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CNBC: Soros Bought $2 Billion Ex-MF Global Europe Debt: Report
CNBC ^ | 12-9-11 | Antonia Oprita

Posted on 12/09/2011 6:09:02 AM PST by tcrlaf

About $2 billion worth of European bonds owned by MF Global were bought by billionaire investor George Soros's family fund, the Wall Street Journal wrote on Friday, quoting people close to the matter.

On October 31 MF Global collapsed into the eighth-largest bankruptcy in U.S. history and an estimated $1.2 billion in client funds remains unaccounted for.

SNIP

hey were turned over to KPMG, MF Global's bankruptcy administrator in London; they were then offered to big investors immediately after the company's collapse by MF Global's London clearing house, LCH Clearnet, the paper said, quoting a KPMG spokeswoman.

A number of large investors passed on the bonds but, according to people close to the matter quoted by the Wall Street Journal, Soros's interest was piqued and he bought around $2 billion of the bonds at a level below the market price at the time.

(Excerpt) Read more at cnbc.com ...


TOPICS: Crime/Corruption; Front Page News; News/Current Events; Politics/Elections
KEYWORDS: corruption; corzine; crime; criminaldemocrats; democratcorruption; democrats; eucrisis; euro; fraud; insidertrading; javeri; liberalfascism; mfglobal; mfglobalsoros; munirjaveri; shadowparty; soros; sorosmfglobal; stealthewealth
It's GOOD to be the puppetmaster. He and his kids stand to make around $100-200 MILLION DOLLARS if the Euro Bailout goes through.

HOPEY CHANGEY, SUCKERS!

(And frankly, I'm shocked CNBC would even mention this...)

1 posted on 12/09/2011 6:09:10 AM PST by tcrlaf
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To: tcrlaf

The comments are interesting, too:

“He may of bought $2 billion on bonds but he may have only paid $ 200 million or about 10% on the dollar for the bonds.”

“Hopefully Corzine did not allegedly pass these assets out of the hands of their rightful owners to his friends at a reduced price, which would or should allegedly be criminal.

Corzine and other MF Global officers should allegedly be prevented from holding positions of responsibility in the future involving the public or the public’s funds.”


2 posted on 12/09/2011 6:11:26 AM PST by tcrlaf (Election 2012: THE RAPTURE OF THE DEMOCRATS)
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To: tcrlaf
Let's see...a big Obama money guy defrauds thousands of innocents and continues to walk around a free man.

In the aftermath of the theft, another big Obama money guy manages to snatch some bonds super-cheap, further reducing the funds available to make-whole the victims of the first Obama money guy.

There's less and less to distinguish Democrat-ruled America from Putin-ruled Russia.

3 posted on 12/09/2011 6:20:21 AM PST by NativeNewYorker (Freepin' Jew Boy)
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To: tcrlaf
Corzine and other MF Global officers should allegedly be prevented from holding positions...

...other than face down in the day room at Leavenworth.

4 posted on 12/09/2011 6:21:38 AM PST by NativeNewYorker (Freepin' Jew Boy)
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To: NativeNewYorker

“In the aftermath of the theft, another big Obama money guy manages to snatch some bonds super-cheap, further reducing the funds available to make-whole the victims of the first Obama money guy.”

And it gets even better....

The bonds that Big Obama Guy bought get made WHOLE, with 70% of the money coming from....

Wait for it....

Wait for it....

THE U.S. TAXPAYER!!!!! (through the IMF Euro Bailout)

Like I said, Isn’t it great to be the puppetmaster?


5 posted on 12/09/2011 6:30:21 AM PST by tcrlaf (Election 2012: THE RAPTURE OF THE DEMOCRATS)
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Photobucket
6 posted on 12/09/2011 6:31:39 AM PST by Doofer
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To: NativeNewYorker

a nation of sheep breeds a gov’t of wolves


7 posted on 12/09/2011 6:36:34 AM PST by dennisw (A nation of sheep breeds a government of Democrat wolves!)
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To: tcrlaf
I've been trying to figure some angle on this transaction. I keep thinking Corizine knows something from the Fed or Geitner. The usual suspects wouldn't have made such a wild bet unless the fix was in. If we bail out Europe, Soros would be a big winner and finance Obama's $billion election bid.

