Audit Notes: Magnetar Misled, Anonymous But On the Record, WSJ Jet Probe

I wrote about JPMorgan’s Magnetar settlement this morning, but it’s important to note that it shows once and for all (if you somehow doubted it) that Magnetar has not been truthful when it’s denied “choosing assets for any CDO.”

Here are some quotes from the SEC’s complaint:

… a hedge fund helped select the assets in the CDO portfolio…

a prominent hedge fund that would financially profit from the failure of CDO portfolio assets heavily influenced the CDO portfolio selection…

Marketing materials stated that the Squared CDO’s investment portfolio was selected by GSCP (NJ) L.P. - the investment advisory arm of GSC Capital Corp. (GSC) - which had experience analyzing CDO credit risk. Omitted from the marketing materials and unknown to investors was the fact that the Magnetar Capital LLC hedge fund played a significant role in selecting CDOs for the portfolio and stood to benefit if the CDOs defaulted….

SEC alleges that Steffelin allowed Magnetar to select and short portfolio assets…

Deny that.

The Wall Street Journal has a good page one story investigating the hacking collective Anonymous. What particularly stood out to me was the number of hackers the paper got to go on the record. Like this one:

Anonymous participants say the attacks expose weaknesses in the systems of computer-security companies and large organizations. “They should be scared,” said Corey Barnhill, a 23-year-old New Jersey native who uses the online nickname Xyrix and who said he took part in the attack on HB Gary Federal. “You’re college-educated and you can’t secure a server? How hard is it? They can’t keep a kid out?”

Mr. Barnhill said the HB Gary Federal hack was designed to teach Mr. Barr a lesson for suggesting he could unmask Anonymous. “Whacking him down a peg was pretty funny,” he said.

And it shows groups turning on each other:

This week, LulzSec claimed to rat out a couple of individuals it said had “tried to snitch” on it. In a document addressed to the “FBI & other law enforcement clowns,” the group appeared to reveal the full names, addresses and other contact information of two U.S. men it claims were involved in some hacks. “These goons begged us for mercy after they apologized to us all night for leaking some of our affiliates’ logs,” according to the document, accessed via a link on LulzSec’s twitter page. “There is no mercy on the Lulz Boat.”

Good reporting.

— And the Journal’s great investigation of corporate jet abuse continues.

Is long-retired IBM Chief Louis V. Gerstner Jr. still a frequent flier on IBM Corp.’s jets?

The number of trips by the computer giant’s jets to Stuart, Fla., and Nantucket, Mass., near where public records show Mr. Gerstner has homes, certainly would suggest so…

The IBM fleet landed 66 times in Stuart, Fla. over the four years ended last December, and 48 times on the resort island of Nantucket, according to Federal Aviation Administration flight records…

Counting travel both to and from Stuart and Nantucket, the approximate cost to IBM shareholders for those flights was $1.1 million, according to Wall Street Journal estimates.

What did Gerstner, who retired nearly a decade ago, and IBM have to say for themselves?

An IBM spokesman said: “We don’t comment on any plane use.” Mr. Gerstner didn’t respond to an email message sent to his assistant or to a phone message left at his Nantucket residence.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,