Longtime Lionsgate Faithful

Richard X. Bove on Lehman: An Assault on Reason

You presented a legal analysis regarding a fraudulent conveyence, yet you completely ignore or possibly understand the securities laws. There is a good chance Dick Fuld cannot trade Lehman stock right now b/c of non-public material information that can affect the future value of the stock: Fuld is constantly, likely everyday, looking to enter into a major transaction that is so material it would prevent Fuld from being able to trade LEH. These transactions have rumored to be: 1) A sale of Neuberger, 2) A sale of $40 billion of Level 3 assets at a steep discount, 3) a major investor for up to 50% of LEH shares, or 4) an outright sale of the entire company. In addition, there are reports that LEH will be taking a $2 to $4 billion writedown this quarter (a figure Fuld probably knows more specifically). Lastly, news reports have stated that LEH will likely pre-announce, some say as early as this coming week. If that is the case, there is an automatic black out period for trading.

As a result, Fuld is likely prevented from trading given the material circumstances surrounding the company.

HOWEVER, I would believe that if he really really wanted to make a statement by purchasing more LEH, he could get a waiver and approval from the SEC. But keep in mind, he already has a substantial value of LEH stock at risk already.