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Bank of Montreal CEO Downe Linked to Fraud and Cover Up
September 30, 2013
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New evidence obtained by Optionable links current Bank of Montreal CEO Bill Downe to a cover up in relation to trading losses in natural gas positions incurred by the bank in early 2007.
Emails by Mr. Downe clearly show he was aware that BMO took a large speculative position without proper risk oversight. In an internal email to staff, Downe commented “It happens to be a fact and you couldn’t lose this much money by taking one gigantic bet if you had risk controls in place.” BMO had numerous times disclosed to the public they were running a conservative client driven book. The fact that BMO was engaged in massive speculative trading was deliberately never disclosed to the public by BMO at the time and has still not been disclosed. Years of gains in their natural gas trading book had padded earnings at the Canadian bank and had resulted in increased bonuses for BMO executives.
When the natural gas positions run by head trader David Lee began to experience losses due to excessive speculation, BMO executives moved quickly to cover up the size of their positions. Investment Banking Head Yves Bordeaux implored David Lee “to come up with a plan because how are we going to explain things to people who thought we were just trading around customer business." Further evidence uncovered by Optionable indicates that Mr. Downe has admitted that BMO executives who were charged with unwinding the positions had told him “the book was bigger than anything they had ever seen”. Faced with an angry shareholder base, potential regulatory actions, and possible downgrades by rating agencies, BMO led by CEO Downe, settled on a plan to “blame Optionable” and “redirect the spin by suing Optionable.” Mr. Downe chose to participate in the cover up rather than disclose the fact that BMO was running a book that was not tied to customer business at all but rather was engaged in massive speculation.
"The fact that this fraud reached the highest level of the executive suite at BMO is tragic”, said Dov Rauchwerger, Optionable CEO. “It is important to note that even at this point in time Mr. Downe shockingly continues to perpetuate the falsehood that BMO was running a client driven book in natural gas. The lack of remorse is shameful, especially given that their cover up landed an innocent man in prison.”
About Optionable
Optionable was the developer of a groundbreaking options trading platform for professional options traders. In May 2007, actions by Bank of Montreal (BMO) and the New York Mercantile Exchange (NYMEX) destroyed five hundred million in market value and billions more in lost opportunity costs. Its business destroyed, the company is now actively investigating and pursuing all avenues to hold NYMEX (now CME) and BMO accountable.
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