Imagine Bank of Montreal's (The Bank) Bill Downe's surprise at learning the fate of JP Morgan's Jamie Dimon in the wake of the London Whale losses. Much like Dimon, Downe was faced with having to explain losses from over-sized bets in illiquid markets to regulators and investors. Sure, both men blamed their own traders and Risk Managers, but Downe took an additional step. Downe sponsored a campaign, code named "Blame Optionable" which fraudulently* looped in and destroyed the brokerage firm Optionable, of which I am an investor.
I'd like to share the following story with you from The New Yorker's website: Will Anyone Hold Jamie Dimon Responsible for the London Whale Scandal? While the article isn't intended to be supportive of Dimon, it shows that Downe could have survived at BMO without destroying Optionable.
Instead The Bank is still in court 6+ years later attempting to squelch Downe's emails from reaching the public. Downe and The Bank could have been miles past this by now; Optionable, the company I am invested in, could still be a profitable brokerage, and their reporting service "Real Marks" could still be improving visibility in these lucrative yet highly illiquid markets.
While BMO has been successful to date selling their version of the story, the truth is known and documented. More people know the truth than the Bank can possibly squelch, and this all could have been avoided if Downe had just taken the heat upfront and moved on.
Disclosure: I am an investor in Optionable. This blog does not offer advice on buying or selling any security.
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footnote:
* Why do I say that the "Blame Optionable" campaign FRAUDULENTLY looped Optionable in?
The Blame Optionable campaign claimed that there was a secret agreement between The Bank's Trader David Lee and Optionable's Kevin Cassidy. Under this theory Lee would secretly provide price points to Cassidy and Cassidy would secretly report them back to The Bank. REALITY: It is documented that The Bank indeed wanted and requested the reports to be independent of their own traders, including Lee. That part is true. It is also documented that: a) The Bank's Risk Managers asked Lee to send quotes to Cassidy b) Kevin Cassidy met with The Bank's Upper Management and told them in person that Lee's input was included and that the reports could not be created without Lee's input. These two facts when combined prove that The Bank knowingly made fraudulent statements when they claimed that Lee and Cassidy conspired to keep knowledge of Lee's participation away from them.
** Photo Caption: The London Whale Swam in Illiquid Markets
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