Cafe Times Blog

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Fortune Cookie Advice: coping with daytrading blues

Am I an idiot for not buying Ford yesterday?


Could I have seen this coming? Or, did I see this coming and fail to take advantage?

Day-trading is a psychological minefield, not only because it intensifies our natural human craziness by placing clear dollar amounts on our mistakes, but there is no time to pause and reflect upon the mental mechanisms that may lead us astray.

So here's an attempt to help my fellow traders out there (and i'm doing this for free! aren't i wonderful?):

1 -- do something quickly to balance your perspective:

a. Actively think of how badly something could have gone and really really enjoy the feeling that that bad thing didn't happen. For example, you look at Ford's recent peak, and then you look back to the nadir the day before. You look at that nadir and mentally draw a new line downwards. Then you make that downward slope 4 time as steep. make it go waaaaaaay down. Now you're like -- wow. i'm all the way up here at 0. awesome.

b. find someone that took a big hit today and shamelessly judge that person in your head. (e.g. Ha ha! At least I'm not that Enron trader...).

c. think of all those people that failed the interview process, and think -- heh heh, well at least I'm here playing the game. i'm not like those losers sitting at home watching oprah and eating frosting from a tube.

2. Quickly think of a way to make money NOW, given the psychology of missed/seized opportunities...

a. trust that you're not the only one feeling whatever you're feeling. and trust that there are also a bunch of people feeling the opposite of what you're feeling, in an equally intense way. and USE that info. don't just sit there. assess just how intense the regret is, and make a judgment as to wehther the 'winners' are distracting themselves by basking in their win, or whether they're fearing a breaking point and preparing themselves to sell. And then DO something to make money off of that judgment--sell short, anticipate where they will put their money when/if they sell, or BUY! just because it has spiked a little doesn't mean you can't ride the wave for 3% or so.

b. trust that if you're not interested in thinking about it, you're not interested. full stop. There is always a better deal. A shiny new ford taurus may look good to a 12 year old in Kansas, but when you show this 12 year old a shiny new porsche 911 turbo (as i have referenced before), the shiny new ford starts looking....wait was I talking about something? mmmm, 911 turbo...

ok, enough of this nonsense, i've got some stocks to sell...

Disclosure Requirements: A Metaphor

Ok hedge funds, I know you like your privacy, but honestly you can't keep people away forever. when there is money to be made, people will loiter. So let me give you a little tip in advance. When the FTC/SEC/DOJ/bloggers/snoopers start coming around, stay away from the baked beans a la hugh grant...and try to keep your eyes on the road despite the motorcade of paparazzi behind you...

mmm...baked beans.... :)

More Bloomberg Hedge funds

Ok, here's another attempt at getting a better list of hedge funds. This is just a test...I'll try more later...

Bloomberg's favorite hedge funds - page 1

FFT: Pragmatism

I find myself to be a pragmatist most of the time (when it's pragmatic to be so, of course). However, I was thinking today about a couple of things that pragmatists never really address.

A little background...

Pragmatists (like Dewey, Pierce, James, etc.) think that figuring out what is true, or what we should do, is in 'actual consequences.' For example, how do I know whether or not something is a book? Hypothesize that it is a book, and see what happens. Similarly, how do I know whether to bite my nails? Try it, and see what actually happens. In the long run, watching consequences will guide you towards what is true and good.

'Actual consequences' resemble a scientist's 'data,' however, consequences include every aspect of experiencs; i.e. not only the 'external' consequences, but also the 'internal' ones--like, my feelings, thoughts, doubts, actions, frustrations, etc., etc..

My first thought...

Pragmatists always assume that being in a mindset of 'looking at the consequences' is immune from pragmatic testing. It is just assumed that the mindset of 'looking at the consequences' is a good thing. The mindset is necessary for pragmatism to get off the ground, so it's got to be good! (right...?).

