Timestamps Matter and Sometimes You Just Have To Call the Authorities

Sometimes you just have to call the cops.

I remember the moment I truly knew my partner was stealing from me and my firm. It’s just not a good feeling. Trust me.

In my case, the cops were the SEC and the NASD. Frick and frack.

My partner had not stolen from client accounts. He was stealing from my third partner, the firm and when that all dried up….my hedge fund and me. Because he had not stolen from client accounts, I imagine it could have been covered up (I learned quickly that Bear Stearns and Stern Agee had been willing to help my partner cover the losses up from me), the losses pushed out and maybe by some stroke of market good fortune, recovered. I was not capable of imagining it. I could only imagine putting a definitive time stamp on it by calling the authorities.

My risk of course was embarrassment and shame. My quick decision was to deal with the embarrassment and shame as fast as possible.

In hindsight, the authorities mostly suck and the punishment for my thieving partner did not fit the crime, but I know I did the right thing.

I got on the phone and on a plane to talk to my investors. There was nothing to sell, just the timeline as I knew it. Not one partner or investor even asked to see the timeline – they had real losses to worry about in their etrade day trading accounts (it was 2002 after all). They trusted and believed I was going to fight to get to the truth and recover as much as possible. Nobody quit me or redeemed. With a great attorney, timestamps and a ton of hustle and a little luck, the fraud insurance paid out and covered 90 percent of the financial losses. I ate the rest personally.

There are some things where your boss or your bosses boss is NOT the authority and a timestamp with the real authorities matter.

It’s not fun because you can’t change the past, but a timestamp allows the clock to start fresh yet again.

The less baggage in life the better, unless your baggage is backed by lobbyists, Goldman Sachs and/or repackaged, leveraged and sold as derivatives to strangers.


  1. Lewis says:

    You did the right thing, and I am certain your credibility and trust factors rose and continue to rise as we learn your story. Way to go! Honesty and honor trump all else.

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  6. MissTrade says:

    Good lesson for the Joe Paterno’s and Jim Tressel’s of the world. Also , why too big to fail will ultimately fail.  Deal with it up front and move on. Don’t wait to cover up and make it worse.

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