Jim,

"Whatever OTC derivatives do not do to them, business conditions and litigation will."
–Jim Sinclair

CIGA BJS

Major Bear Stearns investor files fraud lawsuit
Thu Sep 24, 2009 7:04pm EDT

NEW YORK, Sept 24 (Reuters) – One of Bear Stearns Cos’ largest former investors has sued JPMorgan Chase & Co (JPM.N), two former top Bear executives and an auditor to recover for losses from a "valuation fraud" that he said led to Bear’s collapse and takeover by JPMorgan at a fire-sale price.

The 62-page lawsuit was filed in Manhattan federal court on Thursday by Bruce Sherman, who said he was for several years "arguably Bear’s most visible institutional investor" as the chief executive of Private Capital Management LP. He said he once controlled 5.9 percent of Bear shares.

Billionaire investor Joseph Lewis had amassed a larger stake in Bear by the time of the company’s collapse.

Sherman accused Bear, its former chief executive James Cayne and former co-president Warren Spector, and its former auditor Deloitte & Touche LLP of overstating the value of its mortgage, asset-backed and derivative securities, the adequacy of its liquidity and capital, and the quality of management.

He said Cayne and Spector in particular "repeatedly and directly assured" him that Bear’s valuation methods were accurate when they knew otherwise.

Sherman said he sold his stake for less than $6 per share, more than 95 percent below their peak, around March 19, 2008. Three days earlier, JPMorgan had agreed to buy Bear for $2 per share, with the backing of the U.S. Federal Reserve. JPMorgan later increased the purchase price to $10 per share.

JPMorgan spokesman Joe Evangelisti declined to comment. The other defendants were not immediately available for comment.

Private Capital is based in Naples, Florida.

The case is Sherman v. Bear Stearns Cos, U.S. District Court, Southern District of New York (Manhattan), No. 09-8161. (Reporting by Jonathan Stempel; Editing by Phil Berlowitz

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Hello Jim,

Below are a couple of China related articles that I found interesting.

All the best,
CIGA Scott

China’s CIC may launch domestic rare earth company
By: Reuters
24th September 2009

BEIJING  – China’s sovereign wealth fund, fresh from a series of investments in the global commodities sector, may launch its own domestic rare earth firm, a banking source and newspaper report said on Thursday.

China Investment Corp (CIC) could do so through Jianyin Investment, its wholly-owned domestic industrial investment arm, said the source, who is familiar with CIC. The $300 billion sovereign wealth fund’s primary focus is on foreign investments.

Rare earths are metals used in high-tech devices and green products.

CIC and Jianyin are talking with Baotou Steel and the government of Baotou city in Inner Mongolia about setting up a rare earth company, state-run Economic Information Daily said.

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China Is Getting ‘Sophisticated’ in Commodities, Goodyear Says
By Kyunghee Park

Sept. 24 (Bloomberg) — China, the world’s largest metals consumer, is getting “sophisticated” in its commodity investments with a more commercial approach, said a former chief executive officer of BHP Billiton Ltd.

Investments by Chinese companies in Latin America and Africa haven’t “been as impressive as initially planned,” leading to a change in thinking, Charles “Chip” Goodyear, who ran the world’s largest mining company for almost five years, told investors at a CLSA Research Ltd. forum in Hong Kong today.

China, undeterred by its failure to invest in Rio Tinto Group, is boosting spending on oil and mining acquisitions by at least half this year to take advantage of lower valuations after prices slumped. The nation’s sovereign wealth fund this week spent $2.75 billion on commodities companies.

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China’s CIC may launch domestic rare earth company
By: Reuters
Published: 24th September 2009

BEIJING  – China’s sovereign wealth fund, fresh from a series of investments in the global commodities sector, may launch its own domestic rare earth firm, a banking source and newspaper report said on Thursday.

China Investment Corp (CIC) could do so through Jianyin Investment, its wholly-owned domestic industrial investment arm, said the source, who is familiar with CIC. The $300 billion sovereign wealth fund’s primary focus is on foreign investments.

Rare earths are metals used in high-tech devices and green products.

CIC and Jianyin are talking with Baotou Steel and the government of Baotou city in Inner Mongolia about setting up a rare earth company, state-run Economic Information Daily said.

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Jim,

Poker might have been created in the US but let’s see who is going to call the bluff, the Fed or ROW…

Take good care.
CIGA Vortex

Fed Plans to Reduce Size of Two Liquidity Programs (Update1)
By Scott Lanman
Sept. 24 (Bloomberg) — The Federal Reserve said it will shrink its emergency programs that auction loans to commercial banks and Treasury securities to bond dealers, citing “continued improvements” in financial markets.

The Term Auction Facility will sell $50 billion in 70-day funds next month, down from $75 billion in 84-day funds in September, with the auctions’ size and maturity decreasing more in November and December, the Fed said today in a statement in Washington. The Term Securities Lending Facility will shrink to $50 billion, and then $25 billion, from $75 billion.

The moves are a further curtailment of the emergency- funding programs created by the central bank to buttress financial companies and the economy. The Fed began reducing the TAF and TSLF auctions in July.

The Fed said it will evaluate whether to “maintain a TAF on a permanent basis” and put out for public comment a “range of possible structures for a permanent TAF.”

Under the TAF, a separate monthly sale of $75 billion in 28-day funds will be unchanged through January, the Fed said. The longer-term auctions will be reduced to $25 billion in November and December, eventually converting the auction schedule to a single cycle of 28-day funds from biweekly sales for different maturities, the Fed said.

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Jim,

It’s amazing how consistent the Iranians and Venezuelans are and this is a case of putting their money where their geopolitical mouths are.

This will probably do no more than raise an eyebrow at the State Department. You can see the jaws of the Israelis drop when they hear the indifferent response of the US.

CIGA Chris

Iran, Venezuela Plan $1.5 Billion Refinery in Syria, RPN Says
By Robert Tuttle

Sept. 24 (Bloomberg) — Iran and Venezuela signed a memorandum of understanding to build a $1.5 billion oil refinery in Syria, the Regional Press Network reported in a story published on the Web site of Lebanon’s The Daily Star.

Venezuela would hold a 33 percent stake in the project, Iran would have 26 percent, Syria 26 percent and Malaysia 15 percent, the report said, citing Mohammed Ali Talebi, an official at Iran’s Petropars Ltd. The plant would have the capacity to process 140,000 barrels of oil a day.

Neither Iran nor Venezuela said when construction would start, according to the report.

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