My concern is that this presumptuousness is not very pragmatic. I mean, shouldn't it at least be tested which mindset leads to better consequesnces? e.g. shouldn't Dewey have tried stupidity, just to see what it was like?

But, of course that wouldn't have solved much either...

In fact, I'm am not making an argument about correcting an aspect of Dewey, Pierce, or James's particular versions of pragmatism. I'm making a general skeptical argument that pragmatism cannot justify itself, becuase someone without a pragmatic mindset does not collect data, so they cannot make a pragmatic comparison. My claim:

I cannot decide whether 'not looking at the consequences' is more pragmatic than 'looking at the consequences,' because there is no way to know the consequences of the former mindset.

In fact, for all I know, stupidity has the best consequences. (but since my stupidity prevents me from seeing the consequences of my stupidity, I'll never know...)

(ok in some cases i know that my stupidity leads to bad consequences, but isn't there still an argument here? think billy budd, forrest gump, or apples in edens...)


My second thought...

When does a 'consequence' occur?

I've noticed that happiness invariably leads to unhappy consequences. It's like, I'm happy, yay, great...and then eventually it's like, wait, where'd that happiness go? And then eventually it appears! Yay, life is great! And then...as always, that feeling fades, and one day i'm like--man this problem is really sucky; i wish i didn't have to deal with this...

So, if happiness always leads to a suffering, is the pragmatist forced to say that happiness should be avoided?

(of course not, but i'm trying to point out that absurd results can be reached depending on what we decide are 'causes' and 'consequences')

I (heart) activist investing

Could someone make me a t-shirt that says this?
Any artists out there?

Double Dare: A Transparant Hedge Fund

Ok hedge fund managers, if you're so smart, you'll be able to tell us exactly how you're going to take our money, and STILL take our money.

So here's my challenge to the best and the brightest fund managers out there -- tell us everything. Make a website, post every sale, every holding, every almost-sale, every strategy decision, every disappointment. (you can even hire me to do all of this data collecting/presentation).

I want to be impressed. I want PROOF that you're the smartest people in the room.

A problematic detail -- I don't want anyone breaking the rules, and the SEC is picky about Hedge Fund websites...

Use of the Internet by Domestic Hedge Funds
In 1995, the SEC determined that providing offering materials for a hedge fund on a website constitutes a general advertisement or solicitation, unless the materials are only provided to persons who had a previous relationship with the issuer-even when access to those materials is restricted to password holders. There may be no links from outside the site to an interior page of the fund website. And passwords may be given only to users with previous relationship to fund and only if financial sophistication is verified. (read more...)

So, all i am asking is that you disclose this information to your investors. Just let me know that you're doing this, and (depending on who you are) I may be there to give you some seed money.

In summary...I dare someone to form a fully-transparant hedge fund, that still makes money (in the long-run) because the managers know how people would react to any leaked information. Make that a double dare...

FFT: Launch HF in London or NYC?

Is london really a better place to start up a hedge fund?

Gary Vaughan-Smith and Alex Da Costa at SilverStreet Capital seem to think so. They just launched their HF in london...

However, one should keep in mind that SilverStreet is a fund of funds. In a sense fund of funds can be managed from anywhere with an internet connection, no? It seems like common sense that activist investing funds (M&A, restructurings, bankruptcy purchases, direct involvement in the board's decisions, LBOs, etc.) would prefer to stay close to their investments (and depending on the investments, this could imply that NYC or at least the US would be the best location). However...M&As are getting more international. In fact, i hear that the most common M&As these days are foreign firms grabbing US firms...

So...London or NYC?...who knows. i'll have to ponder this one a bit more...

Hedge Fund Manager Salary

NYTimes has an article on hedge fund manager compensation (240 mill for some)

here are a few reactions:
1. can i trust this 240 mill figure? what if last year they lost 190 mill, and over the last 10 years they're batting even?

2. what if they're just charging too much in fees?

3. what if none of the money is liquid?

