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SchillMcGuffin19 karma

Thanks so much for that confirmation, after all these years. That's pretty much what we concluded from the reporting, but nobody seemed to really state it explicitly, and it was pretty boggling. We actually were involved in litigating some similar, less earthshaking "exploited screw-up" frauds before and after yours. One wonders how many more might be out there to be discovered. ;)

Have you ever heard it rumored that someone else might have been benefiting from the same error, and just got upstaged by your downfall?

SchillMcGuffin17 karma

My colleagues and did a bit of study on you after the scandal broke, due to professional interest in trading frauds. We were puzzled a bit by the reporting, in that it was claimed that you concealed your losses by selling options, and thus generating "phantom profits". This seemed impossible, inasmuch as any cash generated by selling options should have simultaneously generated offsetting liabilities -- equal at the time, but escalating as the market moved against you.

So, how were you able to separate the cash from the liabilities? Was that a sloppy accounting feature that you recognized and were able to exploit, or was their some mechanism that you were able to set up to achieve it?