If you stop and think about it, the unions and other thugs can't come up with a $billion, so it will have to come from overseas or some rich cartel. Soros would be the most obvious, but any of them could be the big player.

8 posted on 12/09/2011 6:39:20 AM PST by chuckles
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To: tcrlaf
Hmmmm money missing Corzine a Dem involved Barry says he needs more then a Billion for re election. Enough to make a conspiracy theorist wonder.
9 posted on 12/09/2011 6:50:27 AM PST by mk2000
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To: tcrlaf

Betcha Obama gives Soros a bailout!!!!


10 posted on 12/09/2011 6:57:22 AM PST by CincyRichieRich (Keep your head up and keep moving forward!)
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To: Doofer

I agree! BUT only after a trial with a conviction.


11 posted on 12/09/2011 7:02:26 AM PST by WellyP (REAL)
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To: mk2000

This appears to be just another way to launder money to Obama. Corzine gets to keep his fortune. Sorors skims off his fee. Obama bails out Europe and those “suckers” who had cash with MF Global get to fund the DNC/Tides Foundation/moveon.org/OWS,/NPR news, and a myriad of other left wing outfits.


12 posted on 12/09/2011 7:04:00 AM PST by radioone ("2012 can't come soon enough")
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To: tcrlaf

You’re going th have to prove to me that Corzine and Soros don’t know each other and have never been seen together before I’ll belive this transaction was anything other than an INSIDE DEAL!

Can we now take both of these guys down at the same time?


13 posted on 12/09/2011 7:06:15 AM PST by WellyP (REAL)
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To: tcrlaf
The early buzzard gets the carcass.
14 posted on 12/09/2011 7:10:09 AM PST by KarlInOhio (Herman Cain: possibly the escapee most dangerous to the Democrats since Frederick Douglass.)
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To: tcrlaf

Maybe Corzine and Soros were going to use the bonds to develop viable solar power technology. For the American people. The children, mostly.


15 posted on 12/09/2011 7:30:49 AM PST by dead (I've got my eye out for Mullah Omar.)
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To: tcrlaf
This is one of Obama’s cronies,Corzine,funneling money to Soros so he can redirect it to Obama.Obama’s Mafia are very savvy.
16 posted on 12/09/2011 7:33:15 AM PST by E.K. Crossbow
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To: tcrlaf
“Hopefully Corzine did not allegedly pass these assets out of the hands of their rightful owners to his friends at a reduced price"
That's the question that occurred to me when I saw that MF Global had dealings with Soros with those bonds -was it an arm's length transaction or was it a sweetheart deal?
Did Corzine steal a billion dollars from MF Global investors suckers, and launder it through Soros?

17 posted on 12/09/2011 7:51:31 AM PST by conservatism_IS_compassion (DRAFT PALIN)
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To: tcrlaf

I’m betting Bernie Madoff is wishing he’d kicked in a few more dollars to O-blamer and his cronies election fund back in ‘07!


18 posted on 12/09/2011 7:55:09 AM PST by ssaftler ("John Galt, we need you!")
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To: conservatism_IS_compassion

Can someone explain why Soros did this and what he stands to gain from it? I mean, why are MF Global bonds worth anything? In fact, isn’t he taking a chance that he’ll get nothing in return?


19 posted on 12/09/2011 8:28:56 AM PST by nikos1121
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To: tcrlaf

The link between Soros and Corzine is Munir Javeri:

http://articles.businessinsider.com/2011-02-03/wall_street/30050162_1_global-head-chief-risk-officer-ubs

Javeri was hired by Corzine back in Feb. Javeri was a VP of Soro’s Fund Management.


20 posted on 12/09/2011 9:45:48 AM PST by ConservativeInPA (Maxine, I'll see you there. I'm not changing my ways.)
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To: Liz

article and info in post #20

Drudge is carrying story with this link:

http://online.wsj.com/article/SB10001424052970204319004577086652040716704.html


21 posted on 12/09/2011 10:07:46 AM PST by thouworm (.)
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To: tcrlaf
They were turned over to KPMG, MF Global’s bankruptcy administrator in London; they were then offered to big investors immediately after the company's collapse by MF Global’s London clearing house, LCH Clearnet, the paper said, quoting a KPMG spokeswoman.


