business,” says Mr. Smith.
Moore Capital Management, which was founded in 1989 by Louis Bacon and led by him ever since, had operated under antiquated financial regulations going back to the 1940’s until July 2010 which President Barack Obama passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, the long title of which is “An Act to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end “too big to fail”, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”.
With the Dodd-Frank legislation, like all other hedge fund managers, Louis Bacon’s Moore Capital Management must now endure increased reporting requirements to the Securities & Exchange Commission and, by extension, to the USA Justice Department as to the details of investment in terms of its risk management practices, trading, and disciplinary records.
“On the basis of my experiences over the last two years having exposed Louis Bacon as having lied to the Audubon Society about leading a grassroots movement in The Bahamas in order to be granted the coveted award, and not owning up to his lies after being exposed, I wonder if his refusal to return the award to the Audubon with an apology to the Bahamian people always had a greater purpose for him that relates to this investigation?”, Smith asks aloud.
“What must be more than coincidental is that all of these matters seem to have the common thread of the first quarter of 2010 being the chronological genesis of the arrests and convictions of Bacon’s employees. This period is just a few months before the passage of Frank-Dodd in July 2010 which was 2 years in making and is widely held to mark the end of the 3-year US financial crisis that reverberated in world markets, including in our little Bahamas,” said Smith.
Smith’s dogged devotion to expose Mr. Bacon about what he vehemently asserts are lies about having led the grassroots campaign in The Bahamas between 1999 and 2004, has gained support among Bahamians over the last months despite what the Bahama Journal has learnt to be Mr. Bacon’s effort in having a recent posting by Smith on the prestigious Huffington Post Blog site, unceremoniously removed.
Smith has now added to his supposition that “ [he] believes that Bacon’s attempt to rewrite Bahamian history despite it being rejected, is designed to write himself into the social and political fabric of The Bahamas at a time long before his financial woes come to the fore. In that way, any personal assets that might become subject to confiscation by the USA Government if a Rifat whistle blows against Bacon, might have some added protection,” Smith says.
Smith went on to point out that as a result of the Investor Protection and Securities Reform Act, 2010 (IPSRA) of the United States of American under Frank-Dodd, the US Freedom of Information Act no longer applies to the SEC when it considers such information as being key for use in the furtherance of “…surveillance, risk assessments, or other regulatory and oversight activities” which may come from whistleblowers who have 10% to 30% monetary incentive under the IPSRA for monetary sanctions over $1 Million where their information leads to a successful SEC enforcement.
“When the SEC was subject to the provisions of the US Freedom of Information Act, persons who had something to hide, could use the system to get information to know when and how to conceal illegal activities,” Smith says.
“Is it not now clear why Louis Bacon has been hiding behind the guise of his “Coalition to Protect Clifton Bay” (aka “Save the Bays”) in the most presumptive and aggressive moves to compel The Bahamas Government to promulgate a Freedom of Information Act in The Bahamas? It is not because he loves The Bahamas and its environment as has been shamelessly promoted by Bacon’s mouth piece, Fred Smith, it is because he wishes to have the same kind of cover in The Bahamas that he lost with the passing of Frank-Dodd in the USA,”. Smith asserts.
“As a former Chairman of the Bahamas Environment Science & Technology Commission, I never saw the merit of Louis Bacon’s argument as articulated by his Bahamian mouth piece, Fred Smith that our system of governance in The Bahamas was in such dire need of a Freedom of Information Act. Since I was in that office, the BEST Commission routinely posted all of the Environmental Impact Assessment on its website. The laws which protect government’s right not to have to disclose secrets and cabinet communication in the interest of our national security, could never be repealed,” Smith says.
On the basis of reports quoting Bacon, it is widely believed that he had intended to, if not actually started a financial services provider in The Bahamas for the purpose of launching a smaller family hedge fund that can be operated from The Bahamas
“We have to be ever careful when a man such as Louis Bacon with his confirmed lineage to the Ku Klux Klan, openly espousing its principles and ideology as forming his philosophy even when he is directly referencing a country such as The Bahamas with 99% of its people being of African extract. To me this means that he has come to conquer The Bahamas, maybe by dividing us through the use of his tremendous wealth, or maybe simply through the art of misguiding, misdirecting, misinforming even the loud mouth so-called Queen’s Counsel,” Keod Smith concluded.