4. what if they're not happy people -- money doesn't buy everything, does it? :)



Ok, so I attempted to track down this alpha list, but didn't feel like subscribing to the magazine. Here is what I found online (not particularly interesting, but whatever...):

The Alpha Hedge Fund Compensation Report reveals the truth about hedge fund salaries. Based on the results of questionnaires completed by nearly 900 professionals from more than 600 firms, now you can find an answer to the question, “What are hedge fund professionals really making?” If you work at a hedge fund or fund-of-funds firm, this is your chance to find out whether you’re being shorted; if you work in another industry, our findings may prompt you to consider a career change.

The Alpha report rips through the shroud of secrecy surrounding hedge fund compensation. We found that compensation varies widely within the hedge fund industry and is correlated to several factors, including firm asset size and geographical region. Job function and title also play an important role, but in general we can safely say that when it comes to hedge funds, 2 and 20 equals a hefty salary. (see the site)

And here are the top three money-makers (and the site claims to profile more tomorrow, see the end of the block quote):

JAMES SIMONS

Renaissance Technologies Corp.

$1.7 BILLION

EVEN THE MOST SUCCESSFUL hedge fund managers have to shake their heads in wonderment at the extraordinary continued success of Renaissance Technologies Corp. founder James Simons. Last year his $6 billion Medallion fund posted a 44 percent return after fees, easily exceeding its roughly 36 percent average annualized net return since he launched the quant-based fund in 1988. What makes his performance all the more impressive is that the 69-year-old Simons, who has a Ph.D. in mathematics from the University of California, Berkeley, and once worked as a code breaker for the U.S. Department of Defense, charges a hefty 5 percent management fee and 44 percent performance fee. (The gross return was an astonishing 79 percent.) With $1.7 billion in estimated earnings, Simons tops our list of the best-paid managers for the second straight year.

Medallion, which is closed to outside investors, uses sophisticated computer programs to identify price anomalies, trading everything from equities and commodities to futures and options. An acclaimed mathematician, Simons has hired about 80 Ph.D.s at Renaissance's offices in Manhattan and East Setauket, New York, to find ways to enhance his firm's existing strategies and discover new ones. In August 2005 he launched the Renaissance Institutional Equity Fund, a long-short product that invests exclusively in equities and has a longer holding period for its securities than does frenetic Medallion. By maintaining a net exposure to the market of 100 percent, RIEF has been popular among institutional investors looking for higher returns from their traditional equity allocation. The fund has quickly grown to $20 billion, or one fifth of its stated $100 billion capacity; it was up about 20 percent last year.

Simons, who has said publicly that most of the researchers Renaissance has hired in the past seven years were educated outside the U.S., is a major proponent of boosting math skills. He was named to the National Mathematics Advisory Panel by President George W. Bush's administration to suggest ways to advance the teaching of math and is the founder and chairman of Math for America, a nonprofit organization whose mission is to improve math education in U.S. public schools.

In February, Simons received an award from software and IT solutions company SunGard and the International Association of Financial Engineers as their 2006 financial engineer of the year. At the award dinner, which was held at the United Nations, in New York, Simons told the crowd that although he was flattered to receive the prize, before getting it he never really thought of himself as a financial engineer. "At Renaissance we have lots of smart, imaginative people making lots of money," he said. "If that's financial engineering, I'm all for it."



KENNETH GRIFFIN

Citadel Investment Group

$1.4 BILLION

KENNETH GRIFFIN HAS COME A long way since he began trading convertible bonds from his dorm room in Cabot House at Harvard College. Griffin, who founded Chicago-based Citadel Investment Group in 1990, when he was just 22, is building an empire that has more in common with the business of another famous Harvard student -- Microsoft Corp. chairman Bill Gates -- than it does with most hedge funds. Nearly half of Citadel's more than 1,000 employees work in technology, developing and maintaining not only the firm's proprietary investment models but also its state-of-the-art hedge fund administration and electronic trading platforms. Citadel Execution Services, which trades an average of 150 million shares a day, has been offering market making to investors, including other hedge funds, since 2005. Citadel Solutions, which provides middle- and back-office administration services using the same technology developed for Citadel's own funds, opened for business just this spring.