Errr... AFTER the collapse by the bankruptcy administrator... and the adminstrator used the clearing house of the bankrupt company...

22 posted on 12/09/2011 11:07:58 AM PST by az_gila
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To: thouworm; tcrlaf; CutePuppy; ken5050; Grampa Dave; miss marmelstein
“Soros may have allegedly bought $2 billion bonds but he may have allegedly only paid $ 200 million or about 10% on the dollar for the alleged bonds. Hopefully Corzine did not allegedly pass these assets out of the hands of their rightful owners to his friends at a reduced price, which would or should allegedly be criminal."

Alledged ping.

23 posted on 12/09/2011 12:14:04 PM PST by Liz
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To: Liz
And how did MF get the bonds in the first place?
Did they buy them from Soros at full price?
If so - great bailout and then profit.
24 posted on 12/09/2011 12:41:15 PM PST by tbird-james
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To: tbird-james

That would be collusion.......and conspiracy.


25 posted on 12/09/2011 2:00:17 PM PST by Liz
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To: Liz; nikos1121; ken5050
Looks like a typical opportunistic buy by Soros who always looks for discount or liquidation properties.

"Soros may have allegedly bought $2 billion bonds but he may have allegedly only paid $ 200 million or about 10% on the dollar for the alleged bonds.

Transaction was done at arm's length by a third party administrator, charged with liquidating the European bonds that MF had bought on margin for underlying repo-to-maturity contracts (high-yield sovereign bonds of Italy, Spain, and France) and they were offered to several bidders through a mechanism of Dutch Auction. I don't see how Soros could get much better discount deal than any of the other qualified bidders would agree to.

This is a typical, well-executed liquidation of a large relatively illiquid financial estate. The administrator, correctly, was willing to do the transaction as fast as possible, especially for such a large tranche ($2B) and Soros has no problem with cash or collateral, so he can easily hold these short-term bonds to maturity and collect interest (or sell them at higher price as the interest on the new bonds came down and price of the bonds rises), in addition to buying at discount.

Additionally, through this transaction, Soros, who is very involved in eurozone markets, indirectly signals and expects to bolster the confidence in the Euro (€ currency) which may help his other positions.

Since Dodd-Frank required new reporting and reserves maintanence, many hedge funds eliminated their public listings and either shut down, scaled down, broke apart their operations or, like Soros, became "family" funds that do not require SEC disclosures.

Thus, the drive for more "transparency" and "accountability" presumably expected after passing Dodd-Frank reform, actually made hedge fund world less transparent and less visible from the outside. Another case of "Law of unintended consequences" and pretentious "good intentions".

26 posted on 12/09/2011 8:21:59 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: dennisw

“a nation of sheep breeds a gov’t of wolves”

Great quote. Is that original? If so, it was brilliant. If not, it was merely great. :)


27 posted on 12/10/2011 12:39:40 PM PST by Starboard
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To: Starboard

sadly it is not original from me. Thanks for noticing because this is what we have now with Solyndra and unionized Gov’t workers and a lot more ripping off the private sector taxpayers


28 posted on 12/10/2011 1:13:27 PM PST by dennisw (A nation of sheep breeds a government of Democrat wolves!)
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To: CutePuppy

By this time George Soros is semi-out of it. This is his ravenous sons and the Soros family organization who interestingly enough own part of Dinosaur BBQ in NYC and NY State.

George Soros is capable but only some days. This is my take. But it helps to hoist the old bugger up there as a boogeyman.


29 posted on 12/10/2011 1:18:24 PM PST by dennisw (A nation of sheep breeds a government of Democrat wolves!)
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To: dennisw
By this time George Soros is semi-out of it. This is his ravenous sons and the Soros family organization... George Soros is capable but only some days.

Yes, Soros Fund Management LLC (888 7th Avenue, 33rd Floor, NY, NY 10106) is now mostly run by his sons, Robert (Deputy Chairman) and Jonathan (Deputy Chairman and President).

