Bank of Montreal Bullying Target Has Spoken

"Jeremy" Pearl Jam

While I was reading the transcript from Kevin Cassidy's deposition, the Pearl Jam song “Jeremy” kept running through my mind.  It's not really fair to compare Kevin Cassidy to the tortured youth in the song, yet one comparison holds up. Both victims were bullied in silence, and things have changed now that each of them has spoken.

What does it mean?  What did Cassidy say?

What it means is:  By bullying Kevin Cassidy the bank bought themselves 5 years of Cassidy's silence. In that time, BMO's share price has recovered from its scandalous trading losses, but Kevin Cassidy's company Optionable has not.  Cassidy has spoken the truth, but like 'Jeremy', he is the one paying the price.

What he said is: in direct contrast to BMO's claim that they were defrauded because they did not know that their own trader David Lee contributed quotes to the Bid/Ask summary reports that Cassidy sent to BMO's Risk Management Group, BMO knew that Lee's quotes were included. How do we know for sure that they knew this?  We know this because they were told by David Lee himself, Kevin Cassidy himself and a few other people in between. (details of who was told and when are below*)

Conclusion:  BMO is free to claim that they WANTED Lee's quotes excluded from Cassidy's Bid/Ask summary reports, but they are not free to claim that they didn't know that Lee's quotes were included. Why? Because they were told, by multiple people, including both David Lee and Kevin Cassidy themselves that Lee's quotes were included. (Hence it is impossible for BMO to have been 'defrauded' by Cassidy's inclusion of Lee's quotes.  BMO knew Lee's quotes were included)  

After five years of wondering if Cassidy had a role in defrauding BMO, I am now personally satisfied that he did not. However, I encourage you not to take my word for it, but rather read what Cassidy said for yourself: Transcripts from Cassidy’s deposition.

* The Details (taken from Cassidy's deposition)

1) The BMO trader who accumulated $640,000,000 (US) in trading losses, (David Lee) told BMO's Risk Management Group that he was providing quotes to Optionable. (Hence it is impossible for BMO to have been 'defrauded' by Cassidy's inclusion of Lee's quotes.  BMO knew Lee's quotes were included)

2) Cassidy disclosed the following to BMO:

a. Quotes that Optionable collected from traders were not collected independently of the bank's traders. (Hence it is impossible for BMO to have been 'defrauded' by Cassidy's inclusion of Lee's quotes.  BMO knew Lee's quotes were included) 

b. Cassidy and Stephen Laker told BMO Risk Manager Jeff Wang that quotes received from Optionable originated from David Lee. (Hence it is impossible for BMO to have been 'defrauded' by Cassidy's inclusion of Lee's quotes.  BMO knew Lee's quotes were included)

c. Cassidy told BMO’s Anne Fiddes, (BMO's Director of Valuation Product Control), that he could not properly prepare the reports without using quotes from David Lee. (Hence it is impossible for BMO to have been 'defrauded' by Cassidy's inclusion of Lee's quotes.  BMO knew Lee's quotes were included)

d. Cassidy told BMO that reports from Optionable should be only be reviewed in concert with reports from other sources. Cassidy recommended using 3 to 4 sources to BMO Risk Manager Murray McIntosh.  (Hence it is impossible for BMO to have been 'defrauded' by Cassidy's inclusion of Lee's quotes.  BMO knew Lee's quotes were included)

Note: none of Cassidy's statements attempted to deflect the responsibility he accepted in his plea bargain.  Cassidy admitted that given BMO's internal debate over whether to include or exclude Lee's quotes it would have been prudent of him to specifically disclose Lee's participation in each report he sent. I think we can all agree that would have been prudent.  By the way, please note my disclosure below that I am an Optionable shareholder.    


Disclosure:  I am an investor in Optionable, the company I am claiming BMO bullied.  This blog does not offer advice regarding buying or selling any specific security.

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