Matt Levine

So the story of Mathew Martoma allegedly faking his Harvard Law School transcript is truly, genuinely nuts, but the prosecutors' motion to admit it as evidence in his insider trading trial strikes me as even nuttier. Here is the motion. It contains as an appendix the Findings of Fact and Decision of the Administrative Board at Harvard, which tells the story in some detail, and really we could talk about the story all day, it is bonkers.

First of all, Martoma was named Ajai Mathew Thomas: He changed his name after all this unpleasantness went down. Second, Harvard found that he forged transcripts that he used to apply to federal appellate clerkships in winter 1998-99, changing two Bs and a B+ to As (but leaving another B+, an A and an A- untouched). Third, when he was caught, he told Harvard administrators variously that he had faked the transcript as "a joke" or "with the intention that it be shown only to his parents," but that it accidentally got sent to judges.

You just can't win with LightSquared.

Oh is the Dish/LightSquared saga the best. The latest is that Charlie Ergen's Dish Network withdrew its bid to buy LightSquared out of bankruptcy, but a "group of lenders that has backed Dish’s bid reportedly may seek to compel the company to complete its takeover efforts." If you're following along, some LightSquared stakeholders are suing Dish saying that it can't buy LightSquared, while others might sue Dish saying that it has to. Meanwhile, some Dish shareholders are also suing to prevent Dish from buying LightSquared, but Dish stock was down 2.5 percent yesterday on the news that it's dropping its bid.

One advantage of having a lot of money is that it makes it easier to make even more money. Money scales nicely. For instance, if you have $4.1 trillion, smart people will be happy to give you good advice about how to invest it. All they'll ask in return is that you pay them some of your money, but since you have so much of it this is not too big a burden.

Some of this advice comes from people whom you hire and pay salaries and bonuses -- sometimes bonuses in the tens of millions of dollars -- to work full-time on thinking about how to invest your money. But, financial services being what they are, some of these people work for brokerage firms and help lots of people invest their money, in exchange for "commissions" or "fees" or "trading profits" or whatever. These people take pride in providing exactly the same level of service to all of their fee-paying clients, no matter how big or how small.

SAC Capital traded Elan and Wyeth for "normal, typical reasons."

Mathew Martoma is on trial on insider trading charges, because his employer, SAC Capital, allegedly traded on inside information that he got about Elan and Wyeth. He was hoping to beat this rap using some old deposition testimony from Steve Cohen, which he claimed showed that SAC didn't trade on his inside information: Coincidentally, someone else at SAC wanted to make the same trades as Martoma did, and Cohen ultimately made trading decisions based on the other guy's information, not Martoma's (maybe illegal) information.

There's not a ton of detail in this Wall Street Journal article about federal regulators' "wide-ranging examination of mortgage-bond sales by banks in the years that followed" the financial crisis but ooh boy is it interesting. The examination seems largely metaphysical, looking not so much into the banks' e-mails as their souls. Here:

Regulators are investigating whether traders exploited the murky pricing around residential mortgage-backed securities from around 2009 through 2011 to buy or sell the investments at artificially depressed or inflated values, the people close to the inquiry said. The other parties in such transactions would typically be rival banks, hedge funds and other large investment firms.

Unlike with publicly traded stocks, where pricing is transparent, investors in mortgage-backed securities markets often rely on traders to disclose honestly the prices paid and the commissions charged. It is generally illegal for traders to misrepresent to investors aspects of a transaction that are important enough to affect the decision to buy or sell.

So what aspects of a mortgage-backed security "are important enough to affect the decision to buy or sell"? A conventional answer would be something like "the creditworthiness of the underlying borrowers, the values of the homes used as collateral, etc." And there've been lots of lawsuits about banks that misrepresented those sorts of things in the pre-crisis period and have gotten in bad trouble.

Switzerland just isn't that jazzed about investment banking.

