BMO claims that David Lee mismarked (lied about the value of) their portfolio under his management for 4 years - and that this deception was successful in fooling them.
One of the things that bothers me about BMO's statement though is that Options are not a "Buy & Hold" investment. Options expire. David Lee wasn't able to just hold the options he bought for BMO and then lie about their value. He had to trade them. David Lee's marks were his estimation of the portfolio's value, but his trades were for real money.
Note: Neither the Government nor BMO is claiming that Lee's trades were ever falsely reported.
David Lee was either able to monetize the portfolio from 2003 until 2007 for roughly what he marked it at - or he wasn't. If he was monetizing the portfolio for roughly what he marked it at, then ummmmmm.... the books weren't really mismarked in the first place?? (am I right? Do you follow this?) And, if he could not monetize the portfolio for what he marked it at, consistently, over a period of four years, and nobody said anything to him about the discrepancy, then was there really anyone monitoring this guy?
How can BMO claim that they were truly fooled by Lee's daily valuations, or Cassidy's twice-monthly reports, which were at best an estimation of the portfolio's worth, when they had the cold hard numbers generated by Lee's actual trades?
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