His longtime friend and right hand, pro-Palestininan activist Abbas F. "Eddy" Zuaiter, is the COO and Abbas' brother Ahmad F. Zuaiter is also a high level executive in the company; their youngest brother, Waleed F. Zuaiter is a TV and movie actor.

Ref: Soros' latest Gambit - FR, posts #27, 28, 2011 September 12

30 posted on 12/10/2011 9:55:54 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: CutePuppy

https://www.google.com/search?q=Zuaiter+soros&hl=en&client=firefox-a&rls=org.mozilla:en-US:official&source=lnms&ei=-U_kTpWZBoeDtgfU7YGmBQ&sa=X&oi=mode_link&ct=mode&cd=1&ved=0CC8Q_AUoAA&biw=1160&bih=853

Best I can tell the Zuaiter brothers are Kuwaiti-Americans. The younger one was born in America. They are probably highly intelligent but even more important they would be bringing large sums of Muslim money into Soros hedge funds. They have the family and ethic connections to do this. George Soros publicly hating Israel helps this. His sons are half Jewish at best they can all go to hell


31 posted on 12/10/2011 10:55:38 PM PST by dennisw (A nation of sheep breeds a government of Democrat wolves!)
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To: az_gila
... and the adminstrator used the clearing house of the bankrupt company...

Not unusual and there was not much of a choice.

London Clearing House (LCH) and Clearnet unit of Euronext merged in 2003 to form a non-profit cooperative LCH.Clearnet Group Ltd, the largest central counterparty clearing house in Europe. It clears trades for major international equity and derivatives exchanges and most of sterling and Euro-denominated bond, swaps and repo markets (managed by its RepoClear €GC and recently formed SwapClear units).

LCH.Clearnet should not be confused with LCH Investments NV which is a hedge fund research and investment unit of Leveraged Capital Holdings NV based in Netherland Antilles and managed by the Edmond de Rothschild group.

Major clients include London Stock Exchange (LSE) and Euronext. Competitors include Chicago-based CME Group and London-based Man Group plc (the original parent company that spun off MF Global Holdings brokerage business).

LCH.Clearnet is owned by its users / customers / clients (83%) and exchanges (17%) after Euroclear Group sold its 16% stake in the company (10% to various banking clients of LCH.Clearnet and 6% to exchanges).

Attempt by New York based clearing holding company Depository Trust & Clearing Corporation (DTCC) to create world's largest clearing company by buying LCH.Clearnet for about €739M ($950M) fell through in April 2009 after counterbid from consortium formed by its customers and shareholders.

In September 2011, LSE (London Stock Exchange Group plc) has begun talks to buy majority stake and control of LCH.Clearnet for approximately €1B ($1.4B).

32 posted on 12/10/2011 11:33:39 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: CutePuppy

As short-term bonds, Soros likely purchased them at, say, a 10% discount from par, not 90% as the comment to the CNBC article surmises. Because of the lower risk of short-term bonds, Soros, or any other buyer, could have hypothecated them for, say, 90% margin credit. That is probably the source of the $200 million figure. That’s how much cash Soros has into the purchase.


33 posted on 12/11/2011 12:08:36 AM PST by Kennard
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To: Kennard

Bonds are usually bought at a coupon rate discount to par / value at maturity.

I am sure that when they say Soros bought bonds at a discount, they meant that it was in addition to “normal” market price of the bonds, because of the large sum (about $2B par value) and urgency (to cancel repo contracts and provide liquidity to bankruptcy court), as well as a very limited market for this tranche of bonds (due to the nature of the current sovereign risk and, again, relatively large sums involved).

With the rates on short-term sovereign euro bonds already high, getting 10+% total discount (about $200M in profit, as combination of coupon rate plus discount to market price of bonds) over relatively short period of time should be a no-brainer for anybody who has this kind of liquidity and can stand the risk of sovereign default.

Having easy access to the bond market, to sell bonds at retail market prices if they appreciate quickly as rates drop (current European headline risk-on/risk-off trade volatility is very high) is certainly a bonus and he can take profits as a capital gain.

When Soros “broke the Bank of England” (he didn’t, it was always a hyperbole) betting on the plunge of pound sterling, he made $1B profit over few months, but it was a group making a $20B short currency arbitrage bet, of which his part was $10B so it was only a 10% profit. Stanley Druckenmiller, who worked for Soros at the time, was actually the one who realized and provided the basis for the trade.

