One of the things I'm assuming has happened over the last few weeks as the Chicago Mercantile Exchange (CME Group) prepares for trial against Optionable is that depositions are being taken. Of particular interest to both the CME Group and Optionable will be the deposition testimony of the Bank of Montreal's trader David Lee.
My understanding of CME Group's position is that they believe if they can prove there was a conspiracy between David Lee (of the Bank of Montreal) and Kevin Cassidy (of Optionable) then they (CME Group) should be held blameless for breaching their contract with Optionable, a breach which cost Optionable hundreds of millions of dollars.
While I do not have access to David Lee's deposition testimony, I believe this testimony from Kevin Cassidy's 7/26/12 deposition will be troublesome for the CME Group:
page 599-600
MS. ROBIN: Prior to September 2006, did anyone from BMO other than David Lee forward to you or anyone else at Optionable natural gas pricing information at month-end for this review?
MR. WALFISH: Objection.
MR. CASSIDY: No, not that I can recall.
MS. ROBIN: Did Mr. Lee ever tell you that he was mismarking his book of natural gas options?
MR. CASSIDY: No.
MS. ROBIN: Did Mr. Lee ever specifically tell you that he was defrauding BMO in any way?
MR. CASSIDY: No.
MS. ROBIN: To your knowledge, did Mr. Lee ever tell Mr. O'Connor that Mr. Lee was mismarking his book of natural gas options?
MR. CASSIDY: No.
MS. ROBIN: To your knowledge, did Mr. Lee ever tell Mr. O'Connor that Mr. Lee was defrauding BMO in any way?
MR. CASSIDY: No.
Additionally Kevin Cassidy's deposition testimony might be troublesome if the CME Group wishes to contend that a conspiracy must have existed because the people in the Bank's Back Office were unaware that David Lee originated many of the quotes used by Optionable.
(pages 687-688)
MR. GOTTLIEB: Would you be surprised to learn that Jeff Wang later said to others that from an auditing point of view, the quotes that Optionable was returning could be viewed as the equivalent of quotes coming from the trader?
MR. McDERMOTT: Objection.
MR. LACK: Objection to form.
MR. CASSIDY: No, I wouldn't be surprised by that.
MR. GOTTLIEB: Why not?
MR. CASSIDY: Because I think Jeff Wang and the people at BMO knew that the quotes came from David Lee. He was the largest market maker in the marketplace. He was just about on every market that was out there through every broker.
MR. GOTTLIEB: This is a good place to stop for the night.
MR. GELBER: Great
I don't presume to know what's in David Lee's deposition transcript. I can tell you however that something happened for me when I read Kevin Cassidy's deposition transcript. I went from being an Optionable shareholder who had hoped against hope that Kevin Cassidy had been telling the truth into an Optionable shareholder who KNEW beyond a shadow of a doubt that Kevin Cassidy was telling the truth.
I'd like to offer you the opportunity to have a similar experience by reading Kevin Cassidy's deposition transcript for yourself here.
Disclosure: I am an investor in Optionable. This blog does not offer advice on buying or selling any security.
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