Amidst scathing public allegations made by Attorney Keod Smith that he has perpetrated untruths about having led the Bahamian grassroots campaign to save the ruins of Whylly Plantation at Clifton here on New Providence Island in The Bahamas, Billionaire Louis Bacon finds his name embroiled in an international scandal associated with persons from his multi-billion dollar hedge fund company that now involves a criminal investigation by U.S. Justice Department into improprieties in the currencies markets back in March 2010.
The Wall Street Journal reports that the “…alleged event, which HSBC self-reported to U.S. and British authorities and is being examined as part of a U.S. criminal investigation, happened when HSBC was advising a major client, British insurer Prudential PLC, on a huge acquisition and was working on a related multibillion-dollar currency transaction [whereby HSBC was]… helping Prudential sell billions of pounds and buy billions of dollars to finance the insurer’s planned $35 billion acquisition of the Asian life-insurance unit of American International Group Inc.”.
From what is being reported by the Wall Street Journal, a “… senior HSBC trader allegedly alerted a trader at hedge fund Moore Capital Management LLC, a prominent New York hedge fund founded by investor Louis Bacon, about the impending transaction. The planned merger was public at the time but in these situations, profiting from any related currencies deal requires a detailed understanding of the size and timing of related trades.”.
Bacon can find himself and his company yet again at the end of high fines or other criminal penalties for activities that the Wall Street Journal reports as being regarded as “…attempting to boost currencies-trading profits…” as a result of what HSBC Holdings PLC regards as improper conduct.
This latest alarm rounds off a staggering set of similar criminal inquire by regulatory agencies either in the USA or the UK that has led to millions of dollars in fines jail sentences.
In May of 2010, Moore Capital Management LP, was required by the U.S. Commodity Futures Trading Commission’s to pay $25 Million in order to settle allegations involving the trading on the New York Mercantile Exchange by one of its former portfolio managers, Christopher Pia, who was found to have attempted to manipulate platinum and palladium futures through the practice known as “banging the close.
In August 2013, it is reported Moore Capital settled a class-action lawsuit by paying $48.4 million in relation to the attempted platinum and palladium manipulation. It was also restricted from trading within 15 minutes of the close in the palladium and platinum futures and options markets as a part of that settlement.
The March 2010 arrest of a Moore Capital Management trader, Julian Rifat in relation with charges of insider trading on London while still in his employ, has now ended in Rifat having pled guilty of the charge and now awaiting sentencing .
“In looking at all of these matters, I am left to conclude that Moore Capital Management is fertile ground for these acts, the conduct of which is regarded as improper although such acts have earned the Company and its principals, millions of dollars if not billions. It is no wonder that the Wall Street Journal now reports that the U.S. Justice Department intends to broaden its criminal investigation into these matters that puts huge pressure on various financial related markets causing significant losses to unsuspecting investors and other persons doing normal business,” says Mr. Smith.
Moore Capital Management LP, which was founded in 1989 by Louis Bacon and led by him ever since, had operated under antiquated financial regulations going back to the 1940’s until July 2010 which President Barack Obama passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, the long title of which is “An Act to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end “too big to fail”, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”.
With the Dodd-Frank legislation, like all other hedge fund managers, Louis Bacon’s Moore Capital Management have increased reporting requirements to the Securities & Exchange Commission and, by extension, to the USA Justice Department as to the details of investment in terms of its risk management practices, trading, and disciplinary records.
“With the Pia 2010 conviction costing Bacon’s Moore Capital $73.4 Million Dollars in settlement money willingly paid between regulatory agencies and investors along with a suspended sentence deal to keep him out of jail, I wonder whether the big net criminal investigation recently announced by the U.S. Justice Department at about the same time when Rifat has pled guilty after four unbelievable years since his arrest, means that he has made a deal to become whistleblower?”, Smith rhetorically enquires.
“On the basis of my experiences over the last two years having exposed Louis Bacon as having lied to the Audubon Society about leading a grassroots movement in The Bahamas in order to be granted the coveted award, and not owning up to his lies after being exposed, I wonder if his stance, has a greater purpose for him that relates to this investigation as opposed to what ought to be shame about being found out as being a liar and compelled to having to return the award to the Audubon with an apology to the Bahamian people?”, Smith again asks aloud.
“What must be more than coincidental is that all of these matters seem to have the common thread of the first quarter of 2010 being the chronological genesis of the arrests and convictions of Bacon’s employees. This period is just a few months before the passage of Frank-Dodd in July 2010 which was 2 years in making and is widely held to mark the end of the 3-year US financial crisis that reverberated in world markets, including our little Bahamas,” said Smith.
Smith’s dogged devotion to expose Mr. Bacon about what he vehemently asserts are lies about having led the grassroots campaign in The Bahamas between 1999 and 2004, has gained support among Bahamians over the last weeks and months despite what the Bahama Journal has learnt to be Mr. Bacon’s effort to have a recent posting by Smith on the prestigious Huffington Post Blog site.
Smith has now added to his supposition that “ [he] believes that Bacon’s attempt to rewrite Bahamian history despite it being rejected is designed to write himself into social and political fabric of The Bahamas at a time long before his financial woes came to the fore. In that way, any personal assets that might become subject to confiscation by the USA Government if a Rifat whistle blows against Bacon might have some added protection,” Smith says.
Smith went on to point out that as a result of the Investor Protection and Securities Reform Act, 2010 (IPSRA) of the United States of American under Frank-Dodd, the US Freedom of Information Act no longer applies to the SEC when it considers such information as being key for use in the furtherance of “…surveillance, risk assessments, or other regulatory and oversight activities” which may come from whistleblowers who have 10% to 30% monetary incentive under the IPSRA for monetary sanctions over $1 Million where their information leads to a successful SEC enforcement.
“Imagine the Pia conviction having been caused as a result of information coming from a whistleblower, it would mean that that person could receive as much as $7.2 Million under that Act,” Smith states.
“When the SEC was subject to the provisions of the US Freedom of Information Act, persons who had something to hide, could use the system to get information to know when and how to conceal illegal activities,” Smith says.
“Is it not now clear why Louis Bacon has been hiding behind the guise of his “Coalition to Protect Clifton Bay” (aka “Save the Bays”) in the most presumptive and aggressive moves to compel The Bahamas Government to promulgate a Freedom of Information Act in The Bahamas? It is not because he loves The Bahamas, its because he wishes to have the same kind of cover that he lost with the passing of Frank-Dodd in the USA,”. Smith asserts.
“As a former Chairman of the Bahamas Environment Science & Technology Commission, I never saw the merit of Louis Bacon’s argument as articulated by his Bahamian mouth piece, Fred Smith that our system of governance in The Bahamas was in such dire need of a Freedom of Information Act. Since I was in that office, the BEST Commission routinely posted all of the Environmental Impact Assessment on its website. The laws which protect government’s right not to have to disclose secrets and cabinet communication in the interest of our national security, could never be repealed,” Smith says.
“We have to be ever careful when a man such as Louis Bacon with his confirmed lineage to the Ku Klux Klan, openly espousing its principles and ideology as forming his philosophy even when he is directly referencing a country such as The Bahamas with 99% of its people being of African extract. This means that he has come to conquer, maybe by dividing us through the use of his tremendous wealth, or maybe simply through the art of misguiding, misdirecting, misinforming even our illustrious Queen’s Counsel,” Smith concluded