As impressive as $1B usually sounds, it was only about 10% gain (had he borrowed some of it, he would have gained more from leverage). Admittedly, it happened over relatively short period of time (few months), but also at the time when interest rates on pound were much higher than today, and this kind of percentage return in the more volatile stock market wouldn’t be considered unusual.

There are not a lot of opportunities to deploy large amounts of money for almost guaranteed double-digit profit. At times of distress it’s time of the opportunity to invest.

Similar thing was done by Warren Buffett with Goldman Sachs in 2008 and, more recently, with Bank of America. Several hedge funds sometimes known as “vulture investors” (Wilbur Ross, Alec Gores, Tom Gores / Platinum Equity, Leucadia National et al) are specializing in distressed properties, whether equities or debt. Some of them were offered the same deal as Soros, through Dutch Auction, but they passed up on higher bids for whatever reasons.


34 posted on 12/11/2011 3:21:08 AM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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To: CutePuppy
The total market value of the bonds would have been available to the trustee, who had the option of selling them into the market, which was liquid, at least for the larger credits. The trustee probably agreed to a discount to achieve a faster liquidation, but I cannot imagine a very large one. Even your suggestion of 10% seems rich.

Buffett's BAC warrants are currently out of the money even after last week's equity ramp, leaving him with a coupon that doesn't compensate for the risk inherent in BAC's toxic assets. These bets are sometimes losers.

I agree with your assessment that the terms of Soros' MF Global deal were likely arm's length.

35 posted on 12/11/2011 12:40:51 PM PST by Kennard
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To: Kennard
The trustee probably agreed to a discount to achieve a faster liquidation, but I cannot imagine a very large one. Even your suggestion of 10% seems rich.

Most likely. I was trying to cobble up and overstate / stretch the potential total return, including high coupon rate and market discount and potential for capital gains in fast market, by giving all the benefits of the doubt I could find - urgency, eurozone market volatility, real and headline sovereign risk, deal size...

And still, in the end, to paraphrase some T-shirts, "... all I had left was the 'lousy' 10 percent."

This is not an easy money without risk, and the total returns are not outsized in percentage terms (often, higher return can only be achieved through high leverage, which only magnifies risk, as LTCM and MFGH, among others, have shown). The numbers, in percentage terms are never as "impressive" for lay people as absolute numbers in dollars (or other currencies) and that's what I tried to show with the Soros' "breaking Bank of England" example.

The fact is, were the deal any more lucrative, adjusted for risk, it probably wouldn't be left on the table for Soros to pick up.

Bond market is liquid, players are very sophisticated, plenty of available cash is looking for deployment, and credit is cheap and easy enough for qualified investors and deals.

Buffett's BAC warrants are currently out of the money even after last week's equity ramp, leaving him with a coupon that doesn't compensate for the risk inherent in BAC's toxic assets.

Buffett is usually willing to be patient, even adding to his positions if he thinks that the "market" is wrong, and he sees no better use for cash. In the meantime he is pretty happy with clipping BAC coupon. The biggest problems for BoA are not financial, but political, though these are by no means trivial and should not be understated.

These bets are sometimes losers.

Yes, anybody can buy BAC preferreds, it's not limited to the likes of Buffett, but few will either have the knowledge, understanding, guts or decide that there are no better risk-reward opportunities somewhere else.

But that's how more money can be made (or lost) - by correctly differentiating, and exploiting market inefficiencies while avoiding most value traps. Bill Miller of Legg Mason was doing it for almost two decades, but then the "streak" snapped, in part because of the fund size, in part because of reversion to the mean.

Few investment are without risk (sovereign debt mess in Europe is one prime example), especially with huge sums of money to allocate - many markets are crowded or simply not available, while there are some advantages which they have to be willing to exploit to put capital to work.

People are overlooking many of these issues because the absolute "dollar" amounts are big enough to obscure the risk or total percentage returns. So quite often people tend to suspect or see something nefarious where it doesn't exist, in normal market trades or strategies.

36 posted on 12/11/2011 3:06:33 PM PST by CutePuppy (If you don't ask the right questions you may not get the right answers)
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