The buildout of Citadel's non-hedge-fund businesses has fueled speculation that Griffin, now 38, is preparing to take his company public. The timing would be propitious. In 2006, Griffin enjoyed his best returns since 2002. Each of his two main funds -- Kensington Global Strategies and Wellington -- was up about 30 percent, net of Citadel's 20 percent performance fee. (The firm does not assess a management fee; instead, it charges all expenses to the fund.) The gains were spread across a variety of strategies, including long-short equities, quantitative, credit and energy. At least 5 percentage points of the firm's returns were directly attributable to the decision by Citadel to team up with JPMorgan Chase & Co. to buy, at a discount, the bulk of the energy portfolio of collapsed hedge fund Amaranth Advisors. At the end of 2006, Citadel had $12 billion in assets under management.

Griffin and his wife, Anne, who has her own hedge fund firm, Aragon Global Management, are among the world's biggest art collectors. Last year they paid $80 million for False Start, a 1959 work by Jasper Johns. In October the couple gave $19 million to the Art Institute of Chicago, which in turn will name the central court of its new Modern Wing, currently under construction, the "Kenneth and Anne Griffin Court."

EDWARD LAMPERT

ESL Investments

$1.3 BILLION

THE FORTUNE OF EDWARD Lampert rises and falls largely with the stock price of one company -- Sears Holdings Corp. At year-end his firm, Greenwich, Connecticut­based ESL Investments, owned 42.5 percent of the U.S.'s third-biggest retailer, accounting for nearly $11 billion of ESL's $14.6 billion stock portfolio. Lampert, who is chairman of Sears, acquired the stake in March 2005, when he merged Chicago-based department store chain Sears, Roebuck & Co. with discount retailer Kmart Holding Corp., which he had taken control of in bankruptcy two years earlier.

Although some critics have complained that Lampert is destroying Sears' iconic brand by cutting costs and not reinvesting in its core retail business, investors have applauded his focus on boosting profits rather than sales. The shares of Sears surged 45 percent last year, helping to power the former Goldman, Sachs & Co. arbitrageur back above $1 billion in earnings, after a falloff in 2005. (Lampert was the first hedge fund manager to breach the $1 billion barrier, in 2004.) Apart from ESL, two of Sears' ten biggest shareholders are hedge funds, New York­based Atticus Capital and Perry Partners. Richard Perry, the co-founder of Perry Capital and a friend of Lampert's since they worked together in the merger arbitrage group at Goldman during the 1980s, sits on Sears' board of directors.

ESL's other two reported equity holdings were retailers AutoZone, whose shares rose more than 26 percent last year, and AutoNation, which finished the year roughly unchanged. ESL's nearly $18 billion hedge fund, however, rose 24.5 percent, net of fees, held down a bit by a multibillion-dollar cash position, say investors. Last fall Lampert announced that he would not seek reelection to the board of directors of AutoZone so he could devote more time to ESL and Sears. Last month he said he wouldn't seek reelection to AutoNation's board, for similar reasons.

Please visit us tomorrow where we profile: George Soros, Steven Cohen, Bruce Kovner, and Paul Tudor Jones II. (see site)

Bank of America Likes Movies?

Do Netflix and Bank of America have something goin' on?

First, there websites are strangely linked through an internet wormhole...
http://www.hackingnetflix.com/2006/09/netflix_on_bank.html

And now the netflix stock price is balancing on the fulcrum of BofA's words...

NFLX shares rallied 2.7% to $22.10 after Bank of America upgraded the stock to neutral from sell.

(see context...)

Dunno what's up. didn't know they were friends.

And Didn't Bank of America start in California?