Here's a story about how UBS and Credit Suisse, which have already cut back pretty dramatically on their investment banking and trading businesses, "are prepared to scale back their investment banking operations further if the country’s strict capital rules become even more onerous." You sometimes hear U.S. bank executives talk about how onerous regulation will make U.S. banks less globally competitive and cause the U.S. to lose financial business to offshore competitors, which it is widely assumed would be a bad thing for America. But here you have a case of a whole country more or less saying "yeah okay global financial-services behemoths are not really where we want to be." And so they're pretty much shutting them down: "Although Swiss regulators introduced some of the toughest capital requirements in the western world in the aftermath of the financial crisis, politicians and the wider public have continued to express an unease about the scale of both UBS and Credit Suisse."

When I started working at an investment bank there was a series of compliance videos that one played in a corner of one's computer while doing other work. Nonetheless, the money-laundering one seems to have stuck with me: I still remember the basic plot, in which someone asks a banker questions about how he ignored red flags in a client's account-opening documents, and then at the end the camera moves back and you see that the banker is in prison. Prison for letting someone else launder money! Really makes you think, I guess, primarily about the realism of the compliance videos.

But maybe not, since JPMorgan is going to prison for missing some red flags while working as Bernie Madoff's primary bank. Hahaha no that's impossible, but it is forfeiting $1.7 billion [update: plus a separate $350 million fine and $543 million in private lawsuit settlements], which is really quite a lot of money, to settle money-laundering and so forth charges relating to the fact that it sort of noticed that Madoff was a Ponzi scheme and then didn't do anything about it.

I guess insider traders are greedy.

Mathew Martoma's insider trading trial starts today and, I don't know, on my casual reading of the evidence it doesn't look great for him. The main defense seems to be something like "well sure I told Steve Cohen to trade based on illegal inside information, but he was gonna do those trades anyway." So it's like failed insider trading. Yesterday the judge ruled that prosecutors could tell jurors that Martoma's insider trading was motivated by "greed," which I think is a pretty unilluminating explanation for anything -- "imagine, he acted out of self-interest!" -- but I guess prosecutors think differently. They can't tell jurors that Martoma fainted when the FBI came to his house, which again I think is pretty unilluminating; you'd be kinda bummed too if you learned that the U.S. government was going to devote its considerable resources to ruining your life.

There are many pleasures in this story about investment banks pitching activism preparedness so I guess we might as well start with the cheapest of them,which is that people who work at investment banks sometimes use words funny:

“It’s literally a matter of career life and death for management teams and directors who are subjected to activism,� said Chris Young, head of contested situations at Credit Suisse Group AG. (CSGN) “Many CEOs and directors have decided they’d rather go through the unpleasant process of taking a harsher look at themselves in private than a very unpleasant process in public.�

Ah yes, the stakes are career life and career death. Which in addition to being career dramatic raises the question: Who is the client here? Presumably Credit Suisse's engagement letter says that its client is Underperforming Corp., and its obligations are to do what is best for Underperforming Corp. But presumably that engagement letter is signed by a human at Underperforming Corp., and that human might worry more about his career life and death than he does about Underperforming Corp.'s stock price. (Though they are obviously correlated.) And he's the one looking into Chris Young's eyes and tearing up when he thinks about the impending approach of the doom that awaits us all in our careers. And Chris Young strokes his hand and says there there friend, don't cry, we can save your career, your career will live to a ripe old age.

John C Malone is having fun.

Liberty Media Corporation is a series of corporate-engineering art projects curated by John C. Malone; also I guess it runs some cable television stations or something. Liberty owns 52 percent of Sirius XM, the satellite radio company, and its latest exhibit is announcing that it wants to acquire the rest in exchange for Liberty Media stock. But which Liberty Media stock, you ask: the Series A or the Series B? (Because of course Liberty has two classes of stock, which is down a bit from when it had a bunch of classes of tracking stock.) Neither, cackles Malone maniacally: the Series C! There is no Series C. Liberty is going to create a new Series C non-voting stock, distribute two shares of it for each existing share, and then use it to pay for Sirius. Why? To expand the frontiers of human perception would be my guess. Anyway I'm sure that there's a lot of other wonderful stuff going on in this proposal and that Sirius's special committee will have a grand old time evaluating it.