Capital Markets Red Flags III Investment Strategy Didn't Make Sense BM couldn't afford the Put options he said he bought because they would have cost him too much $ BM stock picks would have had to be > 30% per year Feeder Funds said BM subsidized down months but this would have been illegal Feeder Funds said BM benefited from his broker-dealer arm's trading volume which was code for illegal front-running Feeder Funds said that BM had perfect market-timing ability thanks to his access to his B/D's order flow of 5 – 10% of daily US stock volume Reality: BM did know what the other 90 – 95% of trading volume was doing so there was no way he could predict stock prices in advance!
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