Market Neutral Funds - Calamos

Definition -- "market-neutral funds," from smartmoney.com in 1999:

Market-neutral funds "neutralize" the effect of the market by owning both long and short equity positions. The long positions presumably earn high returns in a bull market, while the short positions post gains in a bear market. Some try to beat the three-month Treasury bill (which currently yields 4.62%) by as much as six percentage points. And they try to do that with very little volatility. (read more...)

Example -- "Calamos Market Neutral Fund (CVSIX)," from findarticles.com in Nov 2002:

Kinnel says that he is impressed by some "market neutral" funds that have adopted the hedge funds approach of aiming for profits in all kinds of markets. These "tame versions" of hedge funds have had mixed results, but there are some he cites with approval. "Calamos Market Neutral Fund (CVSIX) is run by a manager who is very knowledgeable about convertible bonds," he says. (read more...)

About Calamos...

1. morningstar on calamos (2006/7?)

2. Bloomberg on Calamos:

page1


page2


page3


page4

Arbitration or Lawsuits?

In response to a reader's comment below,

Anonymous said...
http://www.srz.com/publications/publicationsDetail.aspx?publicationId=1627

I wonder if this will be available to the public or only to those involved in the bankruptcy?

Check this out (from the WSJ on April 16). Perhaps hedge funds will start using arbitration:

Critics of arbitration say the three-member arbitration panels used in brokerage disputes often favor the industry over the consumer. In arbitration, the extent of a consumer's right to receive and review relevant information from the opposing side, a process known as discovery, is less clear than in litigation. Arbitration hearings also are often conducted in private, rather than in a public forum. (read more...)

Take 5: Wow, Paprika is awesome.

Paprika trailer...

Bloomberg's hedge fund listings

There are approximately 55 'Active' US hedge funds listed on bloomberg. This seems like a far from complete list of all hedge funds, but it's an interesting list nonetheless. I apologize that the resolution is exceedingly bad. If you cannot read something, just post a comment, and i'll look it up.

1-6


6-10


11-15


16-20


21-25


26-30


31-35


36-40


41-45


46-50


51-55

A Juror on the Nacchio Trial Explains...

WSJ law blog on Nacchio...

Fortune Cookie Advice: Dealing with Uncertainty

I am continually reminded that the dangerous uncertainty is the kind that you're not used to identifying as uncertainty. Your normal behavior-correcting habits don't kick in, so you just persist in a state of 'why is this so strange?'

My advice: beware of indulging the 'this is strange' feeling. it's just harmless ol' uncertainty. If you take it too seriously and want to do something to get rid of it, you may have a mess to clean up later.

Will SAC buy Fidelity?

Fidelity has been more 'activist' than other funds...

The funds have gotten lots of heat for their staunch support of management, with critics questioning if funds are upholding their legal obligations to vote in the best interest of their shareholders if they take management's side.

But some mutual funds appear to be warming up to the activist role, perhaps because of new rules that requiring fund companies to disclose how they vote in corporate elections. They also face increased competition for investors' money, especially from hedge funds.

...Fidelity Investments took a prominent role in opposing the proposed $19 billion takeover of U.S. radio broadcaster Clear Channel Communications Inc. by the private-equity firms Bain Capital Partners and Thomas H. Lee Co. Fidelity and other investors against the deal, which has yet to go to a shareholder vote, think the company is worth more than the $37.60-a-share offer.(read more...)

Fidelity and hedge funds have already been trading employees...

Fidelity Management & Research Co. (FMR Co.), the investment management division of Fidelity Investments, hired Brian Conroy as SVP and head of global equity trading. Conroy will be responsible for setting the strategic direction of domestic and international trading and will serve as the point person for both desks. He will have five direct reports, who, in turn, will manage FMR Co.'s trading force, says a Fidelity spokesman, who declines to reveal the number of Fidelity equity traders.

Conroy joins FMR Co. from New York-based Sigma Capital Management, where he served as COO. Prior to assuming the COO role, Conroy was a head trader with the $6.5 billion Stamford, Conn.-based hedge fund, SAC Capital Management - a Sigma affiliate. He also held positions at JPMorgan, Goldman Sachs and ABN AMRO. (read more...)

