I know this was all long ago, but I read the transcript of David Einhorn's speech and his argument with the Lehman CFO, only recently (google it- all very very curious). I am just wondering if certain salient aspects of this episode were ever noted
1. Everyone knew that this guy was short Lehman stock. Is it okay for a hedge fund manager to be short a stock and then publicly attack a company in a market that was already jittery.
2. If transparency was the issue, why was David not obliged to disclose how many shares of Lehman was his firm short, and how much he stood to gain by creating negative sentiment on Lehman.
3. How can a hedge fund, whose financials are not transparent to anybody, claim to crusade for more transparency from its rivals, the investment banks ?
4. If you short a stock, how can you claim to be a champion for shareholder rights when all the shareholders are actually long the stock ?
The guy claims the SEC harassed him but his entire behavior during the Lehman episode could not by any stretch of the imagination, be considered ethical.
5. All that fuss about Level 3 assets. Nobody even knew what a Level 3 asset was at that point in time. The classification of assets into three levels was a lame attempt by the Accounting boards to try to understand what kind of casino Wall street was running through derivatives. But it was certainly not the hard science that the hedge fund Manager was trying to make it out to be, in his attacks in Lehman Brothers.
6. The Lehman CFO was obviously not qualified, but just goes to show what kind of people get promoted on Wall street, where the CFO cannot do simple arithmetic.
All in all, the whole episode was a reflection of the pathetic state of affairs in the Financial industry, where the blind were leading the blind.
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