Thank God the SEC is out there protecting us from the guys that are really destroying the economy!
The Securities and Exchange Commission has charged a Florida man with running a Ponzi scheme whose trading was dictated by celestial forces.
In a civil suit filed in U.S. District Court in Florida, the SEC alleges Gurudeo “Buddy” Persaud, 47, made “numerous misrepresentations and omissions to investors, foremost among them failing to disclose his trading strategies were based on lunar cycles and the gravitational pull between Earth and the moon.”
According to the SEC’s complaint, Persaud raised more than $1 million between July 2007 to January 2010 from 14 investors in three states: Florida, Connecticut, and New York. At least two of his investors were “unsophisticated investors.” Persaud is accused of keeping $415,000 of the money he collected for himself and his family. He allegedly used the money to pay for a mortgage, his kids’ tuition, family vacations, and clothes. Of the $530,000 in investor money Persaud did invest in stocks, futures, and options, he lost approximately $400,000, which, go figure, with a trading principle like this:
The primary principle underlying Persaud’s trading strategy was that the gravitational pull between the moon and Earth affects mass human behavior, which in tum affects the stock markets. For example, Persaud believed that when the moon is positioned so there is a greater gravitational pull on humans, they feel down and are therefore more inclined to sell securities in the markets.
(via Talking Points Memo)
Talk about low hanging fruit. I’m not saying that they shouldn’t go after the guy, though the case could probably have been handled by a local US Attorney, but this seems to be the only type of guy they do go after. Weren’t credit default swaps about as transparently phony? If I offered to issue insurance policies without bothering to set aside reserves to pay up in case My bets went bad, I would be considered to be a scam artist, as indeed I would be. If I’m AIG, not only does the government cover my bad bets, but it lets me pay big retention bonuses to the geniuses who cooked up the scheme, not to mention the fact that the guys on the other side of the bets, who got paid in full, knew all along that AIG lacked the resources to pay if the bills ever came due. Mel Brooks said that “It’s good to be the King”. It’s also good to be too big to fail.