And Mutual funds have been losing people to hedge funds like crazy. From 2004:

In the face of legislation, lawsuits and media criticism, mutual funds have become significantly more cautious. They can't afford to become associated with any more scandals or be on the wrong side of any potential legislation. Mutual funds continue to lose their most successful fund managers and research analysts to unregulated hedge funds where such managers and analysts can make far more money with far less scrutiny. As if the brain drain wasn't bad enough, mutual funds can no longer (by virtue of their huge asset bases) command proprietary information from companies since Regulation FD mandates that all investors receive material information concurrently. (read more...)

Specifically, Fidelity lost people to London's TCI fund managment, and Highbridge Capital Management...(read more...)

Fidelity and SAC track each other's investments (at least some of the time). They were/are both big holders in...
>Martha Stewart Living
>Pacific Sunwear (read more...)
>Take-Two
etc...

What would SAC gain? $$$$$$ (and it's all about the money...)

President, Fidelity Employer Services
JOHNSON IS WIDELY believed to be next in line to run Fidelity, the $1.1 trillion mutual fund giant founded by her grandfather and now run by her father, Edward. Indeed, as the new head of Employer Services, a fast-growing unit that does benefit and payroll outsourcing that covers 19 million workers and retirees, Johnson, 44, is the driving force behind a transformation that will turn the company into a financial-services juggernaut. Fidelity watchers believe that a generation of consumers will receive their most important financial documents stamped or processed by a Fidelity computer, from their first pay stub to their last retirement check. "Abigail is running the company's next trillion-dollar business," says James Lowell, editor of the Fidelity Investor newsletter. "She is already CEO of the new Fidelity." (read more...)

The bottom line, though: Fidelity would be a cheap acquisition right now...

And...Fidelity is in the business of streamlining...From April 15, 2007:

BOSTON (MarketWatch) -- The mutual fund industry is a survival-of-the-fittest world where management companies frequently kill off their weakest offspring by merging them into their best and healthiest issues.
So when one of the industry's biggest players announces plans to merge two issues into sister funds, it's no big deal.()

Hypothesis: Technology Concentrates War Powers in the Executive Branch

Here is an excerpt from a paper which seems to be a response to pro-executive-powers theorists like John Yoo:

The main point in this paper is to suggest that technology is primarily responsible for expanding presidential war powers since 1957. Technology allows raw intelligence data to be personally reviewed by the president. In the 1960s, the Kennedy and Johnson administrations concentrated war powers in the cabinet because of new satellite surveillance. My hypothesis is that the Bush administration is similarly concentrating the war powers in the cabinet through new computer surveillance...

So, computer regulations could stop renegade presidents, and restore a balance of power between the three branches? Interesting...

GW Should Pardon Nacchio

Ok, this is a long story, but bear with me... :)

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1. NACCHIO HAD GOVERNMENT TIES WHILE HE WAS CEO OF QUEST (until 2002)....

A. Nacchio/Qwest was in bed with homeland security as far back (at least) as 2001...In fact, Nacchio's (unsuccessful) defense against during his recent (2007) trial for insider trading was that elements of these government contracts could not be made public. From technewsworld.com
on 3/19/07

The Defense
Nacchio has made it clear he will argue in his own defense that his estimation of Qwest's future outlook was based in part on possible contracts the carrier might win from the government. He is set to claim those contracts were not public knowledge because they involved homeland security and intelligence agency work. (read more...)

(i) It appears that these contracts were largely MAA contracts (Metropolitan Area Acquisitions Programs). See a subcommittee hearing transcript from 2001,

(ii) And Qwest held/holds MAA contracts for Albuquerque, Boise, Denver, Minneapolis, Salt Lake City, and Seattle. (see Qwest website)

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2. BUT NACCHIO BECAME LEGALLY VULNERABLE BECAUSE OF HIS OWN GREED BACK IN 2002...

A. In 2002, Qwest tanks -- the stock drops to about a dollar, and innocent people lose almost everything, though Nacchio suspiciously makes millions. Not surprisngly, Nacchio resigns as CEO and the lawsuits begin (including the insider trading lawsuit that was just resolved). From talkleft.com:

...the U.S. West retirees (Qwest bought U.S. West in the late 1990's) lost a lot of money when Qwest's stocked tanked to under $2.00 a share.

Qwest's stock price hovered around $35 to $40 a share from January 2001 to May 2001, which is the time period of the alleged illegal insider trading. The stock eventually plummeted to an all-time low of $1.11 a share in August 2002. (read more...)

B. Nacchio was not the only Qwest executive that was indicted, however. In fact, his case came at the end of a long line of Qwest indictments. Other Qwest executives were put on trial in 2003, but they got off! Apparently the government's case was plagued with procedural errors. From Denver News in Dec 2005:

In 2003, Grant Graham, Thomas Hall, John Walker and Bryan Treadway were indicted in an alleged scheme to fake $33 million in revenue for Qwest. Graham and Hall pleaded guilty under plea bargains. Walker and Treadway were aquitted at trial. (read more...)

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3. WHEN QWEST SNUBBED THE NSA, QWEST EXECUTIVES WERE SORTED INTO THE LOYALS AND NON-LOYALS.

A. Some of the loyals include James F. X. Payne (the government contract point-person). In 2005, Payne suddenly leaves Qwest and ends up at Bechtel (read more...)doing work that put him even closer to government agencies (and no surprise he was never prosecuted like most other Qwest execs). From WashingtonTechnology on 5/20/05:

Longtime telecom player James Payne has left Qwest Communications International Inc., where he headed the Denver company’s federal government business.

A company spokesman did not return phone calls, but other sources confirmed Payne has left. Payne also did not return phone calls.

Payne’s departure from Qwest is a risky move for the company as it pursues the huge Networx telecommunications contract, but how risky “depends on who they replace him with,” one source said. (read more...)

B. But simultaneously in 2003 the NSA wants Qwest to cooperate with it's creepy surveillance program! For obvious reasons, Qwest was rolling their eyes at the NSA's reqest (it was legally dubious, plus Qwest probably had little interest in turning over all of its documents considering the pending lawsuits).

So, while some of Qwest people (e.g. James T. X. Payne) were pandering to the government's interests, the Qwest CEO (Richard Notebaert - Nacchio's successor) was vehemently resisting the NSA's surveillance requests. Finally, in 2004, Qwest was so frustrated with the NSA's demands to conduct illegal surveillance, that Notebaert (CEO) cut off talks with the NSA and flat-out refused to hand over their customers' information. From cbsnews.com on May 12, 2006:

Though Verizon, along with AT&T Corp. and BellSouth Corp. began sharing records their customers' phone calls with the NSA shortly after the 2001 terror attacks former Qwest Communications CEO Joseph Nacchio broke ranks with fellow former Bell companies, according to USA Today.

"When he learned that no such authority had been granted and that there was a disinclination on the part of the authorities to use any legal process, including the Special Court which had been established to handle such matters, Mr. Nacchio concluded that these requests violated the privacy requirements of the Telecommications Act," Nacchio's attorney wrote in a statement.

Nacchio agreed with Qwest's attorneys that surrendering its customers' "call-detail records" to the NSA was wrong.

Qwest balked at the request, and pressure, from the NSA, with Nacchio reportedly "deeply troubled" by the implications, USA Today reports. Current CEO Richard Notebaert halted talks with the NSA in 2004 after the two couldn't agree on the details.

According to USA Today, the NSA told Qwest that not sharing the phone records could compromise national security and affect its chances at landing classified contracts with the government, two issues that play a role in Nacchio's own legal woes. (read more...)

C. There is always some lag before the public knows what's going on...so it wasn't until 2006 that the story broke about agressive, irrational surveillance of telephone records, and qwest's refusal to participate. From USA Today 5/11/06:

"One company differs

One major telecommunications company declined to participate in the program: Qwest.

According to sources familiar with the events, Qwest's CEO at the time, Joe Nacchio, was deeply troubled by the NSA's assertion that Qwest didn't need a court order — or approval under FISA — to proceed. Adding to the tension, Qwest was unclear about who, exactly, would have access to its customers' information and how that information might be used." (read more...)

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4. SOMEONE HAD TO TAKE THE BLAME FOR THE SURVEILLANCE SCANDAL, AND NACCHIO WAS THE EASIEST TARGET DESPITE HIS NON-INVOLVEMENT.

A. Someone needed to be the fall-guy...but Notebaert was kind of inaccessible because he hadn't done anything illegal. in fact, he was looking like a saint in the public's eyes for standing up to the NSA. Nacchio, however -- he was in some legal trouble. So, not unlike switching enemy #1 status from Osama to Saddam, the government switched the blame from Notebaert to Nacchio. In late 2005, Nacchio was indicted, and would eventually help the administration put 'Qwest' and 'guilty' in the same headline. From BusinessWeek on Dec 21, 2005:

A Nacchio indictment has been widely anticipated. In March [2005], the SEC charged him and six other former Qwest execs with orchestrating a massive fraud at the company... (read more...)

B. And...the president's people went in for the kill. As one could expect, they brought in a new US attorney. From TalkLeft.com March 18, 2007:

The Nacchio trial...There's a new prosecutor on board -- Clifford Stricklin from Texas who was on the Ken Lay/Jeff Skilling Enron team. Colorado U.S. Attorney Troy Eid brought him in as his First Assistant, after which Bill Leone, who had served as Interim U.S. Attorney for a year and a half while the White House sat on its a** not naming a new U.S. Attorney following the departure of U.S. Attorney John Suthers, who left to take Ken Salazar's place as state Attorney General when Salazar got elected to to the U.S. Senate, and who had prosecuted the first Qwest case, resigned. So, although Stricklin is from Texas, he now lives here and is a permanent part of our U.S. Attorney's office. The other prosecutors are from DOJ in D.C. (read more...)

Note: During this time, Miers and Gonzales were identifying the US attorneys without adequate "loyalty". From npr.org

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5. HOWEVER, FOR THIS ADMINISTRATION, IT'S NEVER THE WRONG TIME TO MAKE A PROFIT...

To add insult to injury (a la Halliburton profiting in Iraq), the government is now contracting again with Qwest. All bad feelings have been hashed out through the Nacchio prosecution, and things can return to normal. and by normal i mean freaky.From USA Today, 3/07:

WASHINGTON (AP) — AT&T (T), Qwest Communications (Q) and Verizon (VZ) on Thursday were awarded the government's largest telecommunications contract ever, a 10-year deal worth up to $48 billion. (read more...)

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6. IN SUMMARY

It seems that Nacchio was unfairly targeted because this administration wanted someone at Qwest to be punished for the NSA-surveillance scandal. Nacchio (CEO until 2002) was the most vulnerable Qwest target.

Now, I don't want to belittle the insider trading claims against Nacchio, I just want to point out that this administration seems to have a pattern of behavior: hire a big-gun lawyer to prosecute the case you want to win. even if it means firing some people for no reason.

And to me, this sounds like turning the legal system into a playground for presidential vengence.

So....since I'm all about justice, not vengence, i don't think it's unreasonable to request a 'correction' of the Nacchio situation. In fact, it doesn't seem so unreasonable that presidential vengence is met with a kinder presidential power -- the one that starts with 'p' and ends with 'ardon'...

just a thought...

I'm Watching You!!! Arrrrg!

(Abu Hamza, "preacher of hate" - gatewaypundit